Automation in accounting, just in any other fields, aims at removing simple and repetitive tasks from the workload of specialists, so they can focus on tasks that require more expertise and creativity. Adding AI to the mix will be a next step that enables an even higher level of automation and increase in efficiency.
Digitalization and automation in accounting
Automation in accounting is usually strongly tied with digitalization. The most obvious step is creating and handling invoices electronically, which is these days pretty common among small and medium sized companies in Hungary thanks to the availability of invoicing software.
Another great step can be achieved by introducing continuous accounting, which means taking tasks that are normally performed at the end of an accounting period (month, quarter, or year), and integrating them into day-to-day tasks, this way reducing the seasonal stress and overtime related to closing accounting periods. However, this already requires an integration of accounting and CRM databases that opens debates concerning data security.
AI in accounting
Implementing AI requires all kinds of relevant data to be available in a digitally readable or discernible format, depending on the intended use. For example, AI can “read” documents and check them against regulations to flag issues, or it can perform trend analysis and identify outliers. AI can also be taught to understand inferred meaning in communication and use historical data to adapt to an activity.
All in all, just like automation, AI in accounting can reduce time spent on tasks that can be well defined. These are typically administrative tasks, or tasks connected to reviewing documents. At the same time, accountants and auditors will be able to spend more time that require human judgement.
Risks in applying AI in accounting
While simple automation in accounting, like using invoicing or payroll software, poses relatively low risks, IT integration already has more risks. Besides the financial risks of implementing the integration (since implementing new technology and new workflow always entails some financial risk), AI relies on access to vast volumes of data to be effective. While integrating your accounting and CRM system and turning nonfinancial data into reporting information, maintaining data privacy and data security must become an even bigger priority to make sure only authorized personnel can access confidential information, while the system is resistant to unauthorized access (hackers).
Another risk is posed by machine learning algorithm bias. Especially during the first steps of the learning process, special care must be taken to make sure the AI learns the right correlations and does not become “biased” by disproportions in the data. For example, if in the first data set there is a high number of exceptional items, or if the exceptional items are too often confirmed, the learning algorithm may identify them as normal and fail to flag them in the future.
There is also the problem of legislation. The application of AI in accounting is still in its infancy, which means that it is not really controlled by law. However, once the technology becomes more widespread, new legislation may appear that can make management of such systems more challenging.
Moreover, there is the human factor. Introducing AI in accounting requires flexibility from your staff while the AI takes over more repetitive tasks and lets people focus on tasks requiring judgement: learning new roles that are more centered around business support as well as learning to handle new tools.
How much automation do you need in accounting?
Automation in accounting starts with small tasks like handling invoices, but it can expand into the domain of using AI. With a small or medium sized company in Hungary, the main goal is to make more precise data available in less time, which can already be achieved by applying the right invoicing and payroll software, especially if it goes hand in hand with a user-friendly CRM system. The bigger the company, the more automation you might need in order to keep your operation manageable and transparent.
How can we help you?
Helpers Finance has extensive experience in providing accounting to foreign owned small and medium sized companies in Hungary. We use state-of-the art tools to automate many of the processes in accounting, including handling invoices and preparing payroll. You can ask us about our processes and how they can benefit your Hungarian SME by calling our office on +36 1 215 0712, by e-mailing email@example.com or by filling in our contact form. If you would like to be notified about our future blog posts, like us on Facebook.