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AI in finance detects AP invoice processing errors, automatically codes to GL accounts, and helps your business analyze spend.
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Today’s high-growth companies have the endless task of ensuring payments are sent quickly and efficiently. If their workflow process falls at the waistline, competitors have the advantage.
To keep up, the most successful companies use artificial intelligence to streamline their end-to-end finance workflow and, stay ahead of the competition.
But the question looms: How do these successful finance teams leverage AI?
In the eBook The Ultimate Guide to Using Generative AI in Finance, you’ll discover how to utilize AI so you can advance growth and scaling. Discover how to use AI for:
– Finance analysis and reporting
– Fraud detection
– Expense management
– Taxes and compliance
– Financial planning
AI in accounting is the use of artificial intelligence technologies like Machine Learning (ML), Natural Language Processing (NLP), and automation to handle repetitive accounting tasks, detect errors and fraud, and provide data-driven insights for decision-making.
AI in accounting is gaining popularity because it improves productivity and drives cost savings. By reducing hiring needs, enabling better analysis, and automating stronger financial controls, it plays a crucial role in modern finance.
This article focuses on artificial intelligence accounting uses and AI tools for accounting, including the best AI accounting software.
The Different Types of AI in Accounting
AI isn’t a single tool, but rather a collection of technologies that solve different problems in accounting. From algorithms that detect fraud to tools that read invoices, each type of AI brings unique strengths.
Understanding these categories helps finance leaders see which technologies are already shaping workflows today, and which are paving the way for more strategic, automated accounting in the future.
Types of AI (artificial intelligence) that can be applied to accounting include:
- Machine learning (ML): Algorithms that learn from financial data over time to improve accuracy and detect patterns.
- Natural language processing (NLP): Technology that helps AI understand and generate human language, useful for reports, chatbots, and data queries.
- ChatGPT and other large language models (LLMs): Generative AI tools that can draft reports, answer finance questions, and assist with coding or analysis.
- Computer vision: AI that can “see” and interpret images, such as reading scanned receipts or invoices.
- Expert systems for decision-making: Rule-based AI that mimics human judgment to support financial and compliance decisions.
- Robotics: Physical or software bots (RPA) that handle repetitive, rules-based tasks like data entry or transaction matching.
Use of AI Technologies as an Accounting Team Leverage
McKinsey & Company, a top-tier management consulting firm, believes that AI and related technologies can be leveraged 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 in accounting include machine learning, AI agents, digital assistants, detecting pattern anomalies, natural language processing queries, and other types of AI technology.
Besides using ChatGPT from OpenAI and other forms of artificial intelligence/machine learning, applications of AI accounting, AI bookkeeping, and RPA (robotic process automation) (with bots for quickly processing repetitive tasks) include:
- Automated invoice processing and payables workflow
- Anomaly detection of outliers in data
- Topic research
- AI-based analytic business intelligence for decision-making
- Financial report trends analysis commentary
Benefits of AI in Accounting
Beyond applications, it’s important to understand the tangible advantages AI brings to accounting teams and organizations. AI accounting benefits include:
- Higher accuracy: AI enables error detection and reduces human errors, compared to performing manual tasks such as data entry and spreadsheet creation.
- Cost savings: Reducing staff time through efficiency and fewer hires, paying invoices on time to take advantage of early payment discounts, and improving spending analysis through informed decision-making result in lower costs.
- Faster close: Automating accounting tasks and performing instant payment reconciliation speeds the accounting close.
- Improved compliance: Automated tax and global regulatory compliance reduces penalties and helps ensure payments are made only to allowable payees.
- Better insights: AI in accounting detects unusual patterns, explains financial changes, and creates ad-hoc custom business intelligence reports through natural language queries.
Who’s Leading the Way in Using Accounting AI?
Businesses, public accounting firms, nonprofits, and governmental entities, including U.S. government departments like GSA, are using accounting AI. Notably, AI technology is becoming embedded in the software that they use. Some are using the latest version of ChatGPT and other AI tools directly to accomplish specific tasks.
The accounting industry encompasses public accounting firms and accountants working as employees or independent contractors for businesses and organizations that are their clients.
