As generative AI shifts towards mainstream adoption, many small and medium accounting firms are starting to feel the pressure to put AI tools to work. But what does the AI landscape really look like in accounting firms?

In spite of the hype, we might be farther away from AI-first firms than a lot of tech companies would like to believe. For many small and medium firms that have yet to adopt AI, that’s probably a relief – but even if you’re not using AI yet, chances are you might in the future.

Below is an overview of where firms are (and aren’t) at when it comes to adopting AI.

Big four firms are building AI tools, but small firms are slower to adopt AI

Thomson Reuters reports that big four firms are already building AI tools for document review, auditing, IT, and client service. With big budgets and big reputations to uphold, they’re in a race to position themselves as being on the cutting edge of their field.

But as CPA Gene Marks points out in Forbes, “Take note of the words in all of these statements, press releases and news articles: they are “could” and “will” and “building” and “promises.” It’s all just starting. Accountants should be aware: none of this stuff is ready yet for prime time.”

The same Thomson Reuters study found that smaller firms are largely heeding this advice; 49% of respondents don’t have any plans to adopt AI yet, as concerns around safety and accuracy remain. The firms that do use AI are mostly using open source tools like ChatGPT rather than industry-specific AI tools, and many still feel confused about how AI can benefit them.

What are smaller firms using AI for right now?

If 49% of accounting firms aren’t using AI, what are the other 51% working on? Internal communications, tax assistance, audits, and compliance are popular use cases. If you’re thinking of getting your feet wet with AI-enabled tools, here are a few highlights:

Keeping up with big data is a longer-term strategy for 25% of accounting firms. As big data becomes more important for advisory services, data analytics tools can be a significant differentiator. New accounting grads are entering the workforce with data analytics skills that can boost reporting and KPI tracking for forward-thinking firms.

Reducing manual data entry with data extraction tools is also becoming more popular. This ranges from optical character recognition tools that extract data from documents and receipts to sophisticated data extraction tools for ecommerce and other commercial clients.

Text-to-formula tools for Excel are helping new accountants create more sophisticated spreadsheets with macros, step-by-step instructions, and web scraping tools for spreadsheet creation. Beginner and intermediate Excel users can get a boost from tools like Copilot that integrate generative AI into Microsoft Office workflows.

Strategic brainstorming is a less popular use case, but it’s likely to become more popular as generative AI tools get more sophisticated. Combined with the careful oversight of management, it can help firm owners create marketing, business, and financial strategies that open the doors to new opportunities.

In the face of an ongoing talent shortage, AI tools have the potential to boost productivity and help struggling firms meet client demands. But for a lot of firms, that potential is still untapped.

What’s next for firms that aren’t using AI already

Marks notes that accounting firms don’t need to rush with AI. Since it’s still a new technology, there’s still lots of time to experiment with new tools. But the trend towards AI adoption means it’s wise to start thinking about creating a solid data foundation and getting ready to implement the tools that will automate repetitive tasks.

It’s also worth noting that there are still lots of tasks that need human oversight. Knowing what not to automate is just as important as understanding what AI can help with, and many firms look to balance innovation with protecting client data.

If you need to start organizing your data, ProCharted can help. An easy to use all-in-one platform for storing and managing your firm’s data can help you build a backbone for AI automation in the future, with security and privacy features that ensure data is kept safe.

Rather than choosing complex tools, starting with simpler solutions can help your entire team manage their core tasks more efficiently with client management, document management, workflows, billing, and more in one place. When you’re ready to move forward, you’ll know exactly where all your data is for more efficient automation at scale.

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