Is getting to grips with AI on your to-do list this year?
With AI trends in accounting among the hottest topics in the industry, you might be planning to investigate how the technology can save time or improve efficiency. Or perhaps you want to try out an AI-driven tool – but you’re not quite sure where to begin.
Incorporating a new technology – particularly one that’s unfamiliar – into your day-to-day workflow can be a big change. Whether you’re feeling overwhelmed by the amount of tools out there or you’re unsure how to implement a specific solution, we’re here to help!
This article covers everything you need to know about using AI for bookkeeping in 2024, from the many ways in which AI can support the bookkeeping process, to choosing the right solution and then implementing it successfully.
What role does AI have to play in the bookkeeping process?
If you’re at the start of your journey with AI, you might be wondering exactly what role it has to play in the bookkeeping process. Why bring technology into the picture?
Ultimately, AI supports many aspects of the bookkeeping process by automating tasks that would otherwise involve a great deal of tedious, manual admin work. This saves bookkeepers a huge amount of time, freeing them up to work more strategically with clients and offer them valuable business advice. AI-driven automation also improves efficiency and reduces the risk of human error, helping bookkeepers to provide a standout service. In its 2024 AI business predictions, PwC stated that “the right AI choices will provide companies a significant edge”.
Although it might seem like a relatively new topic, AI and automation have been at the forefront of innovation in our industry for many years. However, even as the technology advances, AI bookkeeping tools are not designed to replace human thought or reasoning. They’re designed to support the work of those involved in the bookkeeping process, freeing them up to focus on more valuable tasks, and delivering the outputs they need more quickly. Think of using AI in bookkeeping as enlisting the help of a trustworthy, highly collaborative assistant.
How AI can be used for bookkeeping
So which bookkeeping tasks can AI help with? The answer is longer than you might expect. Here are just some aspects of the bookkeeping process that AI-driven tools and software can help to make more efficient and less time-consuming.
Data entry
AI tools powered by OCR (Optical Character Recognition) technology can take almost all of the manual labour out of data entry when it comes to recording invoices, expenses and bank transactions.
These tools recognise and extract text and data from images of receipts and other documents. The recognised characters are then converted into machine-readable text and the data is uploaded automatically into the software.
Some of these receipt-scanning tools even create accounting transactions from the data. Through integrations with leading accounting software, these transactions can then flow automatically into the business owner’s accounts.
For all of this to happen, all the accountant, bookkeeper or business owner has to do is take a photo of a receipt, invoice or bank statement.
Transaction categorisation
Some AI-driven tools suggest categories for accounting transactions. These solutions use machine learning algorithms to improve their suggestions based on users’ responses. As the suggestions become more accurate over time, business owners, accountants and bookkeepers gradually spend less time checking them. Before long, they can simply approve the suggested categorisations with the push of a button.
Invoice and expense management
AI tools with receipt capture and categorisation functionality save a huge amount of time when it comes to the often tedious task of managing invoices and expenses. Often available as mobile applications, many of these tools are incredibly easy for business owners to use. This allows them to stay on top of their financial record-keeping and handle some of the data entry associated with invoice and expense management – an area that has traditionally presented a significant burden on advisors’ time.
Bank reconciliation
By creating and categorising transactions automatically based on captured data, many AI-driven bookkeeping tools make the bank reconciliation process faster and more accurate, transforming a once time-consuming manual task into the work of moments.
Advisor/client collaboration
Many AI-driven bookkeeping tools foster greater collaboration between advisors and their clients by offering both parties access to accurate data that’s updated in real time. With access to the same set of figures, and the confidence that the numbers are correct and up-to-date, accountants and bookkeepers can enjoy far more productive conversations with their clients.
Financial reporting
AI can use the data that business owners, accountants and bookkeepers provide to generate financial reports like balance sheets, income statements and profit and loss (P&L) reports.
Cashflow forecasting
Some AI-powered tools can even help with cash flow forecasting, providing data-driven projections for a defined period of time in the future (e.g. the next 90 days).
