machine learning

Why Machine Learning will Change Accounting Software in 2018

The supercomputer is no longer a thing of fiction—it’s here.  And odds are, you interact with one on a daily basis. 

Companies like Netflix and Spotify use machine learning to track your history and make suggestions. 32% of U.S. households have a smart assistant like Alexa who functions using AI software (and it’s estimated that by 2019, that percentage will near 50%).

Machine learning has seen real applications in software industries as well.  Specifically, in 2018, the majority of accounting software products have already adopted AI technologies in order to improve and automate daily functions.

Cloud Computing is Here

When searching through the myriad of accounting software products available, you want to be sure that you choose the best business solution.  The best accounting solutions are already using cloud computing to their advantage.

Most major accounting software vendors are applying machine learning technologies to do things like auto-categorize transactions and track entry errors for reconciliation.  Xero has made waves in the Xero vs Quickbooks debate by implementing AI.  

Machine learning is particularly useful in accounting software because it manages tasks that are repetitive and predictable. Some specific accounting tasks that are already being affected by AI technology include:

  • Simplifying invoicing by matching items to amounts
  • Streamlining auditing by tracking errors in books
  • Automating bank reconciliations and categories
  • Addressing financial queries using AI chatbots

Cloud computing is being widely used in accounting software and will continue to get smarter, faster and more accurate.

DIY Accounting is Easier and More Accurate than Ever

Entrepreneurs have always had a do-it-yourself mentality.  This serves you well in the creation of your business, but it can also take up valuable time that could be applied to growth.  DIY accounting used to take up precious hours and brain power, but it is becoming easier to use with the advent of machine learning.

Menial bookkeeping tasks like categorization and reconciliation are often done automatically.  Machine learning technologies track your transaction history and offer suggestions, getting more accurate as you go.  Many accounting software products will flag areas of concern, that you may not have noticed yourself, but the computer notices because it has processed big data like this before.

Machine learning is a friend to the small business owner.  It allows smart solutions to become more understandable and more affordable, making you, the smarter DIY accountant.

Will AI Replace the Accountant?

Within the accounting community itself, there seems to be great concern, even fear, of machine learning and AI technologies.  And while there will likely be difficult transitions in the accounting world because of machine learning, the accountant does not need to fear AI—instead, he should embrace it.

Machine learning will make the accountant’s job easier and more efficient.  The menial tasks that take up much of your time can be automated through AI technologies, giving you more time to focus on the meaningful tasks that inform your clients.  

By implementing machine learning within your accounting practice, you can move away from being a number-cruncher to being a trusted advisor.  Use the extra time alloted to you as a way of diversifying your offerings.  Develop deeper insights and observations that will be of greater value to your clients. If you are willing to welcome the supercomputer onto your team, you will be able to offer your client something better while maintaining the human connection.  

Additionally, AI can eliminate hard-to-find accounting errors, reducing liability.  As accounting technologies develop, computer audits will be able to analyze 100% of a company’s financial transactions, instead of just a sample.  

Machine learning will become a robotic assistant to the accountant, so that they can offer better human-to-human services to their clients.

What’s Next?

Machine learning is improving every day, and there are still significant improvements to be made in algorithm accuracy.  However, the integration of AI technologies in accounting software only improves the processes of accountants and small business owners.

One specific improvement that is anticipated in the future is the integration of blockchain technology with machine learning and accounting software.  When you combine AI and blockchain technologies, it is possible to envision a future where auditing happens in real time, and each relevant party is informed along the way— “a true continuous audit.”  Because of the increased accuracy of blockchain technology and the automation provided by machine learning, accounting software will move into the future.  In turn, this will allow accountants more time for human connections with teams members and more importantly, with clients.

The repetitive tasks of bookkeeping and auditing are the perfect place for AI solutions to be integrated.  Accountants and small business owners alike should be glad—the futures of accounting and machine learning are inevitably linked.

Jaren Nichols

Jaren Nichols is Chief Operating Officer at ZipBooks, free accounting software for small businesses. Jaren was previously a Product Manager at Google and holds an MBA from Harvard Business School.