Use of AI by CPA Firms
A Thomson Reuters Institute survey of accounting firms, tax professionals, and corporate tax departments in 2023 compiled these results:
Thomson Reuters found that the top-tier, Big 4 CPA firms (which include Deloitte, PwC, Ernst & Young (EY), and KPMG) are leading the way in AI adoption.
The largest CPA firms are using AI for:
- Predictive analytics
- AI-powered tools for auditing to detect anomalies and possible audit issues
- Automated tax compliance
- Client insights to understand their clients’ needs
CPA Firms Encourage Accounting Clients to Adopt AI
Through their recommendations, these CPA firms can influence a large number of clients to adopt artificial intelligence. Thomson Reuters shares some understanding of the use of generative AI by tax professionals:
The large-language technology behind ChatGPT and generative AI is developing rapidly, however, and many tax professionals can envision using the technology — or tools that have incorporated it — to assist them in their work. Saving time on research is the most commonly mentioned use-case, but respondents identified many other possible applications as well.
Thomson Reuters
Finance Automation Software with AI
Business and non-profit organization users of finance automation software, like AP automation, are using built-in accounting AI for invoice processing, expense management, fraud detection, and spotting anomalies. They are also using embedded ChatGPT and other AI technologies for automated general ledger account coding and as a virtual digital assistant for analytics queries.
Strengthen Accounting with AI-Driven Automation
Explore how Tipalti’s AI Assistant and AI Agents extend beyond invoice capture to approvals, tax, and real-time reporting.
Will AI Replace Accountants?
Public debate surrounding the use of AI in accounting seems to fall under two main camps:
- Camp One: fears complete accounting job replacement.
- Camp Two: views AI as primarily automating routine tasks, with accountants shifting to work that requires human judgment and decision-making.
Replacement Fears
As an executive or financial manager, be empathetic to your accounting team’s concerns about replacement, using leadership EQ (emotional intelligence). Find solutions through effective communication and change management, guidance in implementing system advancements with AI, and AI training.
Reality
It’s unlikely that AI will completely replace accountants in the coming years because AI currently lacks human skills such as:
- Judgment
- Comprehensive understanding of context
- Creativity
- Building the relationships required for effective communications
Humans are needed to review results, make corrections, handle exceptions, and ensure that cybersecurity risks are avoided to the extent possible. Consider AI as performing repetitive and routine tasks and analysis through pattern detection to save humans time and enable augmentation of their work achievements.
Future Skill Shifts
AI impacts traditional accounting jobs by moving the focus away from manual data entry and paper-based transaction processing. Instead, it enables accountants to take on higher-level, more strategic and analytical work that supports decision-making and drives better business results.
However, companies will hire fewer staff to handle more efficiently processed, routine tasks by using automation software for accounting workflows, such as invoice processing and making global payments.
What the World Economic Forum Says About AI and Jobs
Digital transformation specialists and business development professionals are seeing job growth, according to a May 2023 World Economic Forum (WEF) study on AI and jobs.
This WEF AI jobs study confirms, as ChatGPT predicts, that “jobs requiring human judgment and decision-making, complex and nuanced communications, and creativity and imagination” are still needed and won’t be replaced by AI. Accountants use these types of job skills, and, therefore, shouldn’t feel threatened by job loss due to replacement by artificial intelligence.
How AI Can Be Used in Accounting
AI can be used in accounting for:
- Invoice processing, expense management, and employee expense reports
- Data analysis
- Fraud detection
- Business intelligence and decision-making
- Pricing analysis
- Forecasting
- Financial, regulatory, and business research
- AI-assisted scenario generation for strategic planning
- Audits and regulatory compliance
- 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
- Approvals
- Payments
Automated Invoice Processing
With automation software, automated invoice processing workflows, including supplier onboarding and accounts payable and expense management, can be achieved electronically using AI technologies, including AI agents 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.
Examples of AI Invoice Processing and Analysis
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.
Data Analysis
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 the best results.
Business Intelligence and Decision-Making
AI creates real-time business intelligence through dashboards, embedded digital assistants like Tipalti’s AI Assistant, which uses embedded ChatGPT and other AI tools, 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.
