AI in accounting 2024: key trends, technologies, and how to get started

In a world defined by technological change, artificial intelligence (AI) is perhaps the most disruptive and revolutionary trend of all. In recent years, AI has grown from a futuristic promise to an everyday tool used by people and businesses across the globe. Today, 90% of organizations use at least one AI technology in their day-to-day processes.

Naturally, there’s a lot of uncertainty and concern around the adoption of AI. This is particularly true in the accounting industry, where AI tools are already having a big impact. But rather than a threat, AI represents an opportunity to work smarter and faster than ever before. 

In this article, we’ll explore the growing role of AI in accounting, key technologies to understand, and how you can harness the power of this megatrend to drive productivity, growth, and job satisfaction. 

The role of AI in accounting

AI is a machine’s ability to simulate human intelligence. Before AI, technology could be programmed to perform certain tasks based on simple inputs and outputs. But with the advent of AI, machines can now synthesize information, self-improve, and solve complex problems — just like humans. 

AI is transforming the accounting industry, enabling practices to automate, enhance, and streamline all manner of processes — everything from basic repetitive tasks to complex workflows. Here are some key examples: 

• Automating data entry, extraction, and transfer
• Predicting future trends, performance, and risk
• Identifying patterns and anomalies that may indicate fraud
• Automating routine audit tasks such as data collection and analysis
• Generating financial statements and reports
• Categorizing expenses and flagging anomalies 
• Drafting client emails, agreements, and other documents

But this is just scratching the surface of what AI can do. Tools such as ChatGPT are so adaptable that they can be used to automate and streamline all sorts of tasks involved in running an accounting practice, from content marketing and strategy to data formatting and question-answering.

Harnessing the power of AI yields all sorts of results for accounting firms. By automating once time-consuming manual processes, you can increase efficiency and productivity across the board, resulting in serious time and cost savings. At the same time, AI helps reduce human error and boost accuracy. 

But that’s not all. Adopting AI can lead to a superior client experience, driven by timely messages and personalized interactions with your firm. It’s great for accountants too — instead of spending hours each day handling repetitive administrative tasks, they can focus on bringing real value to their firms. 

Key AI technologies in accounting

AI isn’t one technology, but rather a broad term comprising multiple different subsets. In this section, we’ll explore some of the most important types of AI technology and how they can be applied in the field of accounting. 

Machine learning

Machine learning (ML) is a subset of AI that uses algorithms and statistical models to analyze large data sets, spot patterns, and make predictions. The beauty of ML models is that they can self-improve over time. The more data they are exposed to, the more they can fine-tune their algorithms — and the more accurate their outputs become. 

In accounting, machine learning can be used in various ways, including:

• Fraud detection
• Predictive analytics
• Budgeting and financial planning
• Tax compliance

Big Four accounting firm Ernst & Young (EY), for example, is now using a proprietary ML model to improve its audit service, enabling accountants to review and analyze documents with a level of accuracy and speed never seen before.

Natural language processing

Natural language processing (NLP) is a subset of AI that focuses on conversational interactions between humans and machines. NLP-based algorithms can understand and interpret human language, and then generate relevant and factual responses that humans can understand. 

In accounting, NLP-powered chatbots can engage accounting leads, answer client questions, and gather important information and documents. Tools like ChatGPT can be used for all manner of accounting-related tasks, while speech recognition tools can automatically transcribe client calls and summarize meetings.

Predictive analytics

Predictive analytics models can analyze huge data sets in a matter of seconds to spot trends, forecast future outcomes, and identify potential risks. This helps accountants and firm owners see around corners, enabling them to take a more proactive approach to serving their clients. The results speak for themselves, with data-driven businesses 19 times more likely to be profitable than competitors.

In accounting, predictive analytics can be used in financial forecasting, helping accountants to make predictions around revenue, expenses, cash flow, and profitability with a high degree of certainty. Predictive analytics can also analyze market trends, economic indicators, and historical performance to help accountants better understand risk.

Will AI replace accountants?

When the topic of AI comes up, accountants usually have one question on their mind: will this thing replace me altogether? The short answer is no, at least not for the foreseeable future. Why? Because not everything can be automated. 

While AI offers impressive performance in some areas, you can’t rely on it to understand the nuances of ethics and professional judgment, or deeply empathize with your clients’ financial challenges and goals. You can’t expect it to solve highly complex problems and integrate diverse, ever-changing pieces of information. These are all areas that humans excel in.

The ultimate takeaway is this: AI is not here to replace you — it is here to augment you. AI is like a cheat code for productivity and performance. You get to work faster and smarter than ever before. You get to wave goodbye to menial tasks that stop you from doing your actual job, giving you more time and energy to bring real value to your firm and clients. 

