How AI and machine learning is transforming the finance function

There was a time, in the not-too-dis­tant past, when accoun­tan­cy and book­keep­ing was a nev­er-end­ing slog of data entry, with accoun­tants hav­ing to wade through big stacks of invoic­es to man­u­al­ly type every­thing into the account­ing sys­tem. It was dull, repet­i­tive and unre­ward­ing work that could take hours.

Now, with the emer­gence of arti­fi­cial intel­li­gence and machine learn­ing tech­nol­o­gy, data can be extract­ed from a pile of invoic­es in a mat­ter of min­utes.

“With tech­nol­o­gy like Dext Pre­pare you can take a pic­ture of an invoice and it will process that infor­ma­tion auto­mat­i­cal­ly, cat­e­gorise the trans­ac­tion and then pub­lish it to your account­ing soft­ware,” says Paul Lod­der, vice-pres­i­dent for account­ing prod­uct strat­e­gy at Dext, an account­ing soft­ware devel­op­er. “AI and machine-learn­ing tech solu­tions are real­ly cut­ting out all of these repet­i­tive, mun­dane tasks and doing it for you.”

Lod­der calls this a new era of ‘no hands account­ing’. Not only does it free up accoun­tants to focus on high­er val­ue work, it also reduces the risk of errors.

“When you’ve got that human ele­ment and when you’ve got high vol­ume, mis­takes creep in,” he says. “You can eas­i­ly put num­bers in the wrong way around If you’re typ­ing quick­ly. That doesn’t hap­pen when you use tech­nol­o­gy, the soft­ware is read­ing and extract­ing what it’s see­ing on a doc­u­ment. It can’t get tired and it won’t get dis­tract­ed.”

While the time saved from automat­ing tasks can be used to increase the vol­ume of work finance teams can han­dle, it can also help com­pa­nies improve work/life bal­ance and reduce employ­ee stress.

“If you’ve got more capac­i­ty, it doesn’t mean you have to sud­den­ly do more work—we’ve just gone through a hor­ri­ble cou­ple of years, peo­ple are exhaust­ed, so you can use that extra capac­i­ty to actu­al­ly just fin­ish ear­ly on a Fri­day and give the whole finance team an after­noon off because you’ve got every­thing com­plet­ed,” says Lod­der.

For accoun­tan­cy and book­keep­ing firms, tech can help free up more time for busi­ness devel­op­ment and build­ing rela­tion­ships with clients, while also giv­ing accoun­tants the tools to pro­vide more strate­gic advice and there­fore add more val­ue.

“If you’re using tech­nol­o­gy to process trans­ac­tions quick­er, you’ve got access to insights much ear­li­er than before, which means you may be able to pick up on oppor­tu­ni­ties or issues and things that are of a con­cern, so you can have more valu­able con­ver­sa­tions,” says Lod­der. “That’s impor­tant because, if you’re not talk­ing to your cus­tomers, if a com­peti­tor comes along who shows a bit more inter­est, they may move. So it doesn’t mat­ter what con­ver­sa­tions you’re hav­ing, it’s the fact that you’ve got the abil­i­ty to have more con­ver­sa­tions that mat­ters.”

Adopt­ing tech­nol­o­gy also ensures that data is avail­able in real time rather than hav­ing to rely on peri­od­ic report­ing where num­bers are like­ly to be already out of date.

“If your year end was Decem­ber, but you don’t do your accounts until March, a lot can hap­pen in those three months and you haven’t got vis­i­bil­i­ty in that peri­od because not every­thing is being processed,” says Lod­der.

By using real-time report­ing, num­bers will always be cur­rent so that busi­ness­es can make the right deci­sions at the right time based on accu­rate data, he says.

“I want to be able to recog­nise if a trend is form­ing and what direc­tion it is going,” Lod­der says. “I don’t want to be aware of some­thing three months after the event. So up-to-date num­bers mean that you’re more forewarned—it doesn’t mat­ter if you’re a finance team or whether you’re work­ing with clients—you’ve got all of that infor­ma­tion to hand at any point in time so that you don’t have to make a snap deci­sion based on not hav­ing the full pic­ture.”

For instance, if a com­pa­ny want­ed to take out a loan, bas­ing that deci­sion on three-month old data risks sad­dling the com­pa­ny with debt it can’t afford or debt it doesn’t need.

This tech­nol­o­gy is also allow­ing accoun­tants and book­keep­ers to expand their vir­tu­al finance func­tion offer­ings. In the past, book­keep­ing would typ­i­cal­ly involve a client hav­ing to drop off all of their records at the accoun­tant or bookkeeper’s office. Now every­thing can be done online, stream­lin­ing the work­flow process and mak­ing it more cost effi­cient.

“Clients don’t need to drop any­thing off any­more, they can take pho­tos and email doc­u­ments direct­ly and with open bank­ing, you can now con­nect the bank account as well,” says Lod­der. “Tech­nol­o­gy is dri­ving the vir­tu­al finance func­tion and accoun­tants are now offer­ing their ser­vices not just in one small geo­graph­ic area, they can expand their client base to any­where in the world.”

With the account­ing sec­tor strug­gling with recruit­ment and reten­tion issues, tech­nol­o­gy is also mak­ing it eas­i­er for firms to out­source book­keep­ing work to ser­vice providers in coun­tries where fees are cheap­er. At the same time, firms may sim­ply want to out­source book­keep­ing to cre­ate more capac­i­ty for accoun­tants to focus on oth­er work.

“In the UK, you could be pay­ing a qual­i­fied accoun­tant to do book­keep­ing work who is high­ly skilled and who would be bet­ter off actu­al­ly doing more of the high val­ue work for clients, and you can out­source that book­keep­ing work over­seas at a much low­er cost,” says Lod­der. “The tech­nol­o­gy means the work con­tin­ues to be real time and, using soft­ware like Dext Pre­ci­sion, you can make sure every­thing is accu­rate.”

The trend for using automa­tion to make the finance func­tion more effi­cient accel­er­at­ed dur­ing the Covid-19 pan­dem­ic and shows no sign of slow­ing down even as peo­ple return to the office.

“Tech­nol­o­gy is an oppor­tu­ni­ty, it’s not a threat,” says Lod­der. “A lot of the pro­cess­ing work that is cur­rent­ly being done man­u­al­ly will be com­plete­ly auto­mat­ed in the future. That doesn’t mean that peo­ple aren’t need­ed though. Tech­nol­o­gy can’t do every­thing, but it can cer­tain­ly replace a lot of repet­i­tive tasks, and that’s how it cre­ates oppor­tu­ni­ties. If you don’t embrace it, then you risk get­ting left behind.”

For more infor­ma­tion vis­it dext.com

Pro­mot­ed by Dext