5 Main Benefits of Using AI in Accounting

In my former career as a financial analyst, I spent countless hours at work meticulously examining numbers in spreadsheets, searching for patterns and trends that could reveal the underlying financial story. We relied heavily on the financial models we built to perform these tasks, and while they were effective, I never anticipated the extent to which artificial intelligence (AI) could revolutionize every aspect of our work in the near future.

Today, that future has become our present reality, as seen in our 2024 course trends report showing a remarkable 550% rise in interest in AI courses and a significant 24% increase in accounting courses on findcourses.com.

The advent of AI is causing a seismic shift across various industries worldwide, and accounting is no exception. AI's capabilities extend beyond simple automation of repetitive tasks; it enhances accuracy and provides deeper, more nuanced insights than were previously attainable. In our article, "Accounting Today: 4 Trends Defining the Future", we identified AI as a pivotal trend shaping the landscape of accounting, highlighting its significant role in driving innovation and efficiency within the industry.

To ensure we stay at the forefront of this technological revolution, we are tapping the knowledge of experts in the field, including practicing accountants, business owners, and AI and automation specialists. By incorporating their insights and real-world experiences, our goal is to inspire accounting professionals with a clear understanding of how AI can effectively integrate into modern accounting practices.

Read on to discover the five key advantages of using AI in accounting. These benefits illustrate how AI is transforming the industry by making operations more efficient, improving accuracy, and facilitating smarter decision-making.

What is AI in Accounting?

AI in accounting refers to the use of advanced computational techniques to perform tasks that traditionally require human intelligence. These tasks include data analysis, pattern recognition, and language processing.

"Software solutions like cloud-based accounting systems, automatic payroll services, and AI-powered bookkeeping tools have made things easier, cut down on mistakes, and made things run more smoothly."

— Gary Jain, CEO of The Ledger Labs, an automation-focused accounting firm

5 Benefits of Using AI in Accounting

1.     Increased Efficiency

According to the Thomson Reuters 2024 Future of Professionals report, AI-powered technologies are expected to save professionals in legal, tax, risk, and compliance fields an average of four hours per week, totalling around 200 hours annually.

These time savings come from AI systems processing vast amounts of data much faster than humans, significantly reducing the time required for tasks such as data entry, reconciliation, and report generation. This allows accounting professionals to focus on more strategic activities.

• Data Entry Automation: AI-driven tools automate data entry by extracting and inputting information from various documents, such as invoices and receipts. This reduces the manual effort and time spent on data entry tasks.

• Speedy Reconciliation: AI accelerates the reconciliation process by automatically matching transactions with corresponding records. This rapid matching identifies discrepancies quickly, allowing for prompt resolution.

• Efficient Report Generation: AI tools can generate financial reports on demand, compiling data from multiple sources in real-time. This ensures that reports are always up to date, enabling faster financial analysis and decision-making.

"AI and machine learning are revolutionizing accounting and bookkeeping by automating routine tasks and providing deeper insights through data analytics. For instance, AI-driven software can now handle complex reconciliations, detect anomalies in financial data, and predict cash flow patterns with remarkable accuracy."

— Dennis Shirshikov, Head of Growth at gosummer.com and finance professor at City University of New York

2.     Enhanced Accuracy

By minimizing human error, AI improves the accuracy of financial records. Automated systems consistently follow predefined rules and protocols, ensuring that calculations and entries are correct.

• Consistent Data Processing: AI systems follow strict rules for data processing, eliminating the inconsistencies and errors that can occur with manual data entry. This ensures that financial data is accurate and reliable.

• Error Detection and Correction: AI can detect anomalies and errors in real-time, flagging them for review. This proactive approach helps maintain the integrity of financial records by catching and correcting mistakes early.

• Standardization: AI enforces standardized data formats and processes, reducing the risk of errors due to varied data handling practices.

"Using predictive algorithms and AI has enabled precise forecasting, enhancing our budget planning and financial strategy development."

— Mark Pierce, CPA, Founder & CEO of Wyoming Trust & LLC Attorney

3.     Cost Savings

Automating routine tasks reduces labor costs and operational expenses. Over time, the investment in AI technology can lead to substantial financial savings for businesses.

