Unless you have been living under a rock over the past year or so, you will be well aware of how AI has been transforming the way businesses operate. From automating tasks, to boosting productivity, to streamlining processes. However, as with any powerful digital tool, it’s essential that you get to grips with the basics, especially when dealing with sensitive financial data.
Remember, with great power comes great responsibility. So before pouring all your financial details – or, even more importantly, your client’s – into Chat GPT, it’s essential to know how to use AI securely and safely. If you’re wondering what the best practices are for using AI in accounting, here is a helpful breakdown of the essential do’s and don’ts.
The AI Accounting Do’s
Do use AI-powered Accounting Software
There’s a bunch of smart AI software out there these days that’s designed to make your business accounting a lot easier. Xero has a host of AI features, from AI-powered bank reconciliation to financial reporting to predictive forecasting that are specifically designed to make your accounting journey easier.
There are a range of different accounting software out there, but take it from us, as Xero accounting experts, Xero really is the best accounting software on the market for small businesses. And now it comes with an Inspector Gadget-esque range of AI features and gadgets to boot. Using AI-powered accounting software will help you streamline your business accounts and save you a lot of time.
If you want to find out how to set up Xero accounting for your business then read our Xero setup guide.
Do use AI to automate tedious tasks
As a creative business, it is important you stay on top of your game, but who wants to spend their hours focused on the boring financial side of things? With AI operating as your trusty sidekick, you don’t have to.
Leave repetitive tasks such as bookkeeping, reconciling payments and chasing up unpaid invoices to the robots so you can focus on the more strategic side of your business. However, always ensure that the platform you are using is both applicable and trustworthy. You don’t want to be sacrificing your data to the ether…
Do Use AI to Visualise Your Data
Raw data can be a drag. Organising seemingly endless streams of numbers can fry the mind of even the keenest mathematician. With AI, you can convert these numbers into easy-to-read charts, graphs and visuals with excellent AI powered accounting tools. In turn it provides you with a clearer, more digestible picture of your business and a range of invaluable visual insights. Which can help you develop a business strategy that aligns with your vision and your resources.
But remember to be smart with where you are putting your information. Dumping your financial reports into an online AI generator will not give you the accurate results you are after. Instead use accounting software with AI capabilities like Xero.
Do Try Out AI in Predictive Analytics
This is about using past data to anticipate future trends. It’s not a magic crystal ball, but it can give you a heads-up of what’s around the corner and help you plan ahead for your business.
AI is also great for forecasting your future cash flow based on your historical accounting information and data. This allows you to make more data-driven decisions and ensures you’re not caught short when it comes time to paying your bills.
Do Use AI to Break Down Financial Jargon
The world of accounting can get a little complicated, especially when it starts getting technical. Not sure of the difference between gross and net sales? Or cash-based or accrual accounting?
As experienced accountants for creatives, we are always happy to answer any questions that you may have. However, AI helps provide a quicker – if somewhat less human – option when it comes to answering your accounting queries. So if you’ve ever been stumped by complex accounting jargon, don’t sweat, as AI can help simplify complex information with ease.
Do Use AI to Detect Fraud
With financial crime continually on the rise, it’s important your business is kept safe. Detecting fraud can be a time-consuming process but AI can help keep an eye out for any suspicious going on. Because AI can analyse data faster than any human – some have carried out ominous human vs machine tests to prove this – it means that abnormalities are spotted a lot quicker, saving your business from potentially greater financial loss.
The AI Accounting Don’ts
Don’t Just Input All Your Financial Data
As helpful as AI is, as a business it’s essential to ensure your data’s safety. You would think it’s a no-brainer to not put sensitive financial data into ChatGPT, but surprisingly, many people do. In fact, 15% of employees were found to be regularly posting their companies’ private data into the Generative AI app.
But, sharing your sensitive financial data with AI software can lead to some very bad consequences if it subsequently gets hacked. Data breaches are a major headache for any business and can lead to identity theft, financial losses, and legal liabilities. So stay smart.
Don’t Rely Solely on AI
AI can provide some great insights, but remember, it doesn’t replace good old-fashioned human judgement, and at times it can give inaccurate information. So while it is good to incorporate it into your accounting strategy, remember that it isn’t infallible and some oversight is very much needed.
Don’t Have Unrealistic Expectations
AI is an accounting game-changer, but it’s not perfect. When deciding how to use AI in accounting remember it may be a great tool, but it has limits. Believing that you can leave all of your accounting in the hands of AI is a big no-no. It may be able to help with automating tasks but it won’t be replacing the need for accountants anytime soon.
While AI may be revolutionising the world of accounting with better insights and efficient automation, it’s essential to strike a balance. Use it wisely, understand its potential, and always ensure safety and security when handling any of your sensitive financial data – then you’ll be A-okay.
At Raedan we are accounting experts here to make your financial life a helluva lot simpler. We take care of the numbers so you can stay focused on running a successful business. If you want to find out more about how to use AI in accounting to improve your business then get in touch now.