Artificial intelligence and machine learning will liberate accountants from the back office, says Barry Murphy of Sage Ireland

A ‘computer’ hasn’t always been the electronic screen we spend much of our working day glued to. Before the rise of electronic machines, computers were humans employed to perform long and tedious mathematical calculations. Today, however, everyone recognises computers as machines that augment our work and perform many of the tasks our parents had to manually complete.

Businesses too, recognise the power of new technologies, with two-thirds of businesses in Ireland set to be using artificial intelligence or machine learning by 2023. 

This shift in perspective is important today, as it’s exactly what’s happening in finance regarding AI. Many of the slow, manual, and error-prone processes currently performed by accountants will soon be automated by AI software and systems. In fact, it’s already happening. This will redefine the role that humans play in the world of finance and business at large 

These powerful AI solutions have been made possible by the ever-growing quantity of financial data available in the cloud, accessible from anywhere and on any smart device. Indeed, it’s estimated that half of all data will live in the loud by 2025, but this could be accelerated even faster due to the pandemic.

In Ireland, the pandemic has increased the adoption of powerful technological solutions such as AI, with 40% of Irish businesses stating they have automated more processes as a result of the pandemic and 17% believe that automation has helped to minimise potential backlogs caused by Covid-19.

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Closing the close process

For many years, a regular challenge for accountants is to minimise the closing process, whether monthly, quarterly or annually. Expected to meet strict standards and under high pressure, accountants have expended valuable time and resources on the process down the years. Yet with the power of AI at last, the industry is on the verge of eliminating the manual close process for good.

To facilitate this, companies first need to capture all business activity in real time. They then have to transition to continuous reconciliation. The final step is to train AI to make continuous adjustments as the business environment evolves. Accruals, allocations and other period-end adjustments should occur automatically and continuously. In this manner, virtually every business day is a closing day where systems capture, reconcile and adjust transactions in real time.

AI can facilitate this in a variety of ways, including tools and technologies that automatically capture and code data (such as travel and entertainment charges and invoices), smart reconciliation engines, and intuitive conversational interfaces. This is all underpinned by machine learning models that grow smarter over time through use.

Continuous assurance

Just as accounting moves into an ongoing, real-time process, we will similarly see audit and assurance evolve into a continuous activity. Fundamentally, the heart of all financial activity is trust. Key stakeholders including investors, bankers, and regulators trust that finance teams will not only be compliant, but also provide guidance grounded on accurate insight and information.

The continuous auditing process starts with continuous detection. This is only possible when we leverage AI’s ability to detect and report irregular activity in real-time across vast quantities of data. Rich data sets and powerful cloud computing allow firms to build machine-learning models that learn how to understand accounting transactions and detect anomalies to expose inaccurate, non-compliant, or even fraudulent activity. This is especially useful given that 10-20% of journal entries typically need adjustment when added to general ledgers.

Organisations can then capitalise on new graphical user interfaces that help users review and make intelligent decisions when AI flags irregularities. As users and AI technology learn to work together on continuous auditing, accountants can improve their controls and assurance models to minimise exceptions 

With AI working on continuous accounting and continuous trust, accounting and finance teams are free to focus on more strategic activities. This is perhaps the most exciting advantage AI can provide —elevating the work of professionals from repetitive tasks to creating strategic value for the future.

AI augments employee value — it can increase team productivity by 40% when it’s deployed. According to recent research conducted in Ireland, business and IT leaders across the country believe that over the next three years, AI will have a significant positive impact on their day to day business operations in ways such as speeding up processes, reducing costs and aiding employees to focus on business-critical tasks. And it’s expected this will be accelerated by the pandemic, with one in five Irish business claiming that machine learning and AI have been crucial to the success of their business throughout the pandemic.

Known unknowns and speedy forecasts

AI helps us identify unknowns by making more accurate predictions about the future. Armed with this insight, professionals will ultimately make smarter decisions and be more comfortable taking decisive action. The real advantage is that AI never sleeps; it continuously watches activities, identifies exceptions and patterns, and posts an alert when it foresees sudden or unexpected changes.

For most companies, forecasting is a very intensive process, and as a result, it’s only feasible to get a reasonably accurate forecast a few times a year. But with AI-powered forecasting, they gain unprecedented speed without compromising accuracy. They also know when the forecast changes in real time and can understand the factors affecting the change. This allows businesses to reallocate resources to capitalise on opportunities, respond to previously unseen threats and secure a better outcome.

As finance and accountancy teams integrate AI into their daily workflows, they’ll be able to rise from their traditional back-office role to one that is at the forefront of the business. AI opens up the potential for true organisational leadership, driving efficiency, ensuring trust, and revealing future unknowns.

Teams and organisations that embrace and harness AI’s power will gain a new voice and a 360° view of the business, as well as accessing data more quickly to make more efficient, less error-prone decisions.

• Barry Murphy (pictured) is managing director at Sage Ireland