How AI in Accounting Addresses Pain Points and Inefficiencies for Finance Professionals

Accounting and finance departments are the backbone of any organization, responsible for managing cash flow, ensuring compliance, and providing financial insights. However, these departments often grapple with numerous challenges, from manual processes to data inaccuracies and security concerns. With massive amounts of financial information and documents to manage including POs, invoices, payments, and more, the “back office” function constantly deals with many process and workflow inefficiencies. Financial leaders are often faced with an important choice: evolve and adopt modern accounting best practices and technology or continue on with broken processes, disparate systems, and staff turnover.

Artificial Intelligence (AI) is emerging as a game-changer, offering new solutions for these historical pain points that go beyond traditional automation.

In a recent Controller’s Council article on 2024 trends to watch for, AI and automation technologies were at the top of the list. The organization, which provides resources for controllers and chief financial officers (CFOs), states that “automation has already been a major push for many organizations across the nation, and as business leaders face talent shortages and increased competition, these automated tools will become all the more vital for maintaining smooth corporate operations.”

In this article, we explore the biggest inefficiencies in accounting and finance and how AI can solve them.

The top pain points in accounting

Manual processes and inefficiencies: One of the most significant challenges in accounting is the reliance on manual processes. Tasks like data entry, invoice matching, and financial reporting often require manual work or intervention, making them time-consuming and prone to errors.

Data inaccuracies: Manual processes often lead to data inaccuracies, which can have a ripple effect across an organization. Incorrect data can result in financial losses, compliance issues, and damaged stakeholder relationships.

Security and compliance: Financial data is sensitive and requires the highest level of security. Traditional accounting systems are often vulnerable to fraud and cyber-attacks, putting the organization at risk.

Lack of real-time insights: In today's fast-paced business environment, real-time financial insights are crucial for making informed decisions. Traditional accounting systems often fail to provide real-time data, leading to missed business opportunities and inefficient cash flow management.

How AI in accounting solves common challenges

A recent Deloitte CFO Signals survey highlights a divide in business focus in the near future: Just over 50 percent of CFOs say CEOs are pushing for cost reduction, while over one-third note CEO emphasis is on strategic transformation, performance optimization, and boosting revenue.

According to a Ringover study, a striking 82 percent of employees in finance and insurance are considering job changes, highlighting growing stress in these departments, often worsened by inefficient processes. 

Artificial Intelligence is increasingly viewed as a viable solution, offering not just task automation but also game-changing predictive analytics. Goldman Sachs estimates AI could contribute nearly $7 trillion to global GDP, making its appeal hard to ignore.

AI can automate routine tasks, freeing up accountants to focus on more strategic activities. For example, AI-powered software can automatically match invoices with purchase orders, drastically reducing the time spent on this task, or surface early payment discount opportunities to increase the bottom line.

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A closer look at software for AI in accounting

AI-first platforms designed for the accounting function have been built specifically to reduce or eliminate the common pain points addressed above. Vic.ai is one such platform that goes beyond basic automation capabilities to drive autonomous accounting for invoice processing and bill pay. 

Autonomous accounting is when the software has enough data and intelligence to make highly accurate decisions on common processes to be able to run independently without manual intervention or data verification. The Vic.ai AI algorithms are trained on vast datasets, enabling them to handle tasks like GL coding and 2, 3, or 4-way PO matching.

Here are some specific ways that an AI-powered platform can benefit the accounting function:

Invoice processing: AI software can ingest, read, extract, and process invoice data, saving time and creating more accurate records. With faster processing, invoices can quickly be routed through workflows for approval and payment. And, because AI learns over time, common anomalies or variances within invoices help train the algorithm to adapt.

Enhancing data accuracy: AI algorithms are designed to learn from data, making them increasingly accurate over time. They can identify anomalies and errors in financial data, flagging them for review. This leads to more accurate financial statements and better decision-making.

Strengthening security and compliance: AI can also play a significant role in enhancing security. Machine learning algorithms can detect unusual patterns or anomalies in financial transactions, providing an additional layer of security against fraud and cyber-attacks.

Providing real-time insights: AI-powered analytics tools can sift through large volumes of financial data in real-time, providing actionable insights. These insights can help organizations identify cost-saving opportunities, optimize cash flow, and make data-driven decisions.

AI in enterprise finance: AI tools can analyze spending patterns, track budget compliance, and even forecast future financial trends. This level of insight is invaluable for CFOs and finance teams, enabling them to strategize effectively.

The ROI of implementing AI in accounting 

The benefits of implementing AI in accounting and finance are not just qualitative but also quantifiable. For Vic.ai specifically, the organizations that have adopted Vic.ai's autonomous finance platform for their accounting processes have seen a return on investment (ROI) within seven months. They also experience up to 99% accuracy in tasks performed by AI, surpassing human-level accuracy.

‍By automating manual tasks, enhancing data accuracy, strengthening security, and providing real-time insights, AI is revolutionizing the accounting landscape. And, as AI technology continues to evolve, its applications in accounting and finance are expected to grow exponentially. From predictive analytics to blockchain integration, the possibilities are potentially endless. Organizations that adopt AI now are likely to have a competitive edge, setting the stage for more efficient and effective accounting practices in the future.

This article originally published October 2023, and was updated March 2024.

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