How AI is Transforming Accounting in 2023
Accounting is no different, and there are now many ways that AI implementation has changed how it works for both employees and users.
A 2023 survey by US tax firm KPMG found that 65 per cent of respondents already used some form of AI to carry out financial reporting, and this figure will only increase over time.
Despite the fear around it replacing roles altogether, the practical implications of AI are the same as other types of software: it’s a tool to make the process easier. Here, we’ll take you through how you can make the most of AI as a tool for everyday tasks and ask whether it can really replace an accountant.
Making use of automation
Automation is the name of the game when it comes to AI, and accounting is no different. AI is now used to make processes simpler, with data entry and invoicing software allowing you to automatically generate invoices, emails and reports, reducing the time spent on routine, everyday tasks.
Features such as Sage’s CoPilot and AP Automation automatically extract data from documents like invoices, receipts and bank statements and identify errors or patterns, as well as generating reports.
Fraud detection
AI-powered algorithms have improved fraud detection for accounting in a few key ways. With real-time monitoring, AI tools keep track of transactions and can automatically flag any irregularities it detects, offering more oversight than doing it manually. AI tools can easily spot patterns such as duplicate payments, unusually frequent transactions, and payments from unknown vendors, and then alert you to potential irregularities that might otherwise only be discovered when you conduct an audit.
As well as improving accuracy and accountability, the amount a business could save in eliminating fraud makes algorithms one of the most common uses of AI in accounting. Payroll and accounting platforms now use AI to scan bank statements, receipts, and payment processors to monitor payments across multiple layers.
Making tax simple
Tax is one of the most time-consuming and important aspects of accounting, and AI can help here too. With automatic tax integration, payroll and accounting software removes a lot of the busywork and human error associated with tax reporting.
Payroll software now automatically calculates VAT, income tax, and other types of levies based on UK rates. This is tailored to your business and its accounting patterns, cutting the time it would normally take to report tax.
AI-assisted tax reporting can even highlight tax-saving opportunities (such as capital allowances or R&D tax credits) when generating reports, allowing you to save money that you might have missed in the past. Plus, if your business deals with other countries, AI tools can help with any complexities that arise there, including automatic currency conversions and compliance with EU/international regulations.
Keeping compliant when reporting tax is such an important part of running a business, and AI is a handy tool on that front, acting as a secondary check before you submit any reports.
Chatbots and virtual assistants
AI chatbots can answer everyday queries about functionality and accounting processes to help you perform tasks more quickly.
For example, Sage’s in-platform assistant can create an invoice with a simple command, run you through the steps of configuring a payroll or troubleshoot a VAT submission. You can also set this up to give you reminders and alerts about upcoming tax deadlines or suspicious transactions.
This is ideal for users who might not be tech-savvy or are just beginning in the world of accounting, providing plan language and easy-to-follow steps for everyday tasks. But is equally useful for more experienced users who just want to be more efficient.
Could AI replace your accountant?
The question on everyone’s lips is: will AI replace your job? As an accountant or HR manager in charge of payroll, there’s no real need to be worried. AI is a long way from being able to fully replace a role, especially one that’s as important as accounting.
Like in other types of roles, AI is currently best used as a tool that makes accounting and payroll easier and users more productive, as well as decreasing the likelihood of mistakes. Remember: AI cannot yet replicate human decision-making, but understanding what it can do will make your accounting experience seamless.
See also:
8 Accounting Software Platforms for Making Tax Digital – Mariah Tompkins scrutinises accounting software options that small businesses can use for their digital VAT and tax returns.