Spreadsheets were arguably the killer app for personal computers, and accounting software is commonly used. However, that hasn’t changed day to day operations of businesses or the lives of individuals. We’ve simply shifted from written ledgers to digital ones, and accounting professionals review reports that haven’t changed much beyond being computer generated. However, Big Data, AI and other technologies are poised to radically alter the financial world. Let’s look at how Big Data and artificial intelligence are set to transform accounting and finance.
Robo-Advisors
We’re starting to see more and more robo-advisors popping up nowadays, and people are slowly getting used to them. These robo-advisors can give clients a quick answer regarding the impact of upping their retirement contributions another one percent or whether they should consider diversifying their investments.
And, they can aid accounting professionals, too. A robo-advisor may flag suspected mistakes in the records for instance, identify unusual patterns for audit or provide deeper insight into a customer’s behavior. All of this could come in handy for accountants. This will allow accounting professionals to handle more clients and provide more value to them.
They’ll then be able to advise people on how to adjust their spending or alter investing portfolios instead of crunching the numbers. Robo-advisors can also provide basic advice to clients, giving the masses vetted financial advice without the cost of a human financial advisor. The chatbots can handle common customer questions, freeing up customer support staff for more complex problems.
The Productivity Tools Powered by AI
Artificial intelligence powered invoice management systems already exist and are poised to change accounts receivable forever. They use digital workflows to streamline the process of generating invoices and tracking payments.
The AI behind them can learn which accounting codes are most appropriate for each invoice. Supplier onboarding can be done almost automatically via AI. The supplier’s credit score or tax information is vetted, and if approved, the supplier is added to the system. No human involvement is necessary.
APIs are able to interface with each other, dramatically reducing the amount of paper that needs to be generated and managed. Let the robot find the cheapest supplier while your staff address issues automated systems can’t resolve. Artificial intelligence can read receipts, review expenses relative to company policy and approve most of them. Managers are only involved when the AI notifies them of a possible infraction.
The monthly and quarterly close process is both faster and more accurate. Then, your business can shift from consolidating and reconciling records to using that information to craft better business strategies.
The Merger of IT and Accounting
Only three percent of an organization’s data meets minimal data quality standards. Studies suggest half of all data records have at least one major error. Yet, financial and accounting professionals are increasingly working entirely off digital data. This means CPAs have to set standards for data quality and manage business policies meant to maximize it in addition to meeting accounting standards. Data security and privacy regulations are also the purview of financial professionals, because of the digitization of financial data.
Financial professionals who can automate various business processes will be able to leverage automation and serve many more clients effectively at a lower overall cost. The ability to mine and make use of masses of data allows financial professionals to provide greater insight than out of the box reports.
Professionals Forced to Move Up the Food Chain
As AI takes over the menial tasks like totaling up expenses and checking spending against an established budget, financial professionals must find new roles to fill if they don’t want to lose their jobs. Because AI is taking over the menial tasks, human staff needs to refine their skills. This may mean learning how to use AI capabilities to improve their own productivity or moving into roles AI cannot fill.
One great thing is that students can now get an online accounting MBA that is up-to-date on Big Data and AI. Getting their MBA online allows them to learn the regulatory and reporting requirements that accounting and finance firms must meet. They’ll learn not only generally accepted accounting principles but also the more advanced skills like budgeting and performance evaluation needed to make use of data.
This allows them to move into financial planning, risk management, tax planning and other higher-skill positions. And, they must do so since bookkeeping, accounts payable and entry level tax accounting are likely to become automated. Finance professionals will want to be able to do more than report past performance relative to key performance indicators and give actionable advice to improve performance.
Auditing and Auditability
Digitalization of the financial audit process dramatically increases its security, because it automatically tracks who accesses what data and when. You don’t have to search through old paper files, because you can quickly search through digital files instead. The fact that all of the information is saved digitally allows for 100 percent financial auditing. This improves the efficiency and accuracy of audits over the traditional samples that were audited.
Machines to Work with Human, not Against Them
At the end of the day, machines will have the ability to complement human intelligence and will work best in conjunction with human input. While bank reconciliations could be better handled by machines, there is still much need for emotional intelligence that only humans can provide.
Machine learning could be used for advanced analysis, while humans can use this flow of data to be better advisors and tailor financial services and solutions to clients based on certain intangibles. If anything, the role of humans will be even greater, as there will always be need for people who can analyze this data and apply them to human needs.
Conclusion
Machines have long taken care of the monotonous, repetitive tasks and are now starting to be implemented for more complex operations. Artificial intelligence and Big Data are allowing them to change the way accounting and financial work is done, and we can expect them to start taking a larger role in the future.