Artificial Intelligence (AI) has been in the tech world for quite sometime. There has been both positive and negative takes on how AI will shape the future of bookkeeping firms.
With AI, bookkeeping firms can perform tasks that used to take hours within seconds. This allows bookkeeping firms to free themselves from manual work and focus more on strategic decisions and client relationships.
This article will explore what AI is and how bookkeeping firms can leverage and implement it. It will also address the million dollar question: "Will AI replace bookkeepers?"
What is artificial intelligence in finance?
AI in finance refers to using technologies such as machine learning (ML), natural language processing (NLP), and advanced algorithms to analyse huge volumes of data, compute data, detect patterns and errors, automate repetitive tasks, improve decision-making process, and enhance client engagements.
Machine learning refers to software using historical data to learn trends to predict or suggest things better over time. Natural language processing in software is used to understand conversational language to pull out reports or insights from the financial data in response to conversational prompts.
How can bookkeeping firms leverage AI?
AI in bookkeeping firms can speed up manual accounting and bookkeeping tasks to solve everyday challenges and can significantly transform practice firms. Here are some of the tasks which AI can perform at your bookkeeping firm.
Auto scans
Dreading the shoebox full of receipts just before tax season? AI solutions combined with optical character recognition (OCR) technology can extract key information such as customer name, address, line items, and tax amount from receipts, and add it as an expense within your accounting software.
Auto categorisation
Based on your clients past financial data, AI looks for similar transactions and can suggest categories for every entry. Accepting or rejecting the suggestion helps AI to learn and improve its auto categorisation capability. For example, AI powered solutions can categorise fuel expenses from F&B expenses automatically.
Bank reconciliation
Bank reconciliation is a time-consuming process. When your clients' accounting software is connected to a bank account, AI within the software can help reconcile journal entries by comparing them with the bank feeds in real time. AI isn't perfect, but it can match most entries; less than 15% of entries require manual intervention.
Recurring transactions
If your client has recurring transactions, like monthly rent, AI can automatically create journal entries in your accounting software to ensure every transaction is captured.
Payments and invoices
Accounting solutions powered by AI can automatically mark a payment as received by matching the amount received from the bank feed to the respective invoice raised for the service offered.
Data insights
AI in accounting software enables faster spotting of trends and flags anomalies from the reports and dashboards available in the software. Since AI can analyze large volumes of data, it can flag errors or duplication in entries to prevent fraud.
An accounting solution, like Zoho Books with Ask Zia (its built-in AI agent) can help bookkeepers provide insights on their clients' business health. You can also connect with an LLM like ChatGPT or Claude using Zoho MCP. This gives the agent access and control to convert instructions in natural language to actions inside Zoho Books application.
Why should bookkeepers use AI?
AI not only saves time by taking over repetitive tasks, it also helps maintain accurate data, prevent fraud, and provide data insights. This means bookkeepers can focus on reviewing exceptions, faster turnaround time, and proactive client engagement.
How to implement AI
You don't have to be tech savvy to implement AI for your firm or your clients. AI can either be integrated into the existing accounting system, or an easier way to use it is to implement an AI-powered accounting solution. Your early days will require some time spent learning and understanding the capabilities. Try to use AI in one workflow, set goals, evaluate the outputs, and add more processes to unleash its potential.
It is important to be aware that there are accounting solutions that charge a fee to have AI in the solution while others only have AI solutions available only in higher subscription plans.
Will AI replace bookkeepers?
AI has definitely brought about significant changes and it is not limited to only bookkeeping. There is still a complex layer of decision-making, ethics, regulatory changes, oversight (because AI isn't perfect), and creativity where human intervention is required. Another aspect that AI lacks is building client relationships. Humans have interpersonal skills, which are beneficial in financial planning with clients and understanding their goals.
AI will be an augment to bookkeeping and bookkeepers who know how to work with AI will be in high demand. This would also benefit bookkeepers with scalability for legislative changes such as MTD for Income Tax in the UK.
As an ICB member, you can sign up for one-year free access to premium plans of Zoho Books, Expense, Inventory, Billing, and the standard plan of Zoho Practice to see how Zoho's AI capabilities can help your practice and your clients' businesses.