Impact of AI in accounting: What accountancy practices should know

Written by

Parth Shah

In a world where technology evolves at breakneck speed, accounting is no exception. Imagine a future where smart algorithms flawlessly handle mundane tasks like data entry and invoice processing, freeing up your time for strategic decision-making and client consultations.

This is the impact of AI in accounting – a revolution that’s not just on the horizon but is already transforming how accountants like yourself work, enhancing accuracy, efficiency, and insights like never before.

QuickBooks’ 2023 survey shows that 86% of accountants believe AI can help them become strategic growth partners for their clients.

Additionally, 76% agree that businesses partnered with accountants using AI are more likely to survive due to benefits like richer insights and accurate forecasting.

If you’re too keen to leverage AI to provide superior client service but don’t know how, this blog post is for you. Here, we’ll discuss the impact of AI in accounting, the challenges in adopting the technology, and how outsourcing can aid your accountancy practice.

The impact of big data and AI in accounting

1. Automated data entry and bookkeeping

By utilising AI-driven bookkeeping solutions, your practice can drastically reduce the time spent on manual data entry. This increases accuracy and frees your staff to focus on more high-value jobs, such as budgeting and forecasting.

For example, tools like Dext and Xero’s Hubdoc can automatically extract data from receipts and invoices, streamlining bookkeeping.

2. Enhanced financial forecasting and budgeting

Big data analytics enables you to create more accurate and detailed financial forecasts and budgets. AI algorithms analyse historical data to identify trends and patterns humans might miss. This is useful for helping clients plan for future growth or navigate economic uncertainties. Tools like Futrli and Float use AI to enhance your forecasting capabilities.

3. Fraud detection and risk management

AI and big data have improved mainly the detection of fraudulent activities and the management of financial risks. Machine Learning (ML) algorithms can analyse large datasets to identify unusual patterns and anomalies that may indicate fraud.

They continuously learn and adapt to new fraud techniques, providing an ever-evolving defence mechanism. Tools like MindBridge AI Auditor use AI to detect anomalies and assess risk levels in financial transactions.

4. Advanced tax planning and compliance

Big data and AI streamline tax planning and compliance by analysing vast amounts of data. You can use these technologies to provide your clients with optimised tax strategies and ensure they comply with ever-changing tax laws. This reduces the risk of errors and penalties. Solutions like Avalara and Intuit’s ProConnect Tax Online use AI to simplify tax planning and compliance tasks.

5. Client advisory and strategic decision-making

AI-driven analytics provide deeper insights into client data, enabling you to offer more strategic advisory services. They can offer clients data-driven insights and recommendations that drive business growth and efficiency. Tools like Sage Intacct and Oracle NetSuite provide advanced analytics and reporting capabilities that enhance advisory services.

6. Fraud detection

Top-quality AI accounting software can detect irregularities or anomalies in financial data, which is vital for catching and preventing fraudulent activity and conducting internal audits much more smoothly.

Generative AI in accounting can even help design high-level strategies against fraud within the specific constraints of the client business’s resources. It can also design specific statistical models to detect anomalies in datasets based on the constraints you feed it with.

Challenges in adopting big data and AI into accounting workflows

1. Data security and privacy concerns

Adopting big data and AI involves handling vast amounts of sensitive financial information. Ensuring the security and privacy of this data is crucial, as any breach could lead to significant legal and financial repercussions. Therefore, you must invest in robust cybersecurity measures and comply with data protection regulations to safeguard client information.

2. High initial investment and implementation costs

The transition to big data and AI technologies requires substantial financial investment. This includes the cost of acquiring new software, hardware, and possibly even new infrastructure. Additionally, maintenance, updates, and support are ongoing costs. If you’re a small practice, these costs can be a significant barrier to adoption.

3. Lack of skilled personnel and training requirements

Successfully implementing and utilising big data and AI tools requires a workforce skilled in data analysis, ML, and AI technologies. Many accountancy practices may find that their current staff lacks these specialised skills, necessitating investment in training or hiring new employees with the requisite expertise.

4. Integration with existing systems and processes

Integrating big data and AI solutions with existing accounting systems and workflows can be challenging. Compatibility issues may arise, requiring significant customisation and potentially disrupting daily operations. You must carefully plan and manage the integration process to minimise disruptions.

5. Resistance to change from staff and clients

Adopting new technologies often meets with resistance from staff and clients accustomed to traditional methods. Your staff may fear job displacement or struggle to adapt to new tools, while clients may be wary of the security and reliability of AI-driven processes.

Effective change management strategies are essential to address these concerns and ensure a smooth transition.

How outsourcing accounting service providers help accountancy practices take advantage of big data and AI

1. Access to advanced technology and expertise

Outsourcing providers often invest heavily in the latest AI and big data technologies, which might be prohibitively expensive for individual practices. For example, they might utilise AI-driven software for automated data entry and real-time financial analysis.

By partnering with such a provider, you can access these sophisticated tools and the expertise to use them effectively without incurring high direct investment costs. This also allows you to offer high-value services like predictive financial modelling that you otherwise couldn’t.

2. Customised data analytics solutions

Outsourcing providers can develop and implement tailored data analytics solutions that address the unique needs of each accountancy practice.

For instance, a provider might create a customised dashboard integrating various data sources to provide real-time insights into a client’s financial health. An example could be a custom-built AI tool that helps forecast cash flow for manufacturing clients based on industry-specific data trends.

3. Scalable data management services

Outsourcing providers offer scalable solutions that can handle varying data volumes efficiently. For example, during tax season, you might experience a surge in data processing needs.

An outsourcing provider can scale up their resources to manage this increased workload seamlessly, ensuring you can operate smoothly without interruptions. This scalability is crucial for practices that experience seasonal fluctuations in their data management needs.

4. Enhanced compliance and risk management

Outsourcing providers stay abreast of the latest regulatory changes and use AI to monitor compliance continuously.

For example, they might employ ML algorithms to analyse transaction data to comply with the latest tax regulations, automatically flagging discrepancies or potential issues.

This proactive approach helps ensure your clients comply with all regulatory requirements, reducing the risk of audits and penalties. A specific example could be an AI system that monitors VAT compliance in real time, ensuring all transactions adhere to the latest HMRC guidelines.

5. Integration support and seamless workflow

Outsourcing providers assist with integrating big data and AI tools into existing accounting systems, ensuring a smooth transition. For example, they might help you integrate an AI-powered expense tracking tool with your existing accounting software.

This support minimises disruptions and ensures that the new tools enhance, rather than hinder, productivity. They can help you quickly adapt to new technologies and maintain efficient workflows by providing hands-on support and training during the integration phase.

Over to you

AI and big data technologies can automate several tasks in accounting processes, perform analysis, and derive hidden insights for practice growth. You can choose a dependable outsourcing provider to outsource their clients’ accounting tasks using AI.

But the key here lies in choosing the right provider to cater to your business needs and requirements. When choosing an outsourcing firm, security, compliance, costs, and integrations must be considered.

With the best outsourcing provider like Stellaripe, you can scale and dominate their market with accurate insights. Book a free consultation with our team to find out more about outsourcing.

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