There is a new tech wave in finance and accounting: Blockchain, Artificial Intelligence (AI) and Cognitive Agents enable real time accounting. This changes dramatically workflows and processes in the accounting and finance industry. Here we take a look, which new technologies occurred during the last years and how something quite new and special was born.
The role of the finance department in companies is evolving for some time now. From an administrative function, finance expands to an executive advisory role. Accounting plays a major role in this and many CFOs spend “less time on recording and verifying the numbers, and more time making the data connections and explaining the number implications to the business.” – Source
Prerequisites for Real-Time Accounting
For the transformed finance, you need accounting data in real-time. But how to achieve this?
There are three prerequisites:
- Automated processing
Processes accounts payable, accounts receivables in real-time, without human interactions.
- Automated compliance checks
Ensure company compliance guide lines in real-time – without human audits.
- Human-like interfaces
Enable that all employees can access the data in real-time.
Real-time accounting is around the corner. But what are the drivers? Here, we explore the three key technologies that drive real-time accounting today.
Artificial Intelligence for Real-Time Accounting
In the past accounting was a slow and labor-intensive job. Today, artificial intelligence automates accounts payable (see also our article on automation of invoice processing. Accounts receivables are automated by artificial intelligence chasing technologies as collectAI. AI automates reconciliation in general ledger accounting. The combination of self-learning software applications deliver accounting information in real-time. Businesses benefit from:
· Reduced manual effort
· Increased quality
· Consistent results
· Faster turnarounds and almost real-time results
· Standardized inputs for business intelligence systems
Blockchain for Real-Time Accounting
Accounting departments ensure compliance with local and global regulative frameworks. Nowadays companies receive and issue invoices in reference to contracts. Then you need to make sure the invoices comply with the contracts and its underlying regulative frameworks. This process is time intensive, prone to errors, could lead to manipulation and there is always a certain level of unambiguousness. However, smart companies create “smart contracts” in the blockchain. Smart contracts are trackable and irreversible. In smart contracts, rules and regulations are defined and transparent for both business partners. Blockchain facilitates the execution of the contract as the regular invoice management for suppliers and customers. People create smart contracts, but the Blockchain controls and executes.
Blockchain has the power to change the contract management and execution, but it also ensures the data integrity of accounting records. There are many business cases out there, depend on which stakeholder you are looking: Government, investors, banks, insurance companies, customers, vendors, suppliers etc. The overlapping topic is that all of them rely on accounting data to run their business and take informed decisions.
Cognitive Agents for Real-Time Accounting
Today, you interact with accounting systems through software with graphical user interfaces. Buttons, lists, filters enable you to interact with software. It is often challenging and time intensive to find the right information by navigating through increasingly complex buttons and filters. Soon, AI will make your live easier by offering completely new ways to interact with accounting software.
Cognitive Agents for business applications will soon enable a quick and easy access to complex accounting functions: “What are my earnings today?” Information that will be available soon within seconds based on cognitive interfaces that interact with AI powered software. But you will not only use cognitive agents for an intuitive access to data. Cognitive agents will tell you what to do next in your accounting workflows, identify risks and set alerts to ensure compliance. Cognitive Agents interact with people and facilitates your daily work.
Summary for Real-Time Accounting
Artificial Intelligence, Blockchain and Cognitive Agents turn accounting in a real-time management. Artificial Intelligence is the data generator for business information. Artificial Intelligence enables the real-time data generation for inbound and outbound documents. The Blockchain technology allows distributing information instead of copying, a new type of internet application. Smart Contracts are defined and stored in the Blockchain and Cognitive Agents carry out repetitive action turning accounting in a real-time data generator for business information. A new real-time source for business intelligence.