Recurring admin tasks
Bookkeeping processes involve many other repetitive admin tasks like sending recurring invoices and overdue invoice reminders, and scheduling payments to suppliers.
AI can automate many of these tasks, freeing up business owners, accountants and bookkeepers to focus on more meaningful activities.
How to choose the right AI bookkeeping solution
With so many benefits to leverage from AI bookkeeping, you might be unsure where to start when it comes to choosing the right tool or solution. If you’re struggling to make a decision, you might find it helpful to consider the following questions:
1. What problem are you trying to solve?
In an interview with AccountingWeb, tech expert John Toon points out that accountants and bookkeepers shouldn’t feel the need to “put ‘AI’ into every part of their business”. Instead, his advice is to focus on the “biggest pain point or…. biggest priority”.
Remind yourself of the main problem you’re trying to solve with AI: are you most eager to win back some time, work more efficiently or reduce errors? Many solutions offer more than one benefit, but if you can be clear on what you want to achieve by using AI, you can evaluate your options more effectively.
2. How would the solution fit with your current ways of working?
When you research AI tools, aim to understand how each solution would work in practical terms and how well that would fit with the way you work. If you do a lot of bookkeeping tasks while you’re on the move, for example, a mobile app might be a better choice than desktop-only software.
3. How well would the solution fit into your current tech stack?
Another factor to consider is whether the tool you have in mind will ‘play nicely’ with the set of digital tools you’re already using (also known as your ‘tech stack’). Many AI tools integrate with other software to ensure they are as helpful as possible for users.
If you’re already using technology such as accounting software, it’s a good idea to check that any tool you introduce to your bookkeeping tech stack can integrate with it. Otherwise, you could find yourself doing some of the same work twice!
How to implement an AI bookkeeping tool successfully
Once you’ve chosen an AI solution to support your bookkeeping processes, the next step is to implement it successfully. While many of these tools are very easy to get up and running, taking the following steps can help to ensure that the solution is implemented successfully:
- Communication
Take a moment to consider who needs to know about your intention to implement your chosen AI bookkeeping tool. You may plan to use the solution to collaborate with other parties, for example, or you might be expecting other people to use the tool themselves.
Think carefully about who these stakeholders are and what they need to know about the solution. Let them know about the tool before you implement it, share all the information they need to know about it, and be prepared to answer any questions they might have.
2. Onboarding
Is there anything you’ll need to do from a technical perspective before you can start using the software? This might be the case if you have a lot of data to enter or client details to add. The provider of your tool should be able to help you get ready and support you with an onboarding process. Depending on the complexity of the solution, this might involve some form of training or one-to-one support.
3. Getting started: monitor, review and adapt
Once you’re up and running with the tool, pay close attention to how well it addresses the problem that you first wanted to solve. Perhaps there are other aspects of your workflow that you could adapt to help make the solution even more effective. Keep a close eye on how the first few months go as you adapt to the new tool and the impact it has on your bookkeeping process.
4. Staying up to date as the product evolves
Behind most AI-driven bookkeeping tools is an extremely busy product development team. It’s therefore highly likely that the tool you implement will evolve over time. To ensure you get as much value from it as you can, make a point of staying up to date with its features and functionality.
This needn’t mean a big investment of time. It could simply be a case of reading the provider’s product update emails or blog posts, or attending the occasional webinar. It’s also a good idea to bookmark the Help Centre on the company’s website (this is sometimes called the Knowledge Base). This means you’ll have ready access to the support documentation for any new features that are introduced.
Looking for an AI tool to eliminate data entry and make expense management easy?
If you’re searching for an AI tool to automate tedious bookkeeping tasks and make expense management a whole lot easier, look no further than Dext Prepare.
Powered by state-of-the-art AI, Dext Prepare uses OCR technology to extract data from images of receipts, invoices and bank statements. No data entry required: all you have to do is take a photo!
The tool then creates categorised accounting transactions that can flow seamlessly into accounting software platforms, thanks to integrations with leading providers like Xero, Sage and Quickbooks.
Ready to say goodbye to hours of manual data entry? Find out more about Dext Prepare.