AI in accounting: what are the latest developments?

Despite Labour’s efforts to foster growth in UK business, it’s still a harsh environment out there for SMEs. A steady rise in inflation, coupled with an ongoing cost-of-living crisis, has meant that it’s now mission critical for businesses’ to have real-time visibility over their finances.

This is where the role of AI in accounting comes in. The days of having to manually add data to a fiddly spreadsheet is going the way of the dinosaur. Using machine learning to automate your accounting process isn’t just a luxury for big corporations any longer.

AI has now become mandatory. It’s not a bonus feature, it’s survival. AI has caused a major shift in the accