It’s no secret that the finance and technology worlds are rapidly evolving. From startups to enterprises, the makeup of finance teams is leaner and more tech-savvy than ever before. At the same time, leadership across the C-suite demands new AI-driven solutions across all facets of the business.
While independent factors spur both phenomena, their ascent isn’t wholly unrelated.
For instance, there’s a growing global talent gap: 83% of senior leaders report a shortage of accounting talent—up from 63% in 2020, according to Personiv’s 2024 annual CFO Pulse Survey. That’s a concerning trend that many fear will only worsen.
The long-brewing accountant shortage likely has more to do with job dissatisfaction and compensation (according to anecdotal evidence from educators in the space) than technological disruption in the traditional sense. But those staffing trends are bottoming out just as AI adoption continues to increase.
Broadly, almost three-quarters of all C-suite members expect AI to begin automating tasks at their organization by 2028, according to a 2023 survey by UKG. AI for accounting specifically has a projected compound annual growth rate of 32% by 2028, according to findings from Mordor Intelligence published in 2024, indicating AI-driven accounting will be a game-changer for businesses of all sizes in the short term.
Why the sudden surge in demand?
It’s no secret that traditional accounting methods are often time-consuming and prone to human error. Plus, many finance teams are stretched thin. For early-stage startups with narrow margins, flawed accounting or poor forecasting could doom the venture altogether.
By leveraging AI for accounting tasks, businesses have an opportunity to improve productivity, save money, and unlock real-time analysis of their financial data. That’s because AI empowers your accounting team to process and analyze large amounts of financial data in real time so you can gain insights into your business’s financial performance and identify trends or patterns as they emerge.
So let’s explore how teams of all sizes—particularly innovative startups with an eye toward growth—can start deploying AI responsibly to optimize their financial operations.
Benefits of AI for Accounting Teams
Implementing AI in accounting improves accuracy and increases operational efficiency so that businesses can stay agile in a changing economic landscape. This is especially critical as AI accelerates the speed of innovation across sectors and industries, forcing teams that haven’t adopted the latest machine learning techniques to adapt or disappear.
The key benefits of AI for accounting include:
Real-time data analytics
Traditional financial data analysis involves manual processes that can lead to delayed decision making and missed opportunities. AI empowers your accounting team to process and analyze large amounts of financial data in real time so you can gain insights into your business’s financial performance and identify trends or patterns as they emerge.
Natural language processing analyzes unstructured data such as emails, invoices, and other financial documents to extract relevant insights about the business’s financial performance. This analysis enables accounting teams to quickly and easily access critical financial data, such as cash flow, accounts receivable and payable, and revenue, without manually sorting through documents and spreadsheets.
Improved decision making
AI identifies relationships between variables that humans may not be able to detect, enabling more accurate financial forecasting. These insights will help you make more informed decisions about resource allocation, investments, and financial planning so you can stay agile and quickly respond to changing market conditions.
With deeper insights into the business’s financial health, your accounting team can identify risks faster and allocate resources to reduce potential financial losses. For example, AI-enabled accounting systems can analyze cash-flow data in real time so you can make more accurate and informed cash-flow projections and avoid problems down the line.
Alternatively, if your forecasting identifies an increased demand for a particular product or service, this could indicate an opportunity for growth that you can capitalize on. By using AI to analyze financial data faster and with greater accuracy, you can also uncover potential cost savings. This will help you identify areas where you can reduce expenses or implement automation to streamline business operations.
Use Cases of AI in Accounting
AI automates repetitive tasks and streamlines workflows so accounting professionals work more efficiently and focus on higher-level analysis.
What are some of the most popular use cases of AI for accounting?
Fraud detection
Using AI to detect fraud can minimize the risk of financial loss and protect your business’s reputation. AI-powered algorithms detect anomalies and inconsistencies in data, such as discrepancies between records or suspicious activity, to identify potential problems before they happen. AI-enabled accounting software monitors financial transactions in real time and flags any unusual transactions, such as those that exceed certain thresholds or are made outside regular business hours. Machine learning algorithms also analyze historical financial data to uncover patterns of fraud, embezzlement, or other suspicious activity.
