While accounting has a deep history dating back to ancient Mesopotamia, several technological shifts in the last 100 years have produced significant changes in the profession. Waves of innovation following the widespread use of calculators, personal computers, the internet and mobile have shifted the competitive landscape, including client expectations and the speed at which services can and should be provided.
The recent explosion of interest and innovation in artificial intelligence (AI)—signaled by the rapid adoption of tools like ChatGPT and other large language models (LLMs)—is no exception.
While AI will affect all white-collar professions, accounting is an industry that will likely be heavily impacted, as a recent study by the University of Pennsylvania and OpenAI found that accounting has one of the highest exposures to automation.
It is because of this that accounting firms of every size must be prepared to embrace innovative technology like generative AI and gradually make it a core competency for delivering services and improving operations. Like any core functionality, firms should develop their own ability to use generative AI tools to further their journey in the evolution of accounting and provide higher-level, value-added services to clients.
Why Generative AI Will Force the Biggest Accounting Evolution Yet
Generative AI, put simply, consists of technologies enabling users to converse with AI and instruct AI (in natural language), to produce a wide variety of outputs. Previously, only large firms could afford to deploy and manage AI solutions due to cost and complex technical skills.
However, generative AI solutions effectively change this dynamic as the pattern recognition power of large language models enables firms to automate manual, repetitive tasks with little to no technical knowledge required.
Automation powered by generative AI empowers even the smallest of firms to build and manage automation while deriving deep insights from data without time-consuming manual processes like data entry, extraction or movement. Instead, accountants can simply command the technology to perform the task in natural language. For example, generative AI can retrieve invoices that match client or supplier names, extract the invoice numbers and dates to then enter the details of each invoice into a platform like Quickbooks.
Similarly, generative AI is enabling accountants to request insights derived from financial data. For example, one might be able to make a request with the technology to determine the average number of accounts receivable for certain clients over a specific period of time.
This wave of AI will force an evolution of accounting services from traditional record keeping and insights to higher-level analysis and consultative services. Base line data entry and movement will become commoditized further, but, firms can now harness the power of generative AI to take care of client reporting needs (with little to no manual effort), and be positioned to provide efficient services that solve client needs
Why Firms Should Incorporate AI as a Core, In-House Capability
With any new technology, firms must determine if they should build the capability themselves or outsource the management of such a capability to a consulting or managed services firm. In the case of generative AI and automation, accounting firms of all sizes can significantly benefit from developing this capability internally. There are several reasons for this strategy, most notably because of the ease of use. Natural language-based technologies make automation and AI accessible to anyone.
While it may make sense for firms to use a consulting firm to help design their AI strategy or implement tools initially, the ease of use eliminates the need for outsourcing the management of generative AI and makes it more cost-effective to bring the technology in-house.
Second, like most AI technologies, generative AI solutions will improve with the nuances of firm specific data. Automation solutions in particular will evolve alongside each firm, learning from the logic provided to them by humans and the data provided in the course of use.
As exceptions and problems occur, accountants will be able to “teach” the AI to better suit its needs and serve clients in a better manner. Outside consulting firms may not understand the nuance of a firm’s business, and thus are unlikely to provide the best inputs.
Lastly, as many accounting firms look to establish AI in their organization, outsourcing could create operational delays or other timely challenges. Instead, the firms that embed AI into their core services will be better positioned to compete with other players in the market, ask the best questions and deliver the most value to customers in this new era of the accounting profession.
In many ways, the accounting profession remains plagued by antiquated processes. However, accounting organizations who are quick to innovate and keep up with the latest offerings, including generative AI, have an opportunity to transform their services and workloads. In turn, this can generate greater customer and employee experiences while also giving both small and larger firms the chance to compete on a more even scale.