• Labor Cost Reduction: By automating repetitive tasks, businesses can reduce the need for extensive manual labor, lowering staffing costs. Employees can be reallocated to more strategic roles that add greater value to the business.

• Operational Efficiency: AI improves overall operational efficiency by streamlining accounting processes. This leads to reduced operational costs and allows resources to be used more effectively.

• Long-Term ROI: Although the initial investment in AI technology can be significant, the long-term cost savings from increased efficiency and reduced errors provide a strong return on investment (ROI).

Many accountants agree with the cost-saving potential of AI, as these investments are expected to yield significant returns. A Moore Global study reveals that mid-cap accounting and finance businesses each spent $1.6 million on AI over the past year, slightly above the average of $1.5 million in our study, and nearly four times the amount spent by law and professional services.

4.     Real-Time Data Analysis

AI tools provide real-time insights by continuously analyzing financial data. This enables businesses to make timely and informed decisions, enhancing their responsiveness to market changes.

• Immediate Insights: AI systems analyze financial data as it is generated, providing immediate insights into financial performance. This real-time analysis helps businesses stay on top of their financial health.

• Trend Identification: AI can identify emerging trends and patterns in financial data, allowing businesses to anticipate market changes and adjust their strategies accordingly.

• Informed Decision-Making: Access to up-to-date financial information enables more informed decision-making. Businesses can respond quickly to opportunities and challenges, maintaining a competitive edge.

"AI-powered tools that look at huge amounts of financial data to make thorough reports and predictions help businesses find trends, keep track of their cash flow, and make smart choices about their money."

— Gary Jain

5.     Fraud Detection

AI can identify unusual patterns and anomalies in financial transactions, helping to detect and prevent fraud. Advanced machine learning algorithms can continuously learn and improve their ability to spot suspicious activities.

• Anomaly Detection: AI systems monitor transactions for unusual patterns that may indicate fraudulent activity. By analyzing vast amounts of data, AI can detect subtle anomalies that might be missed by manual reviews.

• Continuous Improvement: Machine learning algorithms continuously learn from new data, improving their fraud detection capabilities over time. This adaptive learning ensures that AI systems stay effective against evolving fraud tactics.

• Proactive Prevention: AI can flag suspicious transactions in real-time, allowing businesses to take immediate action to investigate and prevent potential fraud. This proactive approach minimizes the financial impact of fraudulent activities.

CNN reports that the US Treasury Department began using AI-powered fraud detection methods in late 2022, successfully recovering $375 million in fiscal 2023 alone. By analyzing transaction patterns in real time, the Treasury can halt fraudulent activities before checks are cashed. This initiative highlights the significant role AI can play in enhancing fraud detection and prevention, leading to multiple active cases and arrests.

Continuous Learning in the Age of AI in Accounting

As AI and automation become integral to accounting, continuous learning and adaptation are essential for professionals in the field. The rapid pace of technological change means that accountants and bookkeepers must continually update their skills to stay relevant and competitive.

"As these technological advancements reshape the industry, continuous learning has become crucial for professionals in accounting and payroll. Online courses and certifications in data analytics, AI, and global financial regulations are in high demand."

— Dennis Shirshikov

Practical Application of Training: Training equips professionals with the skills needed to leverage new technologies effectively. For example, understanding how to use AI-powered tools for predictive analysis and real-time data processing can significantly enhance an accountant's ability to provide valuable insights and strategic advice to their clients.

Career Advancement: Professionals who embrace continuous learning and technological training are better positioned for career growth. The ability to use advanced tools and understand emerging trends can differentiate accountants in a competitive job market, opening up opportunities for more strategic and higher-value roles within organizations.

"Professionals who have spent money on training to learn how to use these digital tools better are now ahead of the competition. Accountants and bookkeepers can use technology better now thanks to courses on specific tools, best practices for automation, and data analytics."

— Gary Jain

In conclusion, the integration of AI and automation in accounting offers significant benefits, from increased efficiency and accuracy to cost savings and enhanced fraud detection. However, to fully realize these advantages, continuous training and education are imperative for accounting professionals. By staying updated with the latest technological advancements and acquiring new skills, accountants can ensure they remain valuable assets in an evolving industry.