AI Enhances Accounting, Global Payments, and Business Spend Analysis
AI is transforming accounting by reducing manual work, tightening financial controls, and creating real-time visibility into spend. With solutions like Tipalti Finance AI, teams can automate repetitive processes and unlock more time for strategic decision-making.
Pricing Analysis
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.
Forecasting
AI includes the ability to perform predictive analytics, which helps prepare 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 enhance the formatting of predictions or projections to align with your specific requirements. However, it’s best to utilize AI-driven financial forecasting software for enhanced 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.
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 ones are realistic and feasible.
AI-driven brainstorming through machine learning applications in finance is achieved through access to vast amounts of training data and continuous improvement. AI can enhance the results in creating scenarios and widen the range of possible business opportunities.
AI in Regulatory Compliance and Audit Readiness
AI automatically performs tax compliance and global regulatory compliance in AP automation when onboarding and validating suppliers and before making domestic and international payments. AI can be used to automatically prepare audit schedules from financial data related to financial reporting, analyze financial information, and detect data anomalies that require investigation 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.
Business Communications
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.
Emerging Applications of AI in Accounting
Emerging AI applications for accounting include utilizing AI agents to automate routine workflows, such as automated invoice capture and other invoice processing tasks.
An AI Assistant can help humans discover business insights and utilize pattern anomaly detection in an analysis report, facilitating human review and decision-making for cost reduction.
AI will also help accountants become more productive by performing inbox management assistance.
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 integrates with your ERP accounting system.
Automation is finance’s greatest asset when using AI. Automation software, which replaces manual processes and paper-based systems with touchless processing, is a type of digital transformation requiring employee support to produce the best results.
Tipalti Finance AI Software
Tipalti AI Assistant is designed to elevate accounting as a whole by embedding AI across your financial operations, from accounts payable and invoice automation to tax compliance, reporting, and spend analysis. At its core are Tipalti AI Agents and the conversational Tipalti AI Assistant, which together handle routine tasks, surface real-time insights, and strengthen financial controls.
End-to-end accounts payable automation is one of the most impactful use cases. Tipalti integrates seamlessly with ERP and accounting systems, using AI/ML to capture invoice data with OCR, validate suppliers through TIN checks, and flag anomalies that could indicate fraud. By automating workflows and exceptions with AI Agents, AP becomes a streamlined, error-resistant process that feeds cleaner data into the broader accounting function.
Tipalti AI Agents
Tipalti Accounts Payable deploys AI Agents for routine, autonomous tasks in invoice processing. Examples of Tipalti’s AI Agents for AP automation are Invoice Capture Agent, PO-Matching Agent, Bill Approvers Agent, and Reporting Agent.
Tipalti’s AI Agents perform processes for:
- Invoice capture and verification
- Approvals workflow
- Fraud detection
- Tax compliance
- Reporting
Tipalti embeds ChatGPT and other AI/machine learning technologies in its software. The solutions include advanced automated general ledger account coding of supplier invoices in accounts payable, and an AI Assistant. Tipalti AI adds real-time business intelligence for discovering and analyzing data trends and anomalies to help businesses and nonprofits manage spend, improving their bottom-line results and cash flow.
For example, Tipalti AI Assistant utilizes your natural language prompts to generate real-time, custom reports that help you analyze your business spend more effectively.
What the Future Holds for AI’s Role in Accounting
According to the Global Banking & Finance Review:
The Artificial Intelligence in accounting market is currently predicted to grow at a compound growth rate of approximately 45% and is expected to reach approximately $16 billion by 2028.
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 advancements in technology, and recognized use cases. AI analyzes historical data and helps generate additional information and data for making more informed decisions.
Adopting AI Accounting Software
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.
The best CFOs, controllers, and accounting managers quickly adopt AI in accounting. The financial management team will be contributors to business profitability and analytic intelligence for decision-making, instead of being labeled as old-school bean counters. They’ll be rewarded with career upward mobility and new growth opportunities.
Tipalti’s AI-Powered AP: The Fastest Path to Better Accounting
By automating invoice capture, approvals, and compliance, Tipalti Finance AI improves AP accuracy and speed — which strengthens the close and empowers smarter accounting decisions.
