AI in Finance and Accounting
Introduction to AI in Finance and Accounting
Are your daily accounting tasks getting monotonous and repetitive? Do you have to deal with human errors that disrupt your business’s financial performance? That is why you need to embrace AI in finance and accounting.
‘Accounting automation software’, ‘Artificial intelligence in finance’, etc. are some colossally buzzing keywords in the fin-tech industry. This industry is booming faster than ever. “Automation in accounting” is THE happening topic for businesses. Why? Because it can save you loads of your finances, time, and efficiency. Here is what you should understand about accounting automation -
- Tracing accounting automation history
- Why is AI in finance and accounting mandatory?
- A few technologies used in accounting automation
- How can automation help small and medium businesses?
- Tips on choosing the right automation software for your business
History of Accounting Automation
In the 1960s, the accounts payable processes were streamlined in America. Here is a quick glimpse of accounting automation history over the years -
- The punch card system was first used as an automated accounting system in the 1960s.
- In 1978, the first computerized accounting automation software VisiCalc was introduced and served purposes of automatic calculations and financial modeling. It was innovated by Dan Bricklin and Bob Frankston.
- Microsoft’s Excel was launched in 1987.
- Intuit’s Quickbooks was first released in 1998, almost 15 years after the company’s founding.
- By the turn of the millennium, OCR (Optical Character Technology) in accounting was first used in 2000.
Streamlining Your Accounting Process
Maintaining your business finances is no easy task. The close of a financial year can get messy if things are not organized. With a plethora of data from all ends, it can become overwhelming. This is where automation simplifies your job! It would incontrovertibly be one of your key business success metrics.
Automation is a process where there is less-to-no-human intervention. The duplicative tasks are accomplished using technologies like ML, AI, or ICR, letting your team focus on more crucial activities. By creating dashboards that are accessible to all involved, there is always room for continuous improvement, thus benefiting your business in the long run. It may also lead to innovation in certain job roles.
Why Automate Your Accounting Workflow?
High Accounting Accuracy and Security
As humans, accountants might accidentally omit a small decimal value, which may be costly from the business perspective. Automation would mean less human error and more accounting perfection, which is integral for developing the end-user's trust. It also means lesser fraudulent activities, thanks to automated auditing.
Smart Decision Making
It is essential to develop an all-around view of the numbers, which can be easily done through automation. Thus, you can make smart decisions in so little time!
Pruning inessential complexities in accounting processes.
By identifying data discrepancies, if any, it would be easier to reduce any complications in accounting processes.
AI in Finance - Technologies Used
Robotic Process Automation (RPA)
RPA technology eases up your accounting workflow operations by automating all those manually repetitive jobs and allows finance professionals to prioritize their work efficiently.
Optical Character Recognition (OCR)
This software allows you to extract and process financial information from documents. Be it text, characters, fields, or any other form of data, nothing is impossible for this piece of technology.
Natural Language Processing (NLP)
By curtailing most entry-level accounting work, it helps most businesses. NLP can also assist you from a strategic aspect, by providing advanced insights for business-related decision-making.
Machine Learning (ML)
One of the paramount aspects of AI is Machine Learning. In the accounting and finance field, it can help avoid repetitive processes by providing smart recommendations. For e.g., accounting applications simplify the user’s job by learning invoice coding actions and performing the same on their own.
Tips to Choose the Right Product
Once the desired accounting features are chosen, it would be easier to make a budget decision. You would not want to pay extra for unrequired features that would not be helpful for the business.
UX and UI
Gone are the days when customers had to prioritize only features. In these digital times, it is indisputably important to check out how user-friendly the software is.
The Right Mix of Features
While purchasing the software, ensure it comes with primary features, such as a general ledger, accounts receivable, accounts payable, etc. Identifying what is required and what is not can help make the best purchasing decision.
Without the right support, it is pointless to use a product altogether. It is important to receive technical support as and when required.
Accounting security is crucial to any business. In times when hackers are increasingly smart, you would not want to see your financial data compromised. It can all start with an accidental breach of data. Fixing these breaches may be costly for small and medium businesses.
A Few AI/ML Applications in Finance & Accounting
Does technology intrigue you? Are you curious to know what’s running behind the automation scenes in your business? Read more on what you need to know -
- AI-assisted document processing using Natural Language Processing helps create real-time reports that provide you with smart business insights.
- Allows implementable internal accounting processes, such as invoicing, accounts payable, receivables, etc.
- Machine Learning (ML) algorithms help you identify and prevent fraudulent activities. The technology scans for any such issues and notifies you for review, and helps you cut down on losses on any scale.
Few Reasons to Opt for F&A Automation
Streamline Business Operations
It is essential to consolidate various processes, and automation can be that solution. Research stats have shown that almost 40% - 60% of finance functions can be automated.
Faster Procure-to-Pay Process
Running a business is, in no way, free of cost. There are things that you may need to procure and pay for doing so. For instance, issuing a purchase order, roping in your supplying team, or processing invoices. Why let delays happen when automation can help you resolve your issues?
Payment for Your Services
For every business order placed, there is a sales order to be created, more customers to be brought in, invoices to be issued, and all those payments to be processed - cash and credit. So, you get all sorts of mixed data - what do you do? Automation plays the hero again, like say, collecting the bank statements and inputting the required data into your AR system.
Number Crunching to the C-Suite
Of course, there’s that time of the year when you will have to sit with the C team on your business performance. With a plenitude of data dispersed across your devices and cloud systems, or perhaps even the legacy ones, automation can help you effortlessly gather all those, in no time.
AI in finance and accounting has ensured seamless completion of repetitive tasks. Not just that, you can make the right business decisions and generate better business revenue. Over the years, accounting automation technology has evolved, from a punch card machine to Artificial Intelligence and Machine Learning. Some technologies used are OCR, RPA, NLP, etc. It is recommended to choose a product based on a few important factors, such as price, user-friendliness, compatibility, end-user support, and security. And with the host of benefits that come with automating your accounting process, what are you waiting for?