How Can AI Help Bookkeeping for Small Businesses
Artificial Intelligence (AI) has quickly become one of the most exciting tools available to small businesses. What used to be dreamed of in science fiction is now assisting business owners to save time, improve efficiency, and gain valuable insights into their finances. How can AI help small businesses with their financials? If AI can streamline work, why would a business still need a bookkeeper?
A small business owner wears many hats. Time spent chasing invoices or reconciling bank accounts is time taken away from serving customers or growing the business. AI can assist in reducing administrative tasks so owners can focus on what they do best.
Faster customer and vendor setup:
AI is streamlining customer and vendor setup to save time by reviewing contracts, invoices, and sales orders and automatically entering the data into an accounting system. By removing time spent on data entry, orders are processed, invoices are paid, and work orders begin quicker and with fewer errors.
Smarter invoice collections:
A small business can use AI to get paid faster. AI uses historical data to find patterns. Once a late payment pattern is identified, AI will use the information to suggest ways to encourage customers to pay early or on time. Examples include offering discounts for early payment or assessing reasonable late fees.
Automated bill reminders:
AI can use the data extracted from vendor invoices to set up a reminder to pay. Reminders can be set up for monthly or recurring bills also. Doing this will help to keep your business in good standing with your vendors and assist with ensuring funds will be available.
Faster bank and credit card reconciliations:
AI will review statements and match to common transactions in the database and clear them on the reconciliation automatically. For those transactions that are not common or new, AI can make suggestions for review.
Financial report analysis:
Reading financial reports are made simpler with AI assistance. For example, AI can analyze the P&L statement and flag areas that need a closer look. It may offer possible reasons for variances or suggest which products and services deserve additional investment.
Contract data extraction:
Along with automatically setting up a customer, AI can also analyze contracts and project documents to estimate labor and material requirements, monitor project progress, and assist with periodic billing.
Can AI Replace Your Accountant?
AI has trouble with uncertainty, estimations, and valuations. Especially, with assets like goodwill, patents, or even real estate where property values are often changing. AI cannot apply professional judgment to changing business conditions. Because AI relies primarily on historical data, it may suggest expensing a transaction when it should be capitalized. An experienced accountant can best determine the useful life of an asset and formulate an appropriate percentage for expected bad debt.
Information that AI produces is only as good as the information it receives.
AI may identify unusual transactions, but it cannot determine whether they are simple bookkeeping errors, legitimate business activity, or potential fraud without human review.
A business needs facts, metrics, and data analysis of their financials, their industry, and assessing the economic environment to make data driven decisions. Accounting systems produce financial data based on a period of time. Accountants are needed to explain a business’s financials in light of current trends plainly in a way non-accountants can understand.
J & J Bookkeeping LLC Can Help Your Business
AI is changing bookkeeping in exciting ways, but technology works best when combined with experience and sound financial judgment. At J & J Bookkeeping LLC, we embrace the latest tools while providing the personalized guidance that helps small business owners understand their numbers and make informed decisions. If you’re ready to spend less time on bookkeeping and more time growing your business, we’d love to help.
Contact J & J Bookkeeping LLC to learn how technology and personalized bookkeeping can work together to keep your business on track.