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When you define AI accounting, you may be thinking about using ChatGPT in accounting or ChatGPT in finance. But AI accounting is broader, including more types of artificial intelligence/machine learning applications, not just natural language processing (NLP).
Applications of AI accounting, AI bookkeeping, and RPA (robotic process automation) (with bots for repetitive tasks) include:
- Automated invoice processing and payables workflow
- Anomaly detection in data
- Topic research
- AI-based analytic business intelligence for decision-making
This article focuses on artificial intelligence accounting uses and AI tools for accounting, including the best AI accounting software.
Understanding AI in Accounting
Types of AI (artificial intelligence) that can be applied to accounting include:
- Machine learning
- Natural language processing
- ChatGPT and other large language models
- Computer vision
- image detection, recognition, and classification
- Expert systems for decision-making
McKinsey & Company, a top-tier management consulting firm, believes that AI and related technologies can be used to significantly reduce G&A costs and save time for business support functions, including the finance department. See their Insights in “How bots, algorithms, and artificial intelligence are reshaping the future of corporate support functions.”
Business support function improvement can be achieved by using AI accounting software with automation. AI applications include machine learning in accounting and other types of AI technology.
How Can AI Be Used in Accounting?
AI can be used in accounting for:
- Invoice processing and expense management
- Data analysis
- Business intelligence and decision-making
- Pricing analysis
- Financial, regulatory, and business research
- AI-assisted scenario generation for strategic planning
- Business communications
Invoice Processing and Expense Management
Invoice processing applies to both accounts receivable for customer invoices and accounts payable for vendor invoices.
In payables, invoice processing includes the entire process from:
- Receiving supplier invoices
- for expenses, fixed assets, and inventory items
- Matching invoices with purchase orders and receiving data
- Invoice verification and supplier validation
- Account coding
With automation software, automated invoice processing workflows, including supplier onboarding and accounts payable and expense management can be achieved electronically using AI technologies and RPA. Automation software streamlines and eliminates time-consuming paper document handling and manual data entry. We explain how to use artificial intelligence in accounts payable in more detail in another guide.
AI /machine learning (ML) is used to capture invoice data headings and line items electronically with OCR scanning. NLP technology like the generative AI tool, ChatGPT, assists your business in achieving enhanced automated chart of accounts coding accuracy. AI can also detect fraud and errors.
AI-based payment status notifications and other communications can be shared with suppliers and vendors through the supplier portal and by email. AI can also generate automated payment reconciliations in real-time.
Besides AI-enhanced coding in invoice processing, AI-based data analysis and business intelligence can help your company achieve better expense management and reduce the risk of human errors.
AI data analysis and financial analysis include analyzing financial statements and revenue and expense trends for anomalies and commentary. AI can help your company analyze its spend management and identify opportunities for cost savings.
The smart shop floor helps manufacturing and cost accounting identify opportunities for improving operational efficiency and reducing costs from rework and scrap. For example, ERP systems can be connected with IoT sensors to create real-time notifications of production problems and machine maintenance requirements. AI and IoT are increasingly used in combination for best results.
Business Intelligence and Decision-Making
AI creates real-time business intelligence through dashboards, embedded ChatGPT digital assistants like Tipalti’s Ask Pi, and expert systems that can be used to make routine decisions or help with decision support in more significant areas requiring financial management or CEO and Board of Directors decisions.
How can your business improve payables intelligence and processes with AI accounting?
Read about “AI and Machine Learning for Accounts Payable and Finance Automation” to learn how your growing business can gain AI accounting advantages.
Use efficient AP automation software with self-service supplier onboarding, validation, invoice processing, global payment processes, and automated payment reconciliation, for global regulatory and tax compliance and reduced fraud risk and errors.
Accounting and sales & marketing functions play a role in determining pricing adequacy. For online sellers like Amazon, AI can create dynamic pricing on a website that varies the price depending on the customer demand for an item at a point in time. AI can also perform automated pricing analysis for products not subject to dynamic pricing changes.
