Artificial intelligence (AI) has become a part of daily conversations nowadays. From individuals to businesses, everybody is using AI on a daily basis for personal and professional purposes. Naturally, the accounting industry has not been unaware of this development and has been leveraging AI to automate various processes such as account reconciliation, anomaly management, and financial close management.
The account reconciliation processes specifically have become significantly more streamlined and productive since the incorporation of AI. Take, for example, data entry and data integration, which made reconciliation a very mundane and time-consuming task. With the use of AI, however, such processes can be easily automated. Human intervention has reduced exponentially, allowing accountants to focus on more strategic tasks.
While the intersection of AI with account reconciliation has led to the transformation of the accounting industry, the scope of AI goes far beyond than what has been currently explored.
Let’s understand in detail what the future of account reconciliation and AI looks like.
AI and Account Reconciliation: What’s Next
End-to-end automation: Currently, a lot of reconciliation processes, like transaction matching, anomaly detection, and review and workflow management, have been automated to a large extent.
The next step would be to achieve end-to-end automation for account reconciliation processes. Moreover, end-to-end automation will reduce human intervention to a minimum, where accountants would only need to intervene for highly complex cases of reconciliation.
Predictive analytics: The scope of AI in account reconciliation is not only limited to automation. However, at this time, AI is majorly being used for automation in the accounting industry.
CFOs need to take charge in this case and lead the way forward for investigating the usage of AI for predictive analytics as well. AI is capable of generating strategic insights from the reconciliation data fed to it. This will allow accounting teams to identify cost-saving opportunities, inefficiencies in processes, and potential risks in the financial close process.
Better fraud prevention and risk mitigation: While AI has significantly improved fraud and risk mitigation, there are more opportunities for the accounting teams to improve the processes.
AI empowers accounting systems to have enhanced anomaly detection and resolution capabilities, thereby accelerating the financial close process. Incorporating AI/ML powered accounting systems are capable of analyzing patterns and detecting wrong or mismatched transactions.
AI can further identify risk factors ahead of time so accounting teams will be able to take proactive action rather than fixing problems during the month-end close process. All-in-all, by increasing the use of advanced AI capabilities in the financial close process, businesses can increase security and reduce fraud and risk factors to a minimum, thereby enhancing the accuracy of financial reporting.
Use of natural language processing (NLP): A key step forward in the automated account reconciliation process will be the incorporation of NLP technology. Companies can build out conversational interfaces allowing accountants to interact directly with AI-based reconciliation software.
These systems will further be capable of communicating with all the relevant stakeholders in case they detect any anomaly, thereby streamlining the anomaly detection and resolution process.
Blockchain integration: Blockchain is essentially the next step for CFOs to achieve end-to-end financial autonomy. The technology has immense potential to enhance transparency, streamline processes by removing intermediaries, and increase security when it comes to financial transactions and data.
With the implementation of blockchain technology, companies can further improve financial reporting as the technology provides a single source of truth for all financial data. A key element of this technology is a ‘disrupted ledger’, which allows for more transparency and immutability when it comes to recording transactions.
The unprecedented nature of the business industry especially makes the use of blockchain technology all the more important. Businesses can assess their financial position and dynamically make decisions as their current and future needs change.
Cloud: The scope of cloud technology in the finance and accounting industry is immense. It can help companies stop relying on legacy systems by offering a scalable and flexible infrastructure to store and process large volumes of financial data.
While the adoption of cloud computing has increased over the years, the finance sector is still not embracing the technology as much as it should. Companies are reluctant to get rid of on-premise systems and equipment due to their sunk cost.
The move to complete cloud infrastructure can be easily preceded by a combination of on-cloud and on-premise solutions to ease the transition. Doing so will let companies take a step forward towards an autonomous financial model.
Conclusion
To sum it up, AI has huge potential when it comes to improving account reconciliation processes and enhancing the quality of financial reporting. This potential will be realized with the incorporation of technologies like NLP, predictive analytics, cloud computing, and blockchain. The end goal for businesses should be to achieve end-to-end automation when it comes to account reconciliation.
