Artificial intelligence strikes fear in the hearts of many professionals. With its remarkable potential to automate most human processes, it’s hard not to feel concerned that AI may soon put us out of a job.
However, AI in accounting paints a completely different picture—one of hope and optimism.
Like many technical fields, the accounting industry is hounded by a severe talent shortage. Simply put, the number of accountants and bookkeepers can’t keep up with the demand.
Thankfully, with AI technology, short-handed accounting firms can breathe a temporary sigh of relief. But the operative word there is “temporary.”
Although AI can help alleviate some of the dreadful effects of understaffing, it’s not the silver bullet to your staffing woes. There’s only so much AI can do before productivity issues and practice inefficiencies creep back in.
We’ll explain why that is the case further along this post. But before we get into the “why,” let’s first understand the role of AI in accounting and finance.
What is AI in Accounting?
Broadly speaking, artificial intelligence refers to the technology that enables machines and computers to simulate human behaviour and thinking. While there are different types of AI models, the most commonly used today are:
- Machine learning—where software detects patterns in data
- Predictive AI—which recommends actions based on the patterns it learned
- Generative AI—where software creates new content based on its learned patterns or an existing database (think ChatGPT, Midjourney, etc.)
Every industry implements and leverages AI differently. In the accounting sector, most firms adopt predictive AI to help sort and organise their data, identify patterns in financial records, make better business decisions, and automate repetitive tasks like data entry.
Use Case Examples of AI in Accounting
As the number of AI tools for accounting grows, it’s also becoming increasingly important to identify which areas of your practice to implement them in.
Cash Flow Forecasting
By analysing patterns in accounts receivable (A/R) and accounts payable (A/P), AI-powered tools forecast future cash balances, aiding in proactive financial planning.
Invoice Reconciliation
Scanning Receipts and Invoices
Tax Compliance
AI tools for accounting can examine and analyse financial information to identify tax deductions and credits, avoiding stress and cramming during tax season and helping minimise tax obligations.
These tools also identify any inaccuracies or oversight in tax submissions, guaranteeing improved adherence to regulatory standards and optimising tax benefits.
Transaction Categorisation and Reconciliation
Based on the transaction amounts and vendor information, AI accounting software can intelligently recommend matches between bank statement transactions and entries in the ledger. Additionally, it offers recommendations for categorising these transactions, with users retaining the ability to accept or override the suggestions.
Will AI Replace Accountants?
Is that not the million-dollar question these days?
Concerns about AI snatching jobs away are a valid sentiment. However, you can put that worry aside for now.
According to Thomson Reuters, there’s no concrete evidence that AI is putting accountants out of a job. Even the leaders of the finance industry’s Big 4 (Deloitte, Ernst & Young, PricewaterhouseCoopers, and KPMG) all agree that despite its powerful automation capabilities, AI can never replace human accountants.
Deloitte
KPMG
PwC
If anything, accounting firms and professionals should embrace AI, especially in the face of a severe CPA shortage.
From an accountant’s perspective, AI tools for accounting can improve your quality of life and work. As AI enhances automation, you can accelerate your workflows, increase accuracy, and reduce errors.
From an accounting firm’s point of view, AI can improve operational efficiency without having to hire more employees and inflating salary costs.
However, as we alluded to earlier in this blog, AI is not the end-all-be-all of the CPA shortage. If your practice is understaffed, don’t expect AI to act as an extended member of your team.
AI in accounting functions more like an enhancement to how accountants and bookkeepers work. It’s a tool designed to complement accounting professionals, not replace them.
Beef-Up Your Firm’s AI Transformation
with Outsourced Accountants
The Australian Bureau of Statistics (ABS) predicts a surge in demand for accounting professionals of up to over 300,000 by 2026—almost 10,000 extra per year.
Average Annual Salaries for Accountants
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