AI includes the ability to perform predictive analytics, useful for preparing financial forecasts and cash flow forecasts.
Computer vision, a type of AI, can be used to count cars in retail parking lots like Walmart to help generate revenue forecasts for financial planning models. ChatGPT capabilities can improve the formatting of forecasts to align with your specifications. But it’s best to use AI-driven financial forecasting software for efficiency.
Financial, Regulatory, and Business Research
AI can assist your company with research related to taxation, accounting standards, global regulations, and economic, industry, and business research. If you’re using ChatGPT, you’ll need to input information through a prompt using PDF or other types of data files to close the gap between ChatGPT’s 2021 ending test data date and the current year.
Tipalti uses AI technology to automate global regulatory compliance in its AP automation and global payments software.
AI-assisted Scenario Generation for Strategic Planning
AI-assisted scenario generation is one AI finance application that can help you contribute meaningfully to the strategic business plan, making other strategic decisions, and your company’s financial performance. With these AI-generated scenarios, you’ll need to use your business judgment to determine which of these scenarios are realistic and feasible. AI brainstorming through machine learning applications in finance is achieved through access to vast amounts of its training information and continuous improvement. AI can enhance the results in creating scenarios and widen the range of possible business opportunities.
AI can be used for automatically preparing audit schedules from financial data related to financial reporting, analyzing financial information, and detecting data anomalies to be investigated by CPA firm auditors. In the accounting profession, AI can also be used by auditors at public accounting firms and by corporate internal auditors to help prepare reports.
The corporate accounting and finance team can use AI for more accounting tasks, including planning meetings, creating agendas, and writing emails and reports. You can use AI to edit the initial results and apply human skills to fact-check and refine business communications.
Will AI Impact Traditional Accounting Jobs?
AI impacts traditional accounting jobs by shifting the focus from manual data entry and paper-based transaction processing to more strategic work that contributes to improved business results. Companies will hire less staff to handle routine tasks by using automation software for accounting workflows like invoice processing and making global payments.
How to Embrace AI in Your Accounting Processes
The best way to embrace the use of AI in your accounting processes is to understand the multitude of potential AI applications and how AI can contribute to business profitability. Rather than spending a lot of time wrangling with ChatGPT chatbots or data science models in Python or R language on your own, consider using modern software that embeds AI technology. Whether you have newer cloud accounting systems or legacy on-premises software in your company, use modern cloud-based add-on software products with integration to your ERP software system.
Software with AI and ML Capabilities
Software with artificial intelligence (AI) / machine learning (ML) capabilities includes AP and accounting automation software and automated purchase order management software for purchase order preparation and processing that integrate with your ERP accounting system.
For example, end-to-end Tipalti AP automation software uses AI/ML to digitally capture invoice data fields with headings and line items using OCR scanning technology. Tipalti validates suppliers with TIN numbers and uses AI-driven processes to detect fraudulent activities.
Tipalti automation software for financial processes incorporates robotic process automation (RPA) technology, applying thousands of rules or machine learning algorithms for identifying invoice processing exceptions. Tipalti embeds ChatGPT in its advanced automated account coding and Ask Pi digital assistant. Tipalti Pi adds real-time business intelligence for discovering and analyzing data trends and anomalies.
What the Future Holds for AI’s Role in Accounting
AI’s role in the future of accounting and finance automation has already started gaining traction as accounting professionals and CFOs adopt new technology. AI accounting is growing in the number of AI tools, businesses adopting the technology, and recognized use cases. AI analyzes historical data and helps generate additional information and data for making more informed decisions.
More software applications are using several forms of artificial intelligence and machine learning in their AI system products, making AI use by accountants and financial management easier and quicker to access. The benefits of AI are plentiful when it’s used wisely. To learn how to optimize AI accounting, download our eBook, “The Human Impact of Digital Transformation in Your Finance Department.”