The Role of Automation in Modern Accounting
The world is always changing. But in the last two years, that’s even more true. Since OpenAI launched ChatGPT, technological process has advanced more rapidly than ever before.
It seems like every company is implementing AI and traditional jobs have been affected. Teams of ten customer service agents can be reduced to one or two.
The field of accounting has also been affected. Automations have become significantly more prevalent. But what does this look like today? And how will this change in the (near) future?
Let’s dive in.
What Is Automation in the Context of Accounting?
Automation in accounting refers to the use of software to perform accounting tasks that previously required manual effort. This includes things like data entry and report writing. By automating these tasks, businesses can increase efficiency, reduce the likelihood of errors, and free up accountants to focus on more activities where they have more leverage, such as financial analysis and planning.
Automation helps improve consistency and accuracy in financial records, increases compliance with regulatory requirements, and often helps provide real-time insights that are crucial for decision-making.
In simple terms, it allows accountants to spend more of their time on their most valuable activities.
How Can Automation Be Applied to Accounting?
Before we move on, let’s establish that AI is mostly good at objective tasks. It doesn’t have an opinion, so it can’t give budgeting advice. But it can follow rules. This makes it perfect for other tasks, some of which we will take a look at below.
Processing Data
One of the most simple applications of automation in accounting is for data entry and transaction processing. Previously, accountants had to manually enter data from invoices, receipts, and other documents. AI automations can now extract data and input it directly into the accounting system. This saves time and reduces human error.
Reconciliation
Automated reconciliation is also getting impacted. Reconciliation means comparing financial records with bank statements to make sure they match. Automation software can automatically download bank statements and compare them with the internal records, pointing out any discrepancies for review.
Financial Reporting & Analysis
Automation tools can compile data from different sources and turn it into complete reports, such as balance sheets, income statements, and cash flow statements, with just a few clicks and a simple prompt. This makes decision-making more efficient..
Tax Compliance
Tax compliance is an aspect of accounting that is simplified through automation. Tax automation software can keep track of changing tax laws and regulations, making sure that the company remains compliant. It can also automate the preparation and filing of tax returns, reducing the risk of errors and penalties.
Auditing
AI auditing tools can conduct both internal and external audits by providing records of financial transactions. These tools can perform continuous auditing by constantly checking for compliance and anomalies in financial data, reducing the workload during formal audit periods.
Key Takeaways
Let’s recap:
Accounting automation uses software to do tasks like entering data and writing reports, making things faster and more accurate while letting accountants focus on more important stuff.
Automating data entry saves time and reduces errors.
Automated reconciliation can compare bank statements with internal records to identify discrepancies.
Automation can compile data into comprehensive financial reports like balance sheets and income statements.
Automated tax software ensures continuous compliance to changing tax laws.
AI auditing tools provide continuous checks on financial data.
With this information in mind, you can now start thinking about how to implement AI into your accounting activities.
