Are your company’s accounting and finance teams using artificial intelligence (AI)? Recent surveys report mixed findings on the adoption of AI by businesses. While there are many potential benefits to using AI for accounting and finance tasks, it’s important to understand the limitations and risks of using this technology.
Survey results
Many large companies aren’t using AI company-wide yet, despite the hype surrounding it, according to a 2024 study commissioned by AI company Teradata and conducted by global market research firm NewtonX. Key findings from the study include:
· 40% of executives don’t trust their data to generate accurate AI outputs,
· 70% of executives say their organization’s AI strategy isn’t aligned with their business strategy, and
· Only 56% of executives believe they have a clear, set strategy for AI at their organizations.
In addition, AI deployment is more likely to happen at the department level, with only 12% of executives reporting they’ve fully deployed AI at their companies.
Survey respondents identified the following barriers to AI adoption:
· Workforce lacking the needed skills,
· Insufficient budgets to scale AI use cases,
· Difficulty measuring business impact,
· Insufficient technology infrastructure,
· Risks of data breaches and privacy violations, and
· Inadequate return on AI investment.
Another 2024 study by automation software company FloQast found that 38% of CFOs and 35% of accountants are optimistic about the future of AI in their departments. However, 22% of CFOs and 35% of accountants say they’re still learning how to best apply AI. While many respondents believe AI could help them to be more productive and simplify tasks, a quarter of both groups felt that the technology is likely to cause more problems than it solves.
The American Institute of Certified Public Accountants conducted a survey of accounting and finance professionals on AI adoption in 2019. It reported that only 11% of financial professionals were making use of AI at that time, and over one-third of respondents said they spent more time collecting data than analyzing it. Although accountants and CFOs have historically been hesitant about using AI, many believe it could help alleviate the shortage of skilled workers in these professions, especially as colleges report fewer students pursuing accounting degrees in recent years.
Benefits of AI adoption
Traditionally, accounting and finance departments have had to create and process significant paperwork, such as invoices, purchase orders and shipping receipts. Clerks manually enter those documents in computer systems and submit them for approval and payment.
With AI, software (not humans) recognizes, directs and exports data into a company’s financial system. AI can also be used to:
· Vet new suppliers and customers by checking credit scores,
· Set up new accounts in the accounting system,
· Track pricing among a variety of suppliers,
· Analyze expenses and expense reports,
· Facilitate eXtensible Business Reporting Language (XBRL) reporting requirements for public companies, and
· Simplify end-of-month or end-of-quarter closing.
Effective use of AI gives managers full access to real-time accounting data, allowing them to make better-informed decisions and, when necessary, take corrective actions. By automating routine transactional tasks, accountants and CFOs have more time to focus on strategic planning and growth opportunities. In addition, AI can help lower transactional costs and minimize potential errors that can happen when transactions are entered manually.
Smart audits
Additionally, AI can make financial statement audits more efficient and accurate. Instead of searching through file cabinets for paper records, auditors can follow a digital trail for each transaction in the accounting system. As a result, auditors are able to test 100% of a company’s financial transactions, rather than only a small sample.
AI also can make audit fieldwork easier on your company’s accounting and finance staff. With an electronic audit trail, in-house personnel may not be required to pull as many original source documents to satisfy auditors’ inquiries.
Determine a path forward
Increasingly, companies are exploring ways to use AI to streamline their operations and gather real-time data. Ignoring this trend could cause your organization to lose out on the potential benefits — and possibly put it at a competitive disadvantage. The accounting and finance departments are a good testing ground for AI applications, but determining which tasks to automate can be challenging. Plus, the AI software market has exploded in recent years, making it difficult for managers to evaluate the options. Contact the experts at Hood & Strong to discuss cost-effective, secure ways to incorporate AI into your accounting and financial operations.