AI trends in accounting

While AI itself is one megatrend, there are trends within it that are redefining accounting in their own way. Let’s look at some of the key AI trends you can expect to unfold in the coming years — and how they will affect accountants.

1. Adoption, adoption, adoption

Just last year, ChatGPT became the fastest-growing app of all time, reaching an incredible 100 million users just two months after its launch. For reference, it took WhatsApp three and a half years and Spotify over four and a half years to achieve the same. 

Given that adoption is generally downstream of utility, you could say that ChatGPT is perhaps the most useful app of all time. Despite this surge in adoption, it’s important to recognize that AI is still a nascent technology. We still don’t fully understand its scope and potential. But one thing is clear: adoption will continue at breakneck speed, with AI in accounting forecast to have a compound annual growth rate of 30% over the coming years.

Accountants should expect to rely more heavily on AI in the near future as regular accounting and practice management platforms take an increasingly AI-focused approach.

2. Integration with accounting technology

In addition to standalone apps like ChatGPT, AI is now being integrated into other software platforms to provide an extra dimension of functionality. Accounting and practice management platforms have been quick to take advantage of the new technology available, incorporating a range of interesting features that further simplify and enhance the work of accountants. Here are some examples:

• QuickBooks Online — AI-powered scanner that automatically links receipts to accounts
• Xero — bank reconciliation predictions powered by machine learning
• AppZen — generative AI that drafts responses to accounts payable emails
• Botkeeper — ML-powered bot that scans the general ledger and identifies discrepancies
• DataSnipper — AI text recognition extracts data from scanned documents and images

3. Integration with other emerging technologies

AI isn’t the only tech trend impacting accounting and the wider world. Other accounting trends such as blockchain technology and the Internet of Things could also transform the way accountants work. When combined with AI, these emerging technologies open new frontiers of utility and automation. Let’s look at the potential of these two combinations in more detail.

AI and blockchain

Accountants may use blockchains — distributed, immutable ledgers where transactions are recorded and secured in blocks using advanced cryptography — to record payments, orders, or other transactions. Adding AI into the mix means accountants can automatically query blockchains for data, derive insights, and provide rapid audits. 

AI could even be embedded in smart contracts — digital contracts stored on a blockchain that execute automatically when certain conditions are met — to enhance their functionality. AI could even create the code for smart contracts. 

AI and the Internet of Things

The Internet of Things (IoT) refers to a network of devices that are connected to the Internet and each other. These devices can communicate and share data, enabling a seamless connection between physical objects and digital processes. 

In accounting, IoT devices can be used to monitor inventory and stock, alerting you when certain levels or quality thresholds are breached. The same goes for other physical property such as vehicles or office space, where IoT devices can provide data on location, usage, or other conditions. 

AI can be used in unison with IoT devices to derive insights, make suggestions, and even predict future needs or risks before they happen.

4. An ever-improving client experiences

AI is already transforming the client experience, from timely automated communications that keep clients in the loop to client-facing chatbots that answer basic questions. From the client’s side, it should look and feel like they’re communicating with a human. 

This trend looks set to continue, with AI enabling accounting firms to provide more personalized services based on client data and historical interactions with your firm. AI also helps firms spot clients who are at risk of leaving — by automatically analyzing client communications, AI can spot negative sentiment, enabling human accountants to fix the problem before the client jumps ship.

5. An evolving regulatory landscape

AI poses all sorts of potential risks and issues for firms and clients alike. How can we trust the insights that AI provides? What if the AI has certain false assumptions or biases built in? What happens if it gets hacked?

To answer these questions and ensure that AI is used both ethically and securely, new regulations and best practices will emerge. 

6. AI-powered training and development

Just as AI is transforming the client experience, it will do the same for the learning and development process for accountants. Instead of generic courses and materials, accountants will have AI assistants that understand their competence levels and devise targeted training designed to close skills gaps.

AI will also provide accountants with timely alerts and reminders, ensuring that they stay up to date with the latest regulatory developments, changes to the tax code, and other professional trends. 

Popular AI accounting tools

AI is still a relatively nascent technology, but it’s already making a huge impact on the accounting world. In this section, we’ll look at three of the best AI-powered accounting software out there. 

1. TaxDome

Our award-winning practice management software combines a broad range of features designed to streamline, automate, and enhance your accounting workflows. This includes our newly released reporting feature, which allows you to transform your data held in TaxDome into powerful real-time insights.

The reporting feature also includes an AI-powered search tool that leverages NLP to interpret human inputs and respond with relevant data insights. 

So, for example, if you type in “income from bookkeeping services in Q1 2024”, the AI will search for relevant metrics and data visualizations, allowing you to access insights and build tailored reports rapidly. What’s more, the AI continues to improve over time based on your feedback. 

