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AI is Revolutionising Accounting

Updated: Aug 10, 2023

Background

Technological advances have continued to reshape the global business landscape over the years.

Notably, the rapid progress in artificial intelligence (AI) technologies has fostered a significant transformation across various industries.

Accounting and bookkeeping are among the sectors at the forefront of embracing these technological changes.

Specifically, in Australia, a country marked by rigorous compliance regulations and escalating business complexities, AI serves as a revolutionary tool to transform traditional accounting and bookkeeping practices.


This article offers a comprehensive exploration of AI's impacts and implications on the Australian accounting and bookkeeping industry. The discussion will cover both the significant opportunities AI brings and the challenges it presents, providing an informed outlook on the future trajectory of the industry.


Artificial Intelligence (AI) in the Australian Accounting Landscape

AI encapsulates the ability of computer systems to emulate human intelligence, enabling them to accomplish tasks typically necessitating human intervention.


These tasks encompass a broad range, including:

  • decision-making

  • problem-solving

  • pattern recognition

  • and language understanding.

When applied to the realm of accounting and bookkeeping, AI's impact can be summarised

in three fundamental aspects:


1. Automation

2. Prediction

3. Decision-making.


1. AI and the Power of Automation

The most transformative benefit of AI in the accounting sector lies in automation. AI's power to automate routines. Repetitive tasks such as data entry and reconciliation traditionally conducted manually significantly improves efficiency and productivity.



Take the Australian software company MYOB as an example. It has successfully implemented AI to automate the processing of invoices. The company's AI system, aptly named 'MYOB Capture', eliminates the need for laborious manual data entry by capturing key invoice details and entering them directly into the accounting software.

MYOB AI Capture

This application of AI not only drastically reduces the potential for human error but also liberates accountants from time-consuming tasks, allowing them to focus on more strategic and high-value aspects of their work.




2. AI's Role in Predictive Analysis

AI's transformative power goes beyond automation. Its built-in capability to detect patterns within complex datasets enables predictive analysis. Based on a company's historical transactional data, AI can create predictive models of future cash flows, providing a vital tool for proactive financial planning and decision-making.


Consider the case of an Australian firm that uses AI for cash flow forecasting. The AI system analyses past transactional data to build a predictive model, informing the company's future financial planning. The predictive capabilities of AI go beyond the realms of pure accounting, extending into the strategic management of the business.


3. AI: A Decision-Making Tool

AI's role in strategic decision-making is yet another aspect of its transformative impact on accounting and bookkeeping. The ability of AI to provide actionable insights spans from identifying potential cost savings to flagging abnormal transactions for auditing purposes.


An Australian fintech company, Bigstone, exemplifies the power of AI in decision-making. Bigstone uses AI algorithms to analyse applicants' financial data, assessing their creditworthiness. This application of AI aids in the decision-making process, providing an effective risk management tool in loan provision.


 

AI's Impact on Accounting and Business Software Users

 

AI's influence stretches beyond reshaping the accounting industry's professional landscape.

It significantly impacts the user experience of accounting and business software.


User Experience Enhancement through AI

Xero Bank Feeds

AI's capacity to learn user habits and predict user needs contributes to a simplified, more intuitive software user interface. Consider Xero, a New Zealand-based software company catering to numerous Australian customers.


Xero utilises machine learning, a subset of AI, to categorise bank transactions. As the system learns from the user's categorisation habits, it begins to predict categories for future transactions, improving the efficiency and user experience over time.



AI in Financial Management

Quickbooks AI

AI has a profound impact on financial management by enabling real-time reporting and financial analysis. The integration of AI in accounting software provides business owners with immediate insights into their financial health, allowing for timely and informed decision-making.


An Australian company could use AI-powered tools like QuickBooks Assistant to get instant answers to their financial queries and understand their business's performance metrics. With AI, complex financial data can be transformed into actionable insights, enabling business owners to make more strategic decisions.


AI in Risk Management

AI plays a vital role in risk management by detecting potential financial fraud. By identifying anomalies in transaction data, AI systems enhance financial security. Furthermore, AI can be utilised to ensure regulatory compliance. The Australian AI start-up Checkbox uses AI to navigate the intricate world of regulatory compliance, translating regulations into digital rules that can be easily understood and applied.


Spreadsheets

Excel AI

I'd doubt there would be any professional accountant or bookkeeper who wouldn't use spreadsheets in their day to day work. The two dominant providers, Excel and Google Sheets, already have inherent AI capabilities (see our blog article about Excel's) and are progressively adding more - for example Microsoft's co-pilot. Third party, discrete AI software, such as ChatGPT can already vastly improve a user's experience and productivity.


Here are some of the ways it can help you:

  • understanding and using formulas and functions

  • performing data analysis

  • formatting and customization

  • troubleshooting errors

  • creating macros

  • exploring advanced techniques.



 

Challenges and Future of AI in Accounting and Bookkeeping

 

Data privacy and security are paramount concerns.

AI systems handle vast volumes of sensitive data, and robust security measures are essential to protect this information.

While AI offers tremendous potential, it also introduces certain challenges.

Job displacement due to automation is another significant challenge.

AI Jobs Threat

Professionals in the industry need to adjust their roles from routine tasks to more strategic ones, requiring advanced skills such as data analysis, critical thinking, and strategic decision-making.


As we look towards the future, we foresee an increased integration of AI in the Australian accounting and bookkeeping industry. Advanced AI-powered software and tools are set to make the accounting process more efficient, accurate, and data-driven. To keep pace with these changes, the industry must invest in AI-related training and education.



Final Thoughts

Artificial Intelligence is driving a significant shift in the Australian accounting and bookkeeping industry. It is ushering in a new era marked by automation, enhanced predictive analysis, and improved decision-making.


Furthermore, it is transforming the user experience for accounting and business software users, making financial management more accessible and efficient.


As we move forward, it is crucial to leverage AI's benefits and prepare for its challenges. The industry must adapt and evolve to harness the potential of AI effectively. The future of the Australian accounting and bookkeeping industry is firmly intertwined with AI-assisted growth, efficiency, and enhanced financial management, signalling an exciting and transformative era ahead.


The power of AI lies in its capacity to revolutionise the industry, and the journey has just begun.


 

Philip Seigel CPA FFIN

Comdex Training News and Blog 2023

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