Before having an impact on bookkeeping services, artificial Intelligence (AI) has traveled a long way from being a concept in sci-fi movies and books to integrate into our daily life. You are taking the help of AI every time when you ask Alexa to play your favourite singer on Spotify or enquire the weather before venturing out.
Estimates suggest businesses will spend as much as $50.7 billion USD on AI by 2021. You can use AI to enhance transport systems, education, healthcare, or even manufacturing- almost every possible industry you can think of. It has also made an impact on accounting, promising to bring a transformation in the process and how accountants work.
Today, we are going to explore the ways AI has helped bookkeepers and entrepreneurs to enhance their decision-making.
How is Artificial Intelligence Helping Bookkeeping?
Accountants have been using technology for a long time to improve financial processes and decision-making. With the advent of cloud accounting, AI has taken on a transformational role enabling bookkeepers to be more efficient and act as an advisor by eliminating tedious processes and exhaustive analysis.
Here's how AI is transforming traditional bookkeeping:
1. Automate Workflow and Bookkeeping Back-office Tech
One of the most important goals of AI is to automate repetitive and tedious processes to make the bookkeeper's life easier.
Earlier, bookkeeper and other personnel would manually have to process each invoice, purchase order, delivery order, and other paper documents. Then, they would upload the information on computer systems and transmit to managers for approvals and payments.
But AI eliminates the need for manual processes by extracting, directing and exporting data into your accounting software and from there to auto-payment solutions such as Plooto. Accountant's don't need to deal with paper documents, and even the approval process is streamlined.
For example, ReceiptBank captures vital information from paper invoices using OCR (Optical Character Recognition) and transmits the data directly to accounting software like Xero. It also fetches invoices directly from popular vendors, such as cell phone carriers and electric utilities.
You don't need to enter any data manually which saves you significant time- almost 10 to 15 hours per week.
2. Improved Data Quality and Bookkeeping Accuracy
80% of companies that handle 500 or more payments in a month have 1% or higher payment error rates. For 44% of companies, the error rate is over 3%!
How does that translate in reality? Five hundred payments with an error rate of 3% results in 15 errors per month. Mistakes are expensive and can cost you $24,000 annually on payment resolution and 180 hours of extra work.
AI can process large volumes of data, both structured and unstructured along with more complex patterns. As machines do the whole work, the chances of errors and mistakes are reduced to a great extent.
Machines also don't feel tired or bored and work at full efficiency all the time. AI-based bookkeeping solutions reduce error and ensure accurate and high-quality data for actionable insights.
3. Quick and Improved Decision-Making
As a bookkeeper, my job is to ensure the books are accurate and up-to-date, use my technical knowledge and help businesses make better decisions. To do this though, bookkeepers need to rely on high-quality financial and non-financial information and analysis.
AI can help bookkeeping services on various levels by:
Providing accurate and relevant information they need to support their analysis.
Automating data analysis to generate valuable insights.
Using predictive analysis to leverage forecasts and budgeting.
Freeing up time enabling bookkeepers to add more value to clients and focus on problem-solving, advising and providing meaningful insights.
AI is also devoid of drawbacks like human biases which allow decisions to eliminate cognitive biases. With AI, accountants can make quick data-driven decisions that impact the bottom line of the company.
4. Compliance and Document Processing
AI can not only automate tedious tasks but also take the role of accountants for processing payrolls and matching bank transactions to its supporting documentation. Once, firms had to employ labor-intensive processes for tasks like these, today Xero suggests reconciliations with your bank statement lines based on previous transactions entered. Tasks now are completed in minutes compared to the hours taken before.
Bookkeeping services are not an end, but a mean to deliver useful advice for higher profitability and productivity. AI equips bookkeepers and entrepreneurs with accurate information and actionable insights so that they can make better decisions.
The best way to integrate AI-based accounting is to go for a bookkeeping services provider that automates and optimizes how your transactions are processed and financial reports are prepared. Databooks can automate time-consuming processes and provide useful information and insights to set you apart from the competition.