Machine Learning In Accounting: What Does It Mean For Your Startup?
July 28, 2021
Editor's Note: A version of this article was previously published by Accounting Today.
If you’ve messaged an online chatbot or asked Alexa a question, you’ve used machine learning (ML). But do you know how machine learning in accounting can make your startup’s processes more accurate and efficient?
Machine learning is the application of computer algorithms to identify data patterns and use them to make more accurate decisions in similar scenarios. ML is generally used in conjunction with artificial intelligence (AI) to build automation systems and complete tasks in a way that mimics human actions.
In this article, we’ll look at how machine learning is changing the landscape of startup finances, including some machine learning use cases in accounting.
The Impact Of Machine Learning In Accounting For Startups
Due to the large amount of mundane work and repetitive data patterns, there is a huge opportunity for artificial intelligence and machine learning in finance and accounting to replicate human activities at scale. By using ML-powered software, your finance team can apply these technologies to a range of categories and processes, including:
Recording data and journal entries in the correct formats
Reconciling accounts against bank statements
Identifying data in scanned receipts or invoices
Tracking changes or anomalies in your expenses
Streamlining audit processes or procedures
Improving accuracy of financial planning
Implementing and managing internal controls
Employing ML leads to the following changes in accounting for startups:
Machine learning allows accounting teams to focus on complex tasks.
Growing businesses usually need to process hundreds of transactions, and basic tasks, such as recording and reconciling all these transactions, can take hours of your accountant’s time each week. However, if you use ML, this doesn’t have to be the case.
For example, manually categorizing each transaction as the right type of revenue or expense could take your startup’s accountant or bookkeeper up to 30 minutes every day. A ML-powered platform like Zeni can automatically categorize the transactions in your accounting software in a fraction of the time, freeing up your finance team to work on tasks that require more human expertise and nuanced decision-making.
Machine learning makes accounting proactive rather than reactive.
When you work with a traditional finance firm that manually completes your accounting tasks on a monthly basis, the time it takes to perform all the necessary tasks means you’ll likely only see financial statements 15 days (or more) after the month ends. For example, if your startup’s expenses were 30% higher in February than in January, it would be mid-March before you see this discrepancy. At that point, it may be too late to reduce many expenses in the current month, and you could already be heading for cash flow problems.
In contrast, when you use machine learning to automate accounting tasks, you’ll be able to access reports and insights almost instantly. An ML-powered finance platform like Zeni will close your books every day, giving you the real-time data analysis you need to identify and address any concerning trends before they become serious issues.
Machine learning results in more cost-effective financial services.
Because using machine learning in accounting reduces the human work involved with managing finances, these time savings can then translate to financial savings. Most finance services charge an hourly fee, so the less time it takes them to handle your finances, the lower your monthly bill. In fact, you can benefit from Zeni’s ML-powered services for a startup-friendly flat fee that is only 30-50% of traditional finance firm costs.
The rise of ML is also likely to reduce the range of finance tools you need and, therefore, the number of subscriptions you pay. Currently, most finance teams use many different tools to complete individual accounting tasks, such as paying bills and handling payroll. These tools often don’t use ML or use it in a limited way for a specific feature. The future of finance automation is in a small number of platforms that will use AI and ML innovations to handle all your accounting processes, so you’ll only need a single finance tool subscription.
Zeni: An ML-Powered Accounting Solution Designed For Startups
Zeni is a modern finance firm that uses a combination of high-tech solutions and seasoned finance experts to accurately and efficiently handle all your startup’s accounting, bookkeeping, and CFO needs. Zeni’s AI and ML gives you continuous accounting and immediate access to reports and key metrics, including net burn, cash balance, and operating expenses.
Many accounting firms and platforms try to bolt machine learning onto their existing services, but Zeni offers more comprehensive automation and a smoother user experience by baking ML into the core of our business model. Every Zeni customer benefits from the power of machine learning as standard, with no extra implementation or additional fees.
Zeni is a new age, full-service finance firm, built from the ground up using AI & ML, for startups and small businesses. Zeni’s AI and Finance Experts collaborate together to deliver 100% accurate accounting