AI is unlikely to replace bookkeepers, but it will continue to change their work. Software can handle routine processing much faster, leaving bookkeepers more time to check the records and investigate anything unusual.
For owners of professional services firms, AI in bookkeeping could mean more up-to-date financial information and better support from their bookkeeper. However, automation still needs to be used carefully. Figures can look complete without accurately reflecting what has happened in the business.
How does AI bookkeeping work, and what can it automate?
Accounting software can automate bookkeeping in two ways. Some features follow rules that have already been set. For example, the software might record a regular payment to the same supplier in a particular category each month.
AI uses patterns in previous transactions to suggest how new ones should be recorded. It can also extract information from invoices and match payments, while flagging anything that appears unusual.
This reduces the amount of manual processing involved and makes it easier to keep the records up to date throughout the year.
Why does bookkeeping still need human judgement?
Bookkeeping still needs human judgement because software can recognise that something has changed without understanding why it has changed.
Imagine that your firm pays the same supplier each month for routine IT support, then receives a much larger invoice for a new system. The software may flag the amount as unusual but still suggest recording it in the same way as previous payments to that supplier. A bookkeeper who knows the business is more likely to realise that the new system may need to be treated differently from the routine support costs.
Human judgement is also needed to understand the firm’s wider performance. AI might identify that income has fallen or costs have increased, but it won’t necessarily know that a project was delayed or that work completed last month still hasn’t been invoiced.
This is especially relevant in professional services firms, where there can be a delay between doing the work and receiving the money. The bank may be reconciled and every transaction recorded, but the figures alone won’t explain why the firm is making a profit without seeing that money in its bank account.
A good bookkeeper investigates unusual entries and follows up when something appears to be missing. That helps ensure the records reflect what has happened in the business, rather than simply matching the money moving through its bank account.
What are the risks of automated bookkeeping?
Automation can increase the effect of an error. If an AI feature learns from a transaction that was treated incorrectly, it may repeat the same treatment across hundreds of similar transactions.
The results also depend on the information available to the software. If purchase invoices are missing or sales invoices haven’t been raised for completed work, it can’t provide an accurate view of the firm’s performance.
Businesses should also consider data security before giving a new AI tool access to their accounting records. They need to understand how their financial information will be accessed, used and stored.
Do you still need a bookkeeper if you use accounting software?
You may still need a bookkeeper even if you use accounting software. As a firm grows, the volume of transactions increases while the owner has less time to oversee the records personally.
The bookkeeper’s role is moving away from entering every transaction by hand. As technology handles more of the processing, they can concentrate on making sure the business and its accountant have information they can trust.
Will AI replace accountants too?
AI is unlikely to replace accountants, although it will change how they work. It can analyse financial information and identify changes that may need attention, but advising the owner requires an understanding of what is happening inside the business.
When routine bookkeeping is completed more efficiently, financial information can be reviewed throughout the year instead of being assembled months after the year end. An accountant who knows the business can then investigate why performance has changed and discuss any concerns while there is still time to respond.
This is how we approach financial reporting at Benson Wood. Our Growth Reports show clients how the business is performing against its Business Roadmap. We discuss the figures with them, so they understand what has changed and what that could mean for their plans.
AI and automation can make the process more efficient. The support still comes from having an accountant who understands the business and knows what the owner is trying to achieve.
If you want more than software-generated figures, we can help you understand what they mean for your business. Get in touch to arrange a coffee and a Tunnock’s Teacake with our team in Bellshill.
