AI’s Impact on the Future of Finance and Accounting

As seen in the California Business Journal

Today’s businesses must overcome a number of challenges as they seek to effectively leverage the power of finance and accounting. Technological advances are disrupting the finance space, bringing new risks and requiring new skills. Growing complexity in the regulatory landscape regularly adds new compliance burdens. Elevated uncertainty in today’s economy hangs like a cloud over the business world, making every decision more difficult and more critical.

To overcome these challenges, many businesses are embracing the power of artificial intelligence (AI). AI is reshaping the business world, giving companies of all sizes opportunities to achieve new levels of speed, efficiency, and productivity. Recent reports show that 62 percent of business leaders have already invested in AI to enhance their employees’ capabilities.

AI brings great potential to finance and accounting, offering companies the power to enhance current operations with greater speed and accuracy. Industry leaders report that AI bookkeeping and AI accounting software are already transforming the business world. For those seeking ways to integrate AI into their financial operations, the following are some key initiatives to explore.

Elevating the data entry process with AI

Data entry is a crucial component of finance and accounting that drives financial reporting and analysis. This, in turn, plays a key role in risk management and decision-making. By leveraging AI, companies can gain efficiencies in this area.

AI-powered tools can automate data entry, removing much of the tedious work typically carried out by humans. They can capture figures from invoices, receipts, and other financial statements, automatically classifying them and entering them where appropriate in a company’s financial platform. AI streamlines the process, saving time and freeing up human resources for other tasks.

Bringing AI into the data entry process also cuts down on errors. While tired, distracted, or overworked accountants are bound to make mistakes in the data entry process, AI tools don’t suffer from those challenges. They are available 24/7, never have an off day, and handle the 1,000th entry with the same skill and care as the first.

Strengthening GAAP compliance with AI

As companies shift to AI bookkeeping, they elevate their capacity for complying with Generally Accepted Accounting Principles (GAAP). Publicly traded and regulated companies are required to follow GAAP standards, which are designed to create transparency and consistency in financial reporting. For private companies, GAAP compliance is part of future-proofing, providing insights that drive sound financial decision making and preparing companies for raising funds through loans, IPOs, and venture capital.

AI-powered bookkeeping and accounting assist with GAAP compliance by increasing the speed and accuracy of data entry. Through data cleansing and validation, AI ensures entries are free of errors, inconsistencies, and missing data.

AI also supports GAAP compliance by serving as an “always on” sentinel attuned to the slightest deviations from GAAP standards. It can track accounting processes in real time and trigger alerts when anomalies or potential non-compliance is detected, preventing errant processes from being duplicated in a way that leads to multiple violations. For small companies, this capacity fills what can be a costly knowledge gap, empowering compliance without the need to have a certified finance expert on staff.

Enhancing Financial Forecasting with AI

Financial forecasting is a powerful practice that is difficult to master. When done well, it empowers companies to improve their decision-making capabilities, cash flow, and risk mitigation. When mishandled, it can lead companies down the wrong roads that contain unnecessary risks.

AI enhances a company’s capacity for financial forecasting by increasing the volume of data it can analyze. Effective forecasting requires detailed analysis of external data — industry trends, economic indicators, consumer spending patterns, and more — as well as internal data. The algorithms that drive AI’s analytical capabilities can organize, analyze, and identify patterns in big data effectively and efficiently. AI accounting software empowers the type of analysis that is overwhelming for human accountants.

By adding the power of AI to their strategic planning, companies can ensure their budgetary plans align with the opportunities emerging in their industry. AI takes financial forecasting to new levels, providing a picture of financial power companies can use to uncover new insights and improve the strength of their decision making.

Navigating the New Risks AI brings to accounting

However, companies that embrace the power of AI must also consider the risks it introduces. AI requires access to data, which means integrating it into financial operations adds new challenges to data privacy. Leveraging AI for data analysis and financial forecasting also introduces ethical concerns due to AI’s tendency to learn the biases contained in its training data.

To address these risks, companies must prioritize security, diversity, and transparency as they seek out AI-powered tools. The best options will be those offered by companies that have utilized diverse datasets, engineered explainability, and developed products with clear ethical guidelines.

The business world has already begun to embrace AI bookkeeping and accounting. Moving forward, these new technologies promise to reshape the way companies develop and manage their financial strategies. Companies that deploy AI in ways that improve efficiency without losing consumer confidence will gain a clear competitive edge in the marketplace.