“Everybody’s talking about the weather, but no one’s doing anything about it.” – Will Rogers, American humorist.

“Everybody’s talking about AI, but no one seems to know what to do about it.” – Me.

I’ve written several articles on AI and automation, including Do not buy AI software - yet!, Automate the dreaded Month-End Close!, Automate: Keep rev rec from becoming "rev wreck"!, and others; but I’m writing this one to help you figure that what the heck to do with AI.

Note: Many people confuse automation with AI. AI vendors will tell you all of the things that AI will do for your accounting processes but (shhhh… don’t tell anyone), they’re mostly talking about automation.

That’s why you should automate first – then AI. But please, read on. AI does have a place in your future.

Why use AI? The accounting skills gap is driving AI adoption.

Short-staffed businesses in any industry basically have three options: Ask existing employees to work more hours, cut back on services, or invest in technology to improve the efficacy of the current workforce. Many companies who face staffing challenges are now turning to artificial intelligence (AI), to solve their skills gap issues.

Question: Why is there an accounting skills gap?

Answer: More people are leaving and fewer people are entering the accounting profession

An exodus of retiring accountants, pandemic-related fallouts, including the “Great Resignation”, and declining numbers of accounting graduates, have created a perfect storm for the accounting field. Almost 75% of the CPA workforce hit the retirement age in 2020, and younger accountants are leaving the profession in droves. There’s a need for new talent, but the number of CPA candidates sitting for the Uniform CPA Examination in 2022 was the lowest in 17 years.

CFOs are certainly feeling the effects of retirements, departures, and the sluggish pipeline. Asked if their finance teams are currently experiencing a talent shortage, 84% of respondents said yes. Diving deeper:

• 81% report a talent shortage in accounting roles
• 49% report a talent shortage in Financial Planning and Analysis (FP&A)
• 42% report a talent shortage in Accounts Receivable (AR)
• 39% report a talent shortage in Accounts Payable (AP)

When asked to explain the reason(s) for the talent shortage in their finance team, 63% of respondents said there’s a lack of experienced talent. Like other industry watchers, CFOs are finding:

• Fewer people are majoring in the finance function (54% of respondents)
• Talented people are changing careers (47% of respondents)
• There’s burnout around hours and menial tasks (47% of respondents)

Depressed yet?

Don’t be. Help is on its way. If you're willing to do a bit of homework.

AI to the rescue: AI and Automation will drive efficiency, productivity, and profitability.

With fewer people available to complete essential tasks, CFOs are turning to AI. Just over 92% of CFOs surveyed agree that AI tools will help businesses find efficiencies and drive productivity and profitability. This is true for polled CFOs of all ages, though particularly for those age 55+.

Most of the CFOs plan to invest in AI to streamline the finance function; here’s their timeline:

• <1% said in the next 7 weeks or less
• 43% said in the next 2–3 months
• 22% said in the next 4–5 months
• 19% said in the next 6–7 months
• 12% said in the next 8–11 months
• Less than 1.5% will wait one year or more; fewer than 2% weren’t sure.

ChatGPT is a leading AI option

Among CFOs surveyed, ChatGPT is the leading option for AI. Nearly 65% plan to invest in ChatGPT to streamline the finance function of their teams. Salesforce is the second most popular solution, with 53% naming it. Other options include Zapier (32%), Bard (29%), and Einstein (23%). Only about 21% plan to build an in-house solution to meet their needs – (Note: personally I don’t recommend that route unless you have a really good (and not busy) IT department).

What is ChatGPT? Well, GPT is short for Generative Pre-trained Transformer, and is a type of artificial intelligence model for natural language processing. It uses machine learning techniques to understand and generate human-like text. ChatGPT-4 is known for its ability to engage in human-like conversation, making it a powerful tool in numerous applications, including accounting.

How can ChatGPT help you in accounting?

1. Categorizing invoices and expenses

All businesses have expenses – whether they have revenue or not. They receive lots of invoices and need to record numerous expenses daily. Manual categorization can be time-consuming and prone to errors. ChatGPT, trained on a diverse range of internet text, can help businesses automate this process. With its machine learning capabilities, it can analyze and categorize invoices and expenses based on predefined categories or even learn and improve over time, increasing efficiency and accuracy.

Read more from my post here: Automate your bill paying processes!