2. QuickBooks

The market-leading accounting software for small businesses, QuickBooks has leveraged automation for years now. But in 2023, Intuit — the company behind QuickBooks — decided to go “all in” on AI. They now have over two million personalized machine-learning models. 

So what does that mean in practice? Well, QuickBooks offers a range of AI-powered features. For example, you get:

• Accurate cash-flow predictions and forecasting without lifting a finger 
• Automated expense and transaction categorization 
• An AI-powered receipt scanner that automatically extracts information and links it to an existing expense or account

And that’s just scratching the surface. 

AI also plays a central role in the delivery of QuickBooks services. For example, AI algorithms automatically calculate funding options for small businesses through QuickBooks Capital, while AI models partner businesses with the right accounting experts. 

3. Xero

Xero is another big-hitter in the small-business accounting world. And just like QuickBooks, they have been keen to embrace AI over the years. As Xero’s Executive General Manager of Data Kendra Vant put it in a recent blog post: 

“When used well, AI can create a magical ‘whole is greater than the sum of its parts’ experience, where humans and AI work in close partnership and accomplish things faster and with less effort.”

Here are some examples of how Xero infuses its accounting software with AI: 

• ML-powered bank reconciliation predictions
• Analytics Plus — a suite of AI-powered forecasting tools
• Automated text classification
• Automated entity recognition
• Automated form-filling

To explore some of the best AI-powered accounting software options in more detail, check out our article: 9 best AI software solutions for accounting in 2024.

How to start using AI in accounting

AI isn’t a trend you can ignore. Firms that fail to embrace this groundbreaking tech will fall behind those that do. But amid all the hype and development, you might be wondering to yourself, how exactly do I start using AI in my accounting firm?

Fear not! In this section, we’ll guide you through some steps and best practices you can follow to successfully implement AI in your practice. 

1. Identify your needs and objectives

The first step to successfully adopting AI is to understand your needs and goals. It can be tempting to jump headfirst into new trends and adopt any and every AI-powered tool, but a more selective and prescribed approach is more likely to yield greater results. 

Start by evaluating your current accounting processes and workflows. Which areas are inefficient or ripe for change? Which could be improved using AI? At this early stage, it’s also a good idea to define clear goals for the adoption of AI and how you will measure success. Do you want to increase efficiency, scale your business, improve the client experience, or boost profitability? 

2. Choose the right AI tools and software

Now you know your specific needs and goals, you can start looking for AI accounting solutions that align with your requirements. While many AI tools are for general use, you may want to look at those that focus specifically on the needs of accountants. 

You’ll also need to consider how new tools will interact with your current accounting tech stack. Remember: the more tools you use, the more complex your workflows become, and the more you’ll spend on software. For this reason, you might want to look at practice management platforms that provide all the tools you need to run your business, with AI capabilities included, such as TaxDome.

Generally speaking, we recommend focusing on software and apps that:

• Simplify your overall tech stack and processes
• Are intuitive and easy to use
• Focus on automation, customization, and scalability
• Integrate seamlessly with other key systems
• Include comprehensive support, implementation, and education
• Have excellent user ratings on sites such as G2 and Capterra

3. Develop an implementation plan

Once you’ve chosen the AI tools and software you want to implement, it’s time to create a detailed implementation plan. This should include the timeline, steps, and resources needed to integrate new AI tools into your existing systems. 

Some software providers walk you through the implementation process. TaxDome, for example, provides hands-on assistance with data migration, setting up the platform and integrations, and customizing its core features to suit your needs. 

Education and training is another important factor to consider. For more comprehensive platforms, it makes sense to choose a software provider that offers educational content. With TaxDome, you get access to a suite of educational resources designed to get you up to speed fast, including: 

• TaxDome Academy online courses
• Regular webinars covering core features and major releases
• Hands-on bootcamp events
• An extensive library of Help articles

4. Monitor performance and gather feedback

Now you are up and running with your new AI tools, it’s important to monitor performance and measure success against your pre-defined success criteria. Is the new software making your firm more efficient, profitable, or scalable? If not, what challenges are holding you back from achieving your goals?

It’s also worth asking those using new tools for their feedback. Have the new tools made their lives easier? Do they need additional support and training to realize the full potential of your AI-powered software? Do they understand the benefits of using new technologies — for themselves as well as the firm and its clients?

AI accounting implementation examples

We’ve discussed how AI can be used in accounting in theory. Now, let’s look at some real-world use cases from some of the biggest accounting firms in the world — and the impact they’ve had on accounting processes. 

1. Deloitte: automating the document review process

Accountants typically spend a lot of time reviewing client documents. This process can be a major drain on resources. Big-Four accounting firm Deloitte built an AI-powered document review platform designed to liberate accountants from this tedious and time-consuming work. 

