Small business accounting services – the future and impact of Artificial Intelligence (AI)

My thesis is that AI will not affect accounting industry, but robots that perform repetitive activities in the accounting process will dominate the market. Meanwhile, new technology and new ways to market Small Businesses, will create a new, and probably equal or larger, market and the reason is that AI are only in a simple first stage. This market is increasing (today) and new actors creates market shares within Small Business Services - at this moment - such as search engine optimization, marketing. Small Business Accounting Firms have to make new strategies.

Wiki: ” Artificial intelligence (AI) is intelligence exhibited by machines. In computer science, an ideal "intelligent" machine is a flexible rational agent that perceives its environment and takes actions that maximize its chance of success at some goal.”

There is a common idea that AI is coming to dominate the accounting industry. I say that AI has nothing to do with accounting. Why? Well, see it this way. The purpose of the accounting process is to measure the result of an organization and evaluate assets and debts and various industries also have different standarder to report results. At same time our society has set up rules on how organizations contribute to our welfare. Depending on the organization purpose there are different rules. For example VAT can differ depending on type and purpose of an organization and these rules have been created by a number of persons which are elected for this purpose. We know all rules and it is not rocket science - all factors are known. Depending of the purpose of an organization we code invoices different – a taxi business that buy cars for the purpose to transport people have not the same rules as a hairdresser who buys a car. We don’t need AI for calculating the best way to maximize the result because it can only be achieved in one predefined way.

What we need is intelligent software that has the ability to interpret data from invoices and receipts and other sources and compare all information against a number of predefined rules – it’s nothing else but simple calculations that gives financial statements. Software that handles repeated activities in the accounting process we can give the name accounting robot software.

The technology to create accounting robots are already here – scanners, smart phones, PDF, internet, Dropbox and similar products. And in combination with official open company data it's an easy task. And I can assure you that these accounting robots can be created by small development teams.

The business decisions the organization makes can be handled by AI in the future and we all know how difficult it is the brain way. Demand for products and services are not driven by logical decisions. Color, function, status, smell, sound, etc in market groups is behind human decisions that are more or less completely illogical and market analysis differs depending on who is performing the analysis. Laws and regulations are also a factor affecting organizations result. Probably Small Businesses is not going to invest in expensive AI software for decisions they today make with only common sense, but they need help with new technology and new marketing models.

So in the near future, if I make a prediction, the human accountant for Small Businesses is going to be replaced by accounting robots and a new market area evolves with the purpose to optimize Small Businesses result. The person who gives these advices to Small Businesses must have skills in financing, new technology and marketing - maybe more.

Obviously, small accounting firms will be severely affected by accounting robots and their income will decrease if they are not already preparing for the transition and start selling added value.