What is the Role of AI in Finance & Accounting?
In this article, Burkland startup accounting expert Angela Christian shares her perspective on the role of AI in finance and accounting.
Artificial Intelligence (AI) and its impact on a company’s finance and accounting function continues to be debated and reported-on widely. Accounting Today states:
“technology poses the threat of replacing 94% of accountants and auditors.”
While many executives are eager to hand-off accounting tasks, can AI truly replace humans in the accounting/tax world?
Although AI shows tremendous promise, there are too many subjective decisions and factors within accounting and tax for AI, in its current level of development, to be truly reliable. These challenges can be seen in the recent shutdown of ScaleFactor. Even with raising $100 million by big-name venture capital firms, ScaleFactor was not able to perfect AI tools enough to completely replace human accountants. As mentioned in an article on Forbes.com: “In the end, the only tool with a true automation component, the potential investor found and employees confirmed, was an internal workflow engine, or “a guided to-do list” for ScaleFactor employees that organized tasks required to close a customer’s books.”
Many companies who have relied on promised AI shortcuts and financial savings from AI accounting firms, such as ScaleFactor, ended up regretting their decision. It’s a risky choice to place accounting, tax completion, bill payments, and back-office bookkeeping solely in the hands of software.
Burkland is always on the lookout for technological advances in the realm of accounting, tax, and bookkeeping and feels AI present value is as an enabler, rather than a replacement for a seasoned accounting professional.
Pros and Cons of Increased AI in Finance and Accounting:
Pros to Consider:
- Some menial tasks may be done quicker and with fewer errors.
- Reduces the risk for emotional reactions between client and accountant;
- Possibility of real-time data if the system is integrated properly;
- AI software learns as it develops, therefore, could potentially reduce human error (if successful).
Cons to Consider:
- Due to the subjectiveness needed in accounting, the cost could actually be higher due to unforeseen issues needing to be fixed manually.
- AI can’t yet replace human intelligence. AI does not have the ability to make a judgment call and may never get that ability.
- Mass data being entered in software incorrectly could take much longer to fix, which means a higher cost in the long run.
- Data managed and compiled outside of the software of record could make audits more difficult and costly.
- Professional accountants do so much more than simply keeping track of receipts. They are consultants who advise on numerous areas such as tax planning, financial implications, metrics, operations, and more. AI will not be able to take over that function.
- Burkland clients enjoy interacting with someone they trust and rely on. Many of Burkland’s clients are long-term because of the person they’ve established a relationship with over the years.
At Burkland, we continually monitor the technological landscape and utilize the latest cloud-based software solutions to better serve our clients. However, leveraging a tool is very different than replacing the trained judgment, and forward-looking, service-centered approach an experienced accountant offers. It is this balance between individual expertise and technology that best serves our clients.
Burkland provides expert CFO services, accounting services, and tax services to startups across the United States. Reach out to us to learn more about how we can help your startup or portfolio company.