The platform combines cognitive technologies, ML, and NLP to interpret language, recognize patterns, and identify key information. In practice, it has enabled the Deloitte team to process documents faster and more accurately, allowing them to increase their contract review capacity by “multiple orders of magnitude.”

2. PwC: improving audit accuracy with AI-based fraud detection

From Enron to Lehman Brothers, history books are littered with examples of high-profile accounting scandals. Given the complexity and scope of corporate accounting, spotting when a company is cooking the books has traditionally been tricky. But with the advent of AI, all that has changed. 

Enter PwC and their innovative bot GL.ai. Powered by machine learning, GL.ai can analyze billions of data points in the blink of an eye. Its algorithm then spots discrepancies among the data that the human eye would likely miss. The result is a faster, more accurate audit process.

3. KPMG: intelligent forecasting using AI

Every business wants to know what the future holds, and accounting firms are no different. The ability to accurately predict future trends is essentially a cheat code when it comes to making smarter strategic decisions. 

Until fairly recently, predicting the future amounted to guess work based on the experience and intuition of humans. But thanks to AI, we can now unlock data-driven insights into future trends and risks. 

KPMG’s Intelligent Forecasting is one such example. Combining predictive modeling and advanced analytics, it helps accountants take a more proactive approach to planning, budgeting, and forecasting. 

FAQs

We’ve covered a lot of ground in this article so far. But just in case we’ve missed some key information, here are some frequently asked questions about AI in accounting.

What is AI in accounting?

AI in accounting refers to the use of AI-powered technologies to automate, enhance, and streamline accounting processes and workflows. The scope of AI in accounting is huge and growing all the time, spanning everyday accounting processes such as expense tracking, audit, and fraud detection, as well as areas such as client onboarding and communication, reporting and analytics, and content marketing.

How is AI transforming the accounting profession?

By automating routine tasks, providing powerful data insights and forecasts, and improving the client experience, AI is transforming the way accounting practices operate. Instead of being replaced by AI, accountants are now augmented by it, enabling them to work smarter, faster, and more accurately than ever before. 

What are the benefits of using AI in accounting?

AI adoption brings all manner of benefits for accounting firms. Automating repetitive tasks enables firms to increase efficiency, scalability, and accuracy, all of which lead to significant time and cost savings. At the same time, AI can provide real-time data-driven insights that lead to smarter decision-making, improve the client experience through timely interactions, and improve job satisfaction among accountants. 

Will AI take over accounting?

AI is already having a big impact on the accounting industry, but it won’t take over the accounting profession completely. While AI can automate many routine tasks and provide advanced analytics, it lacks the human judgment, ability to make truly ethical decisions, and interpersonal skills that are so crucial in accounting. For these reasons, AI will be used as a tool to augment accountants, enabling them to focus on developing those skills that can’t be automated.

What are the key AI technologies used in accounting?

Key AI technologies used in accounting include machine learning (ML), natural language processing (NLP), and predictive analytics. While these technologies are already yielding impressive results, they are still relatively new and will continue to improve over time.

What are the latest AI trends in accounting for 2024?

There are plenty of interesting AI trends in accounting to watch in 2024, including: 

• The increased adoption and growth of AI and ML
• Integration with existing accounting software and other emerging technologies
• The evolution of AI regulations and standards
• More personalized client services
• AI-driven training and development

What are the challenges associated with AI in accounting?

The main challenges associated with AI adoption include security risks, ethical and regulatory concerns, a lack of skills or expertise in leveraging AI tools, and issues around data quality and integration.

How can I start using AI in my accounting practice?

It’s important to take a methodical approach to AI implementation and do plenty of research and planning before you dive in. 

First, you’ll need to identify your current pain points, needs, and goals. Next, you can research AI tools that best align with your requirements. Then, you can develop a detailed implementation plan, including training and upskilling your staff. Finally, once you are up and running, you can monitor performance, ask for feedback from staff, and make any necessary adjustments

To sum up

AI represents one of the biggest technological shifts of all time, with the potential to transform virtually every industry. In the world of accounting, AI is already being adopted at a rapid pace, enabling accountants to increase efficiency, quality, and accuracy across the board. 

While many accountants will have concerns about where this trend is heading, it’s important to see AI for what it is — a tool designed to augment accountants, not replace them. If anything, AI will make the accounting profession more human, enabling accountants to focus on those crucial skills we possess that cannot be automated. 

Adopting AI doesn’t guarantee success, however. Maximizing the value of AI-powered tools requires the right preparation, planning, and skills. Accounting firms that can navigate this new technological landscape effectively will enjoy huge benefits. 

To see how TaxDome can transform the way your accounting practice operates with smart automation, AI-powered reporting, a slick client experience, and much more, request a demo today.