2. Financial report generation

Generating financial reports is a fundamental aspect of accounting, often requiring extensive time and effort. ChatGPT can streamline this process by automating the generation of basic financial reports, such as income statements, balance sheets, and cash flow statements, based on input data. This leaves accountants with more time to analyze the reports and provide strategic advice to the business.

3. Audit process

Auditing involves going through vast amounts of financial data, which can be tedious and labor-intensive. ChatGPT can be employed to scan through and organize the data, making the auditing process more manageable. It can help in cross-checking entries, identifying anomalies, and organizing the required documentation, thereby reducing the time spent on manual data handling.

4. Financial data analysis and forecasting

The ability to analyze financial data and forecast future trends is a vital component of strategic planning. By processing large volumes of data and identifying patterns, ChatGPT can help businesses understand their financial health and predict future trends. This valuable insight can help businesses make informed decisions, manage risk, and capitalize on opportunities.

5. Tax compliance

Tax laws can be complex and continually changing. Businesses can use ChatGPT to stay updated on these changes and ensure compliance. It can help with calculating tax liabilities, filing returns, and providing basic guidance on tax matters. However, it’s essential to remember that while AI can provide assistance, professional advice should be sought for complex tax issues. Read more from my article here: Automate consumer use tax.

6. Financial projections

One of the key responsibilities of accountants and financial professionals is to provide accurate financial projections. These are essential for strategic planning, securing funding, and evaluating the financial health of a business.

Traditionally, creating financial projections involves manual data entry, data sorting, and complex calculations, which can be both time-consuming and prone to errors. However, with the advent of AI and machine learning technologies like ChatGPT, the process can be substantially streamlined and improved.

7. Fraud detection

Financial fraud is a significant concern for businesses. With ChatGPT’s ability to analyze and identify unusual patterns in financial data, it can aid in detecting potential fraud. This could include detecting unusual transactions, inconsistencies in financial reports, or irregularities in invoices and expenses.

Bonus: Better customer communication

In my experience as a trusted accountant to many companies, it is essential to stay proactive in keeping clients informed about regulatory changes, upcoming deadlines, and important financial matters. Even if it’s bad news. Better to address problems asap than to put them off – problems almost never go away and they certainly do not solve themselves. With the assistance of ChatGPT, you can effortlessly generate clear and concise emails, letters, or other communication materials to ensure your clients are up-to-date and well-informed.

For starters, use automation first.

For the record, I am not saying that AI has all of the answers. I think that you should first leverage embedded tools in your current systems, in the form of automation (e.g., RPA), low code/no code, and other tools.

And I’m not alone. According to CFO Dive, “CFOs are under increasing pressure to weigh the value of [automation and AI] technologies not only for their future potential, but as ways to help bring down costs in a rocky economic environment.”

I say, use it! Start with the automation that’s built-into your back-office/ERP system like NetSuite, your month-end close system (e.g., FloQast), your tax system (Avalara), expense/spend management (Expensify), etc..

Look for latent talent in your workforce.

Latent talent are non-professionally trained developers, which Gartner calls “Citizen Developers” who can use automation tools like low code/no code (which as the name implies require little to no programming skills). For example, many accounting professionals are already writing “code” by writing macros, using Python, and other tools.

Here are some examples of process that can be easily automated by pretty much any level of accountant:

• Use automation and AI to automate your month-end close (Automate the dreaded Month-End Close!).
• Use automation and AI to automate quote to cash (NetSuite).
• Use automation and AI to automate your procure-to-pay (NetSuite).
• Record to report (financial statements, JEs, rev rec, etc.) - Automate: Keep rev rec from becoming "rev wreck"!
• Automate sales and use taxes across the US and state-wide - Automate consumer use tax

Conclusion.

Let’s put an end to the dreaded “swivel chair computing” epidemic! Use AI and automation to automate repetitive tasks, minimize errors, and to improve the overall quality of work – and life. Oh, and to do it faster than ever. With less people who are happier in the jobs. (Bonus: They want to stay!)

Here’s something to motivate you: Companies who identify, train, and use internally-derived business technologist to automate mundane tasks like the above are 2.6X (that’s 260%!) more likely to reach their goals, according to Gartner.[i]

Write to me to learn more. I’ve worked with over 100 companies in my career, nine of which have become unicorns. Will yours be number ten?

All my best,

Kim

The FinOps Advisor

kimberly@finopsadvisory.com

[i] https://www.gartner.com/en/articles/the-rise-of-business-technologists