AI is everywhere right now. And there has been a lot of talk about AI replacing the bookkeeping profession. The idea is that all of the data entry and reconciliations can be done by a robot.
Which ideally would be cool. But, honestly I don’t see it fully replacing bookkeeping any time soon. The thing is, bookkeeping comes with a lot more than data entry. Bookkeeping requires a deeper understanding of accounting. It requires knowledge on the chart of accounts and where transactions end up. A quality bookkeeper is going to know the difference between an asset and an expense. A quality bookkeeper is going to know that some transactions aren’t as simple as oh, they went to a food place, put it in meals & entertainment.
It also requires involving the business owner or employees so that you can know if something is a personal expense or a business expense (side note: PLEASE keep business and personal finances separate!). Or what about those Amazon transactions? Where it could be office supplies that were purchased? Or educational materials? How is artificial intelligence going to know?
Not only that, half the time QBO’s bank feed suggestions doesn’t even know what it is suggesting. I can’t tell you how many times I have reviewed a set of books to find the previous bookkeeper was just clicking add and match in the bank feed and not verifying that the match is accurate first. Which indicates that even QBO, one of the leading accounting softwares for small businesses, can’t get their software to guess correctly on where a transaction should be classified.
So as far as data entry goes, I don’t think AI is quite there yet to replace a human bookkeeper.
But it goes even deeper than that..
Bookkeeping is NOT just data entry! And if your bookkeeper thinks it is then you NEED to do yourself a favor and find a bookkeeper who knows better right away. Because chances are, they are only going to cost you more money when it comes time to actually have accurate books.
So what more is there to bookkeeping besides data entry and reconciliations?! Well.. ALL bookkeepers should be able to review their work for accuracy and know what they are looking at when they are looking at your balance sheet and P&L. Even further, they should know how to look at your Statement of Cash Flows and explain to you where all your “profits” went for XYZ period.
How is AI going to check itself for accuracy? Maybe this is where they plan to have AI fall off and a bookkeeper come on to review the work and then go over reports with business owners?
I’m not exactly sure how they plan to replace bookkeeping or if it will be able to be done completely anytime soon. I’m sure in the future it will be a thing, but I think we have a while before it can be fully automated with AI. And until then, using AI may cause more trouble than it is worth. Like I said, if QBO can’t categorize correctly, then how is an AI going to? And what do they do with those pesky uncleared transactions that sometimes show up when you reconcile?
If they have a bookkeeper picking up the review process then chances are it will cost quite a bit of money going that route as well. Reviewing the work and finding out where things went wrong is often times more work to fix than to just have it done correctly the first time around. And that is why if you have ever had your books cleaned up or if you have ever been quoted a cleanup it is soo much money. More issues are usually found while cleaning up the surface issues.
As a business owner, I am curious what your thoughts are on AI in accounting. Would you be open to having it do your bookkeeping for you? Or is the relationship you build with your bookkeeper or accountant important to you?
I’m also curious about the thoughts from others in the accounting industry? Do you see AI eventually taking over the industry? What parts can you see it taking over and when do you think that will be?