Tax preparation
AI can help you prepare and file tax returns more accurately by analyzing your business’s financial data and applying tax regulations. This will allow you to claim tax credits and deductions you might have overlooked. For example, AI-driven platforms can gather data from all of your systems to identify and categorize eligible projects, time, and expenses to actively track for tax credit-eligible activities (such as R&D tax credits that can cover many key product development expenses). This provides significant relief on the costs for R&D and allows you to reinvest those funds into your business or reduce taxable income.
Invoicing and cash collection
AI can also automate the invoicing process and identify which customers are more likely to pay their bills on time. With AI-powered accounting software, you can send automated payment reminders to customers, track and analyze payment history, and use predictive analytics to determine the likelihood of future payment delays or defaults.
For example, machine learning algorithms can analyze customer payment behavior, such as how often they pay late, how much they owe, and how quickly they pay after receiving an invoice. Based on this data, the software can flag high-risk customers and prioritize collection efforts accordingly.
AI can also help businesses optimize their invoicing processes by automatically generating invoices and sending them out to customers, reducing the chance of errors or delays. This can ultimately lead to faster payments and improve your business’s cash flow.
Best Practices for Using AI for Accounting
Let’s go over some best practices for implementing AI in accounting so you can successfully integrate this emerging technology into your business operations:
Start with small projects.
When implementing AI in accounting, it’s best to start with small, manageable projects to minimize risk and build confidence. This helps you see if the AI solution is working effectively and efficiently. From there, make adjustments before scaling up to larger and more complex projects. For instance, you might begin by implementing AI for automated data entry for a single department or process before scaling it up to the entire accounting function. As a bonus, this approach helps you demonstrate the value of AI to your team and encourage further investment in the technology.
Choose the right AI tool for your needs.
Not all AI tools are created equal. Some might be better suited to specific accounting tasks than others. The right tool will integrate seamlessly with your existing financial processes to help your accounting team be more productive rather than complicating their workflows. Start by looking for a tool tailored to your industry or specific accounting task, and check whether it’s compatible with your existing systems and data sources. You should also determine whether the software can grow with your business and handle increasing volumes of data. Remember to evaluate the cost of using this tool and compare it to the expected ROI.
Prioritize data quality.
For the most accurate AI-generated insights, you must establish data quality standards and processes for data cleaning, normalization, and validation. Suppose your business has incomplete data on supplier invoices. As a result, an AI-powered tool may not be able to detect fraudulent invoices created by scammers impersonating legitimate suppliers. To ensure high-quality data, start by identifying the data sources used for your accounting processes. Then implement data validation and verification processes to ensure accuracy and completeness. For example, you can implement automated data validation checks to ensure data is entered correctly and consistently across all systems.
Monitor AI performance.
Inaccurate or unreliable insights can lead to poor financial decisions and negatively impact business performance. By monitoring AI performance, you can identify and address issues early on, improving the accuracy and reliability of AI-generated insights over time. Let’s say you’re using an AI-powered tool to automate the process of invoice processing. You can monitor the tool’s performance by comparing the accuracy of the data extracted from the invoices to the data manually extracted by an accountant. If there are discrepancies, investigate the issue and adjust the AI algorithm to improve accuracy.
Leverage AI for Accounting to Reinvest in Your Business
While AI has been applied (correctly or incorrectly) across virtually every industry, sector, and task over the past two years, the benefits of leveraging AI for accounting are very real—and could be a major boon for startups.
AI gives finance teams the opportunity to intelligently automate and redistribute tasks, enabling finance teams to focus on value-added and proactive activities to optimize their order to cash and record to report cycles. This fundamentally changes the posture of the finance arm to be a proactive business function, as opposed to a backward-looking cost center.
By leveraging AI for certain accounting tasks, startups can improve productivity, save money, and unlock real-time analysis of their financial data. Armed with these insights, startup teams can embark on more informed decision making and effective financial planning, helping increase agility across the organization and ultimately extend their business’s runway.
With AI revolutionizing the way we approach our daily activities, businesses that adapt and embrace AI-powered accounting tools will be able to unlock valuable insights from their financial data, optimize workflows, and make more informed decisions. Implementing this new technology will help your business save time and money while staying competitive in a fast-paced, data-driven environment.
