Undoubtedly, AI has been a key technology disruptor impacting every industry. However, its adoption was slow in this space until ChatGPT emerged. ChatGPT is an advanced natural language processing (NPL) powered by Artificial Intelligence (AI) with the potential to transform the landscape finance and accounting industry.
Arguably, it is intelligent enough to resolve all your queries, but one cannot pledge over its accuracy. The software’s commendable performance has gained much traction across businesses. Nevertheless, many industries use it for daily operations, which makes it a threat to employees.
How will it impact the finance and accounting industry? What are the limitations of ChatGPT in this sector, and what the future holds? Let’s dive deep into this blog to explore all the facts.
Impact of ChatGPT on Finance and Accounting
1. Streamlines invoices and categorizes expenses
The most mind-numbing and tedious task for accounting experts is processing invoices and categorizing expenses. Many firms, certified public accountant (CPAs) hire resources to get the job done. However, ChatGPT can analyze invoices and extract relevant data such as invoice number, amount, due date, and vendor information.
On the other hand, categorizing expenses based on predefined categories include utilities, office supplies, rent, and travel expenses.
Tip: Make sure your prompts are accurate and clear.
2. Analyze data through automation
Analyzing massive amounts of data can be overwhelming for accounts. In addition, manual analysis is time-consuming, and the risk of errors can be high. This is where ChatGPT can help you automate this kind of data analysis, saving time and improving accuracy.
Based on a study, 43% of accountants reported increased productivity as a direct result of integrating technology. Since ChatGPT can perform statistical analysis and calculations, and unleash patterns and trends in data, automating data analysis has become an ideal solution for accountants.
Rather than sifting through thousands of numbers to identify potential risks or cost savings, ChatGPT can do the job in a few clicks.
Tip: Focus on financial advisory work more.
3. Generate audit reports at your fingertips
A crucial aspect of accounting is doing audits to assess customers’ financial positions; accounting firms should be capable of providing timely and accurate audit reports. However, creating these audit reports can significantly drain your resources in the long run.
That being said, accounting teams and firms can leverage ChatGPT and automate the audit process by providing adequate reports. Mainly, it can analyze the financial data meticulously and identify any errors or discrepancies.
Tip: Don’t overshare sensitive data on OpenAI.
4. Financial projections
ChatGPT can be optimized for evaluating financial data to understand KPIs like cash flow, revenue growth, and business expenses. Businesses often devise strategies depending on future revenues, for which accurate financial predictions are imperative.
Reviewing balance sheets, income statements, and cash flow projections is needed to make these projections, making the process time-consuming. However, this is where ChatGPT’s evaluation capabilities can be leveraged.
Tip: Ensure you have human validation for the reports.
5. Give tax advice
Another challenging task that accountants need to undertake is navigating through tax laws. It is hard to comply with laws without knowing or learning them before applying the principle in your business.
ChatGPT can make your job easier by bringing in limelight-specific tax laws that are ideal for you and providing suggestions on how to use them. It also can explain laws you are unfamiliar with so you can understand them better.
Tip: Ensure to be specific about the state for retrieving accurate information.
Limitation of ChatGPT
So far, we have emphasized ChatGPT’s positive impact on the finance and accounting industry. There are undoubtedly several possibilities to free up your time and tackle complex tasks. However, it is crucial to understand the drawbacks and make it helpful for accountants to leverage technology efficiently.
1. Unreliable information
One major drawback of ChatGPT is that it delivers accurate and reliable data as instructed. Although it has the power to learn, improve and modify information with time, it may struggle with industry-specific terms or financial jargon.
Hence, it becomes crucial to validate and review the information delivered by ChatGPT. This is where accounting outsourcing companies can help you. With an expert team of professionals, you can ensure data accuracy retrieved from ChatGPT.
2. Data security risks
Putting your accounting information online makes your data vulnerable to cybercrimes. As far as ChatGPT is considered, it uses sensitive financial data during the exchange of information through the Internet, which doesn’t guarantee complete security. Therefore, it’s crucial to ensure robust security measures to protect data from unauthorized access or breaches.
3. No accessibility to real-time data
ChatGPT, as a language model, cannot access real-time data unless specifically integrated with live data sources. Hence, it may not be up to date with the current financial information or market trends, impacting your decision-making process.
4. Limited Industry-specific knowledge
While ChatGPT has been trained on extensive generic knowledge, its training data might not include broad or specialized knowledge particular to the finance and accounting industry. This limitation can affect its ability to understand nuanced financial concepts or interpret complex regulations accurately.
5. Dependence on training for quality work
ChatGPT heavily relies on the quality and pertinence of its training data. If the training data contains biased or false information, it can potentially lead to biased or incorrect responses. This issue is significant in finance and accounting, where accuracy and integrity are crucial.
What Will the Future of ChatGPT Unfold?
ChatGPT has already come a long way in a short span of time. It is expected that ChatGPT will become a common practice across finance and accounting to speed up the work and achieve desired goals.
As a platform, it will prove to be beneficial for accountants, helping them to map out their work in an efficient manner. Experts also suggest that decentralized finance systems will become a new normal in the upcoming years, and ChatGPT will contribute to this transition.
To fully utilize the platform, you can prepare a baseline document of process and interaction mapping the usage of ChatGPT.
ChatGPT will have a lasting impact on various industries poising several challenges and opportunities. It will become a game-changing tool enabling businesses, CPAs, or CFOs to automate calculations, streamline data analysis, and focus on more complex tasks requiring their expertise.
However, we believe that one should not completely hand over the back-office work to an AI robot. Instead, handing it off to a reputable accounting outsourcing company like “Accounting To Taxes” is better.
Our team of highly skilled professionals understands your requirements and industry needs. We can help you leverage the power of technology and outsourcing to achieve your business goals. Contact us at +1 646-688-2821 / [email protected] to discuss our finance and accounting services.