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How AI can transform accountants’ services

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23rd Mar 2017
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The fears attached to machine learning and artificial intelligence (AI) could be ripped straight out of a science fiction novel.

With countless stories in the press eulogising the end of the profession, it’s no wonder accountants and bookkeepers lie awake at night fearing the potential threat of a Westworld-like uprising to overthrow their jobs.

“There's this sci-fi dimension that we jump instantly from automation and machine learning to The Terminator,” Xero’s managing director, Gary Turner told AccountingWEB. “It isn't quite as simple as that and actually the applicational machine learning and automation will be all about augmenting and improving what small businesses and accountants do.”

Far from the sensationalist headline that robots are coming to take your jobs, machine learning would eliminate the low-rent, time consuming jobs that prevent accountants from spending more time with their clients, offering more higher value services.  

In order to do this, Xero has built upon its find and recode feature which launched a year-and-a-half ago. Essentially, this feature streamlined the process for accountants and bookkeepers to hunt and retrieve miscoded invoice transactions. Since the feature was released Xero has seen more than 3m posting corrections done by accountants and bookkeepers every month.

This got them thinking: “What if we could prevent the mistakes from happening in the first place,” said Turner.

So Xero incorporated machine learning into a new pilot scheme where the drop down option where small business owners select the account code is removed, and instead, the machine learning intelligence automatically populates the space with what it believes to be the correct code based upon similar transactions.

The machine learning intelligence enables the accounting engine to quickly code based on the behaviour of tens of thousands of people. “The cool thing about machine learning is that the more data you expose them to the more accurate they become,” said Turner.  

In testing, the accuracy actually hit 90% after 50 invoices. This simple application of machine learning reveals the potential behind the technology. Xero’s recent state of accounts research revealed  that 71% of accountants believe that knowledge of machine learning will be a crucial to their success.

And already, 48% of accounting professionals have undertaken internal courses, while 26% have enlisted external courses to future proof their skills. As an example of this, Armstrong Watson, a top 30 firm in the north of England, recently retrained its entire workforce in anticipation of Making Tax Digital, focusing on streamlined accounting workflows.    

And accountants are relishing the opportunity machine learning presents in removing “tedious tasks” to concentrate on higher value offerings and harness the data capabilities automation could extract to analyse businesses.

Seeing how machine learning is being adopted in other industries, Paul Bulpitt, Xero’s head of accounting, expects in the coming years that accountants will be able to take all of the data at their fingertips and be able to make predictions.

“Imagine as an accountant pulling various data sources and being able to give alerts and insights as to when, for example, a business is going to have a cash flow hole,” Bulpitt told AccountingWEB, “ and then being able to phone your client and warn them that the data is showing that we need to take action now.”

Many accountants already use forecasting for their higher value services. But Bulpitt expects the power of AI will take this service to another level of accuracy. “Imagine being able to put in truly predictive insights into that forecasting,” he said.

The uptake of professionals expanding their service offerings through this tech splinters away from the perceived narrative that machine learning is something to be feared. If anything, Turner believes that machine learning will only increase the emphasis on accountants’ human skills.

“The assistive dimension to automation and machine learning will actually be the real story,” Turner noted. “The combination of a qualified professional human plus great data insights and great automation we think is the best of both worlds.”

Have you undertaken training or changed the way you offer service to your clients to future-proof your firm?

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