Out with the old, in with the new: How AI and automation are changing the financial close

It would be an understatement to say that businesses aren’t run the way they used to be.

Instead of dictating memos to secretaries, consulting miles of filing cabinets for client information, and enjoying a mid-day cocktail, professionals in 2019 use cutting-edge technologies to improve efficiency and save time.

Yet, somehow, many of the challenges employees faced years ago still exist today. Plenty of finance and accounting departments rely on antiquated processes and standards, hampering employee performance and resulting in costly errors that can — and often do — result in millions of dollars worth of preventable errors.

Thankfully, emerging technologies offer the promise of much-needed solutions. As controllers prepare to cope with new challenges and standards, here’s everything you need to know about how artificial intelligence and automation are changing how finance and accounting teams operate (and might help us get back to those two-martini lunches of yore).

Artificial Intelligence

A new kind of smart

For years, the term “artificial intelligence” has existed as a sort of open-ended promise of good things to come. That’s no longer the case. AI’s ability to analyze massive quantities of information to limit room for error and make informed predictions can save businesses billions over time, and that’s just the tip of the iceberg.

Eliminate menial tasks by building a bot

You might not know it, but there’s a good chance the customer service agent you think you’re chatting with online is actually an artificially-powered chatbot. Chatbots can take over menial tasks to allow accountants and controllers to reallocate their time for more pressing challenges. For example, Big Four accounting firm Ernst & Young built an HR bot named “Goldie” that they say has answered nearly 1 million questions for EY employees.

Automate and analyze expenses in real time

AI allows businesses to analyze data in a shorter period of time than ever before. AppZen, for example, allows companies to perform real-time audits across all its spending systems, reducing the impact errors may have by identifying them and correcting them early. After 18 months, AppZen has already saved its clients $40 million in fraudulent expenses.

Predict the future by evaluating the past

Based on the information analyzed, AI-based platforms can accurately predict trends on the horizon influencing how processes are created and establishing new standards for employees. And artificial intelligence is no longer just limited to enterprises with big budgets for custom development. This year, AppZen is releasing a new product to help businesses manage their accounts payable process by performing a real-time audit of invoices and contracts. The system has the capacity to never forget a supplier’s invoice habits and transactions, delivering the ability to detect things duplicate charges and anomalies in invoice behavior over time.

Automation

The case for automation

For decades, accountants have grown used to the necessity of putting in long hours to ensure that the books are closed. Consequently, big picture tasks like revamping outdated processes and conducting fluctuation analysis often are put on hold because of the sheer chaos caused by the financial close. In fact, 82 percent of professionals find the month-end close to be a negative experience. However, by taking tedious tasks off employees’ plates, businesses can benefit by ensuring accuracy and limiting employee stress.

Eliminate time-consuming tasks

Ticking and tying is a task many accountants learn to loathe early, but that doesn’t make it any less important. Using close management software, helps eliminate manual ticking and tying by automating tie-outs from your reconciliations to your trial balance. It used to be difficult to automate this aspect of the close, but FloQast takes the unique approach of integrating with Excel so you can keep your spreadsheets while benefiting from automation to save time and effort.

Minimize the impact of human error

As inconvenient — and costly — as they can be, mistakes will happen, and they tend to happen at the most inopportune moments. Identifying and correcting these errors as quickly as possible mitigates their impact on the business while reassuring staff members that even if they do mess up, the company (probably) won’t go under. One way to ensure that errors are caught before they become a problem is to leverage the automation available in cloud ERP applications.

Ensure consistency

Creating a standard for the month-end close process and improving communication can take days off the financial close. Automation ensures a smooth on-boarding for new employees, limits the impact of departing team members, and creates an environment where transparency and accountability influences performance.

Just as cutting out the martinis from lunch reduced the necessity of a mid-afternoon nap, the integration of AI and automation has the potential to reduce stress, improve transparency, and limit the damage mistakes can make. It will be exciting to watch what new capabilities developers can build out in the near future, but for the time being, the impact their efforts have made are easy to see.