Accounting & Tax Tips
May 9, 2023

How AI Technology Can Revolutionize Accounting for Small Businesses

Accounting and bookkeeping can be tedious and time-consuming work. Research suggests small businesses spend, on average, 30 days per year on accounting and related administrative tasks. The good news is Artificial Intelligence (AI) is playing a huge role in reducing this resource drain on small businesses.

Across all industries, AI technology is more instrumental than ever before – with seemingly unlimited uses and benefits, including developing new strategies and providing real-time insights that can help small businesses improve efficiency and accuracy.

With the evolution of AI tools and the abundance of data available for analysis, small business owners can spend their time on more valuable tasks rather than routine activities.

Here are some ways you can harness the power of AI to transform your small business’s accounting processes and set your business on the path to financial success:

Streamline Bookkeeping

AI can help streamline your small businesses’ bookkeeping by automating repetitive and time-consuming tasks, reducing errors, and improving overall efficiency. Accounting software leveraging AI can also catch errors, like duplicate transactions.

Here are some examples of accounting bookkeeping platforms that use AI:

QuickBooks Online: QuickBooks Online uses AI to automate data entry, categorize business transactions, and provide insights into a business’s financial health. It also offers a SmartScan feature that captures and organizes receipts using AI.

Xero: Xero uses AI to automate bank reconciliation, categorize transactions, and provide real-time insights into a business’s cash flow. It also offers a feature called “files inbox” that captures and organizes receipts and bills using AI. Here is what Xero has to say about AI and its application in small businesses.

Zoho Books: similar to Quickbooks Online and Xero, Zoho Books also uses AI to streamline data entry, categorize transactions, and analyze a business’s financial health. It also offers a “Bank Feeds” feature that automatically imports bank transactions using AI.

Using AI-powered bookkeeping products like QuickBooks, Xero, and Zoho Books, your small business can streamline its bookkeeping processes, save time and money, and make more informed financial decisions.

Automating Routine Tasks

AI can automate repetitive tasks and reduce human error for small businesses. Some of these tasks include data entry, creating invoices, analyzing financial data, generating reports, and identifying patterns and anomalies that suggest accounting fraud.

Automating routine accounting tasks allows your team to do their work more efficiently and explore new services they can provide inside and outside your organization.

Improving Efficiency & Accuracy

AI-powered tools can process massive amounts of information quickly and efficiently, making them ideal for complex business tasks such as tax preparation, financial reporting, and related accounting tasks.

In terms of accuracy, AI can assist by structuring and displaying data for examination. Utilizing machine learning and natural language processing capabilities, these tools can identify trends in financial information. Your team can then analyze the data patterns, find errors, quickly resolve issues, and derive valuable insights for your business.

Providing Real-Time & Forecasted Financial Insights

Accounting software with AI capabilities can deliver instant financial insights, empowering your team to make well-informed business decisions, such as where to reduce costs and opportunities to increase revenue and improve profitability. 

These tools can also aid in recognizing trends, predicting upcoming business performance, and helping you to make strategic decisions that contribute to growth based on cash flow projections.

For instance, QuickBooks has a cash flow tool that helps you see how much money your business will have up to 90 days ahead. Xero has a feature that shows what your bank balance might be in 30 days. These can be helpful forecasting tools for estimating your company’s future financial position.

Improving Accounts Payable/Receivable Processes

AI solutions and tools that streamline the accounts payable (AP) paperwork process exist today. An AI-driven system for AP can handle your business’s invoices as soon as they arrive and notify you about opportunities to pay early. 

For some vendors, quickly paying may result in a discount. This is even true for tax situations such as retail tax in Virginia, which offers a “Dealer’s Discount” for early monthly payments.   

Similarly, AI-backed accounts receivable (AR) platforms can predict when your customers will pay based on their payment history. This is a helpful tool for your business’s budgeting and forecasting process.

Platforms like Quadient Accounts Receivable by YayPay use AI capabilities to help predict payor behavior, intelligently automate invoicing and collection communications, and determine customer credit.

In the ever-evolving business world, small organizations constantly seek innovative ways to stay competitive and maximize their potential. If you’re willing to embrace this revolutionary technology, the benefits of AI in your small business likely won’t stop here!

If you want to learn more about how AI and automation can help your business with its accounting needs, click the Free Consult button below to talk to one of our experts.

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