By Darren Cran, COO, AccountsIQ
The emergence of ChatGPT, Bard and other powerful, user-friendly AI models has sparked much debate about how the technology will make in-roads into financial management.
Major “magic circle” law firms in the UK, for example, already use AI applications for routine purposes such as document review. The Big Four accountancy firms are also outright leaders, using AI for predictive analytics, auditing, tax compliance and client insight. But the potential of AI is not limited to global professional services companies. Forward thinking accountancy practices and time-poor finance functions stand to benefit greatly.
Generative AI’s user-friendliness and widespread availability has helped change notions of digital technology in white-collar workplaces. ChatGPT can assist with budgeting and forecasting, offer guidance on financial analyses such as ratio, trend, or cashflow analysis. But purpose-built accounting software with AI capabilities will achieve much more. It already enables the creation of tables and charts, and facilitates interactions using a vast array of accounting terminologies and concepts. Beyond this, the technology is poised to automate tasks like book-keeping, invoicing, financial reporting, budgeting, and forecasting.
Much of this “AI functionality” is already available
Despite all the hype around AI, the reality is that a significant amount of its functionality that is beneficial to finance professionals is available to us. These are tools that are free from the potential risks associated with generative AI platforms, such as data breaches, cyber threats, and unresolved issues related to copyright and confidentiality.
Originally, ‘AI’ was synonymous with what we now know as machine learning (ML), primarily focused on rapid computational processing. Basic ML, which is rule-based, plays a crucial role in the financial sector, automating tasks like bank reconciliation to accommodate unexpected transactions and charges, thereby hastening process completion. ML technologies, like optical character recognition (OCR), facilitate the scanning and digital conversion of documents, streamlining time-consuming manual data entry, especially in critical functions like accounts payable.
AI, however, is distinct from ML and encompasses more than mere automation. It emulates human cognitive processes without requiring extensive user input. AI’s capabilities extend to extracting insights from images, speech recognition, natural language processing, and employing statistical techniques like regression analysis for financial management.
AI can help resolve morale and retention problems in the finance function
The adoption of AI in finance may be feared by some professionals but younger members of the profession regard it as inevitable. In research conducted by AccountsIQ among 502 finance professionals in the UK and Ireland, 82% of young professionals with no more than three years’ experience said tools like ChatGPT will have impact on their team within five years.
But for all finance professionals it will help remove some of the routine, time-consuming duties that most find irksome. The same research found 82% of senior staff and 75% of more junior colleagues spend up to a quarter of their time on data collection. Similar percentages spend a quarter of their time on reconciliation. A third of all professionals in the survey also said manual reporting is what most frustrates them about their job.
These are the kinds of tasks that AI will handle more rapidly and accurately, freeing finance professionals to provide greater value. The research found, for example that slightly more than half of all professionals (54%) said financial analysis and strategic planning is one of the ways they add greatest value. And virtually every person in the survey (96%) said their finance function makes errors – which AI will largely eliminate.
Far from being a threat to jobs, AI may actually help retain finance professionals. The research found very high levels of frustration relating to the lack of capabilities in current accounting software, and the inability to contribute more strategically. Stress levels were high and more than half of young professionals said they don’t intend staying in finance beyond ten years. They may change their minds if they no longer have to pore over spreadsheets or manually collate data.
The future of AI for finance is in the cloud
However, to harness AI advances seamlessly, organisations must transition to cloud computing. By adopting advanced cloud-based platforms, companies gain access to data visualisation and storytelling tools that simplify financial insights for a broader audience. These visualisations offer diverse perspectives on financial data, enhancing collaboration and positioning finance teams as central players within an organisation’s strategic processes. They make financial narratives more easily understandable, even for those without expertise in financial reporting.
Cloud-based platforms that integrate with third-party data applications and AI vendors enable finance teams to implement robotics for risk management and compliance. Larger organisations are already deploying such technologies, using bots to monitor specific trends and alerting relevant personnel to detection, improving organisational efficiency.
As we look beyond today’s AI applications we can foresee the use of voice-operated functionality to request and analyse intricate “What-if” scenarios. AI will revolutionise fraud detection and trend analysis, outperforming manual spreadsheet analysis and abolishing repetitive tasks like invoice settlements.
We need to keep our feet on the ground, however. Comprehensive AI solutions tailored to all financial functions are not yet readily available. Teams must explore and determine the most effective solutions, necessitating partnerships with the right technology providers. For growing businesses, AI will primarily automate processes, but larger organizations, with their voluminous data, stand to gain significantly. It is easy to see how time-consuming tasks like debt collection will become obsolete.
As AI continues to evolve, finance operations will see how the technology will make them more efficient, with digital processes replacing traditional methods. The integration of AI in finance may lead to some role restructuring, but professionals gain by having greater input into decision-making. Crucially, AI will afford them time for analysis and planning, adding significant strategic value and enhancing profitability.
