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Xero Americas 2018 Predictions: The Future of Artificial Intelligence and Accounting in 2018

VMblog Predictions 2018

Industry executives and experts share their predictions for 2018.  Read them in this 10th annual VMblog.com series exclusive.

Contributed by Herman Man, VP of Products and Partnerships, Xero Americas

The Future of Artificial Intelligence and Accounting in 2018

Artificial intelligence (AI) and machine learning offer limitless opportunities to not only continue the evolution of the accounting industry, but completely revolutionize it all over again. The rate of technological innovation will mean that the sector is likely to see more innovation in the next two to three years than it has experienced in the past decade.

At Xero, we have a machine learning system that learns what accountants change in the system and what it relates to - an invoice for time spent on site should be recorded against Sales - Labor, not Sales - Materials, for instance. The machine learning automation evolves with the processes used by the business and their advisor - when the small business comes to create their next invoice, Xero automatically suggests the account code so they don't inadvertently make a mistake.

In the past 12 months alone at Xero, we have processed more than $1.5 trillion dollars of transactions, providing the data which, when combined with some of the most advanced technology on the market, is able to code with up to 90% accuracy.

In 2018, we will see machine learning and AI become more advanced - enabling the automation of the more mundane aspects of accounting. Tasks such as reconciling transactions will be completed by the machine - enabling accountants and bookkeepers to spend more time working on things that are truly going to impact their clients.

More broadly, automation will change the job landscape. Much like robots in the car manufacturing industry, jobs in the future will require different skillsets. Many layers of new jobs will be needed and developed. The accounting industry is not self-disrupting, it's evolving.

While AI and machine learning are hot topics, they're not the only thing shaping the future of the accounting industry. The digitization of the analog world - things like auto-tagging receipts - showcases the power of automation across the board.

If a machine learning system can already learn how invoices are properly coded and then predict and suggest where the next one should be for an accountant's clients -- imagine what's next. In the future, forecasting will be taken to another level for small business owners. Using the vast amount of data accumulated from users, algorithms can be developed that dive into historical financial information and help identify whether a firm will run into trouble - and provide them real-time insights and advice on how to thrive.

Xero AI helps accountants become better advisors. Evolving insights are what's needed to succeed. Robo advisors automate simple investment choices for a customer. However, human advisors are still necessary to provide comfort and richer advisory with their service offering. The same will apply to accountants.

By the end of 2018, we'll be well on our way towards a new era of code-free accounting. With a global accounting engine like Xero, advisors and bookkeepers can transition from compliance to a growth consultant. In 2018, technology will further enable accountants and bookkeepers help small businesses to grow, succeed, and create jobs.

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About the Author

Herman Man 

Herman is the Vice President of Product and Partnerships at Xero. Previously, he led engineering and product management globally for Xero's People Product Portfolio, which encompassed employee products including payroll and expense management. Herman spent 15 years at Microsoft where he worked across various divisions from enterprise to consumer spanning identity management, commerce and multimedia. Herman holds multiple patents for identity and distributed computing. Herman is a proven technical leader, executive and entrepreneur - passionate about finding great ideas and building beautiful products that matter.

Published Tuesday, January 09, 2018 7:25 AM by David Marshall
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