Artificial Intelligence Already Powers A/R and A/P – Are Budgeting and Forecasting Next Up?

As accounting consultants, we have seen AI usage increase dramatically over the last five years across daily accounting activities throughout organizations of all sizes. So, where is AI most widely used in bookkeeping and accounting these days?
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When it comes to AI in accounting, A/R and A/P augmentation has proven to be the low hanging fruit. As accounting technology has grown more sophisticated machines have been tasked with doing these types of repetitive functions that have traditionally bogged organizations down with manual work. With A/R and A/P already being powered by AI, what can we expect next?

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​Recognizing Today’s Use of AI in A/R and A/P
As Mark Emerson explains in his recent article on the future of AI in accounting, 

A significant portion, if not the majority, of your accounting team’s efforts are spent on data entry functions. The continuing growth of AI in the accounting industry could be an incredibly powerful tool for your accounting team in that it will increasingly perform back-office functions like data entry, real-time reconciliations, and even higher-level functions like payables and receivables processing and fraud detection.

​In keeping with his observation, we are seeing that in accounts receivables AI is already being used heavily to:

• Automate invoicing.
• Segment customers.
• Predict payments for better cash flow management.
• Assess credit risk for setting payment terms.
• Follow-up on unpaid invoices and pursue collections.

Meanwhile, in accounts payables AI is being used just as often to:

• Classify and process invoices.
• Reconcile bank and credit accounts.
• Detect fraud by identifying suspicious patterns.
• Manage payment timing to maximize cash flow.
• Obtain required approvals.
• Streamline reimbursements.
• Depreciate assets correctly.
• Improve overall vendor management.

What these types of use case scenarios reveal is that AI can be used to not only automate repeatable tasks, but also better manage and analyze large data sets to provide tangible business benefits. Using that observation, we can get a sense of where AI may be heading next in the world of accounting and finance.  

Predicting Tomorrow’s Use of AI in Budgeting and Forecasting
Our team predicts that budgeting and forecasting will be the next accounting areas to see heavy AI integration. This will likely include, but is not limited to, usage in data analysis, budget optimization, and predictive modeling.

When used in a scenario planning capacity AI can also simulate the effect of multiple variables simultaneously to evaluate the potential impact of several different types of changes all at once. The result is better business forecasting as well as more comprehensive risk mitigation. 

AI’s aptitude to not only analyze vast amounts of data but also return customized recommendations puts it in a key position to be leveraged in each of these areas to improve strategic business management. Using business goals, preferences, and historical performance as the basis for its recommendations, AI can return actionable strategic advice for organizations that need help deciding where to go next and how to get there.

When used correctly in these ways, AI can help organizations better anticipate and respond to changes in everything from revenue generation and expenses to market demand and volatility to offer a competitive advantage over competitors that are not using these kinds of tools.

Understanding the Implications for Accountants
Of course, even as AI usage in accounting becomes more widespread, people will still be required to execute and oversee these types of integrations. As our team explains when discussing how AI can help accountants to move closer to a zero-day close, 

Any conversation around how technology can improve close would be remiss without including a discussion around how people contribute to the improvement process as well. As AI is coming into its heyday the smartest people in every field are constantly reminding us that technology relies on people. Without the human component to build and maintain technology, it cannot be the powerful tool we are asking it to be. But with the best people in place that have the right knowhow, technology can be a powerful influence to drive the accounting industry forward.

​For this reason, accountants are not going anywhere any time soon! Companies will still need the same input from experienced accountants to ensure that technology is helping them to operate more efficiently without error so that they can achieve their long-term business goals.

If you’re looking for ways to automate your bookkeeping and accounting functions or the staff to help support AI integration, let our accounting consultants help! Our team has knowledge of the most widely used accounting systems and technologies to help streamline your daily accounting activities and close procedures. Find out more about our US-based outsourced accounting services today!