AI-Powered Automation: Improving Efficiency In Accounting

From routine tasks to the monthly close, advanced automation is reshaping one accounting process after another. This article explores how AI-driven automation can help teams save time, reduce errors, and focus on delivering more valuable insights to clients.

Automation is the new norm in accounting

“Automation” has been a buzzword in accounting for a while, but the ability to streamline workflows has now reached new heights. With AI-driven solutions, accounting teams can deliver more value to their clients while also operating more efficiently. As AI continues to evolve, it’s becoming clear that advanced automation isn’t just a nice-to-have—it’s essential for staying competitive in a rapidly changing industry.

The traditional manual entry process

Historically, accounting processes were almost entirely manual. For example, consider prepaid schedules. Accountants often relied on Excel templates developed by their firms. These templates had pre-set formulas, and when a new client was onboarded, a staff accountant would copy the template and start working.

However, Excel is not a database—formulas could be unintentionally modified, leading to errors that were difficult to debug due to their complexity and length. Additionally, if a client’s amortization convention needed adjusting, recalculating the true-up amount became a significant manual task.

Fixed asset tracking followed a similar pattern. Accountants had to identify asset purchases, categorize them, and ensure everything was correctly recorded in accounting software. While Excel formulas automated parts of the process, the bulk of the work remained time-consuming and prone to error.

These manual processes were not only labor-intensive but also risky. Human error was a constant issue, and time spent on data entry left less room for valuable tasks like analysis and client engagement.

The shift to AI-powered automation

Today, AI-powered solutions have automated much of the manual labor that once burdened accountants. Instead of spending time on tedious data entry and manual processes, accountants now focus on higher-level tasks such as analysis and strategic decision-making, overseeing and validating the work that AI performs. This shift enhances efficiency and reduces the likelihood of errors by providing accountants more time for tasks that require expertise.

AI tools can categorize transactions, generate amortization schedules, and post journal entries with minimal human input. This allows accountants to review and confirm outputs, ensuring accuracy while significantly reducing time spent on routine tasks.

Enhancing the month-end close process

One of the most complex and time-consuming parts of accounting is the monthly close process. Traditionally, much of this process involves solving data problems rather than focusing on business intelligence. Accountants spend significant time collecting and cleaning data, using it to generate schedules and reconcile accounts.

Now, AI manages tasks that previously required human judgment:

• Transaction categorization: AI analyzes bank transactions, determines whether an item is a prepaid expense, fixed asset, or another category, and suggests the correct classification.
• Document matching: AI collects, processes, and reconciles large volumes of data, matching invoices with payments, and cleaning up accounts.
• Digital workpapers: AI can auto-create subledger schedules and manage workpapers digitally, replacing the need for manual creation.

Large language models (LLMs) enhance this process by giving AI a deeper understanding of context, enabling it to process data with impressive accuracy. As AI continues to develop, its role in the monthly close process will only grow.

Best practices for integrating AI

While AI-powered automation offers numerous benefits, it’s essential to ensure that these tools integrate smoothly with existing workflows. Firms implementing AI should tailor solutions to complement existing processes rather than disrupt them.

Unlike traditional software, AI isn’t always deterministic. While a software-as-a-service (SaaS) product delivers the same result for a given input each time, AI adapts and improves based on context, learning from each interaction. This flexibility makes AI powerful, but it also requires a thoughtful, collaborative approach to ensure success.

From experience within the industry, the following best practices are recommended:

• Partner leadership: Successful implementations involve leadership driving engagement and participation, joining implementation meetings, and monitoring progress.
• Operations lead: Assigning one person to manage the implementation process can reduce time-to-value and help maintain operational excellence.
• Gradual implementation: Testing with a small group of clients initially—large enough to see meaningful impact but manageable in scale—builds confidence before expanding further.

Move forward with AI in your practice

AI-powered automation is transforming the accounting industry. By automating time-consuming tasks like transaction categorization and reconciliation, accountants can focus on strategic analysis, advisory services, and client interactions.

Advanced automation isn’t about replacing accountants with machines; it’s about empowering them to perform their best work while helping firms grow their business. Ultimately, the firms that embrace AI are positioning themselves to thrive in a rapidly evolving landscape.

The real question isn’t whether automation will play a role in the future of accounting—it’s whether teams have prepared to leverage it for success.

Sponsored Content: This article is generously brought to you by one of our valued sponsors. Their support enables us to continue delivering expert insights and the latest industry trends to our dedicated community of accounting professionals.