Generative Artificial Intelligence (AI) is becoming rampant across industries, and the accounting industry is no exception. AI, with better context and precision, is poised to change the accounting landscape for better outcomes.
Accounting firms are turning to AI to streamline their tax and audit workflows, reduce errors, and automate repetitive tasks. The 2024 State of Accounting Report, which interviewed 595 accounting professionals, reveals that 71% of accountants now believe in AI’s transcending power, and 82% are confident about the prospective opportunities it can bring to the fore.
The bottom line is that accounting firms have two options: either ride the AI wave to boost productivity and performance or choose to stay deceptive and watch competitors with a better grasp on AI grow more.
Generative AI in a Nutshell
Generative AI is a rule-based AI In action. It is the advanced version of AI that interacts and generates new workflows rather than classifying existing content. The best example in this context is ChatGPT which uses extensive large language models. The real differentiator with GPT is its Transformer Architecture.
A large language model is an artificial neural network with billions or trillions of parameters, processing numerical representations of text to predict and generate language. It converts input text to numbers, processes them, and converts the result back to text, enabling continuous text or workflow generation for processes with better context.
Generative AI is upending the accounting landscape as well. Many firms are using it to create automated financial reports, data-driven insights, personalized advisory services, and efficiency enhancements.
Accounting Firms are Marred by Skill Shortage
| Total Employees | Number of Businesses |
| 1 – 4 employees | 12,956,533 |
| 5 – 9 employees | 1,940,834 |
Counts by Total Employees on Payroll (Updated 2023-03-30)
According to a report by the North American Industry Classification System (NAICS), nearly 12,956,533 organizations have only 1-4 employees on payroll. Most organizations in the US work with a limited workforce, and they prefer to outsource their accounting operations. This has inversely increased the demand for accountants, and there are nearly 1,449,800 to 1,538,400 positions. Accounting firms now have to do more filing and bookkeeping with less staff.
Generative AI can Embolden the Accounting Practice: How it is Addressing the Current World Accounting Needs
Smarter accounting firms have found the answer to their most pressing problems in Generative AI. They are automating account processes like accounts receivable and accounts payable and building momentum with new AI-led capabilities.
AI is helping them to generate responses for clients in natural language, streamline communication, eliminate repetitive tasks, and smack down performance-sapping errors.
Specifically designed natural language digital assistants simplify operations like purchase order matching and cash-flow forecasting. Their data is now logically orchestrated for managing streams of accounting workflows, improving invoicing with a human reviewer to approve them for validation. The best part is that their AI assistants interact with accounting teams, empowering them to close books more quickly. AI has improved its ability to progress the accounting workflows with greater self-service.
Accounting is Shifting from Rules to Confident Decision Making: AI is more Real Time
Earlier accounting operations were kept in silos for efficiency. Specific accounting systems were built for only specific purposes where there was restricted data exchange and drag that slowed processes. However, Generative AI is running a bulldozer on archaic processes.
Generative AI is creating seismic shifts to transcend rule-based accounting systems into intelligent and decision-based accounting systems. It transforms unstructured and siloed data into usable information for better data-informed activities. Here are some rock-solid use cases of Generative AI in the modern-day accounting world:
- Invoice Data Orchestration: Generative AI amplifies Optical Character Recognition (OCR) engines to simplify invoice processing. It is pulling data from unstructured and multi-language invoices and giving it a relational context. It is now also able to read hand-written sections as-well. Intelligent workflows are flagging discrepancies for human review and summarizing reasons for rejection. In this way, it is preventing duplication of records and errors.
- Streamlining Invoice Processing: Next-level workflows are now available with Generative AI for line-level matching, Value-added Tax (VAT) coding, and approvals involved in tedious Purchase Order (PO)-based scenarios. AI is now supporting General Ledger (GL) coding and selecting the right approvers using historical data and NLP while reducing exceptions. On top of that, AI can now manage multi-currency transactions with adherence to exchange rates.
- Improving Helpdesks: Generative AI-driven bots and emails offer more accurate information retrieval by generating faster response time and a better understanding of inquiries. Human agents are better equipped with information to identify recurring issues and meet client’s expectations.
- Boost Master Data Validation & Risk Monitoring: Generative AI is accurately validating vendor information for due diligence, credit and tax deductions, and account checks. This unique ability is helping the accounting teams to flag risks and better manage vendor relations.
- Accurate Vendor Reconciliation and Reporting: Next-gen AI models seamlessly extract data from diversified vendor statement formats, including unstructured data, and make better use of them. They leverage the same data for automated reconciliation, providing narrations and offering enhanced forecasting.
Treading Carefully on the Path to Automation
Smarter accounting firms are successfully leveraging generative AI to open new revenue streams and enable deeper relationships with clients. Others must follow to stay relevant in the race. However, accounting firms should tread carefully on their path to reach.
The haphazard adoption of Generative AI can do more harm than good. Therefore, accounting firms should have the right approach for factoring Generative AI in a correct way into their processes and ensure that it is frictionless and compatible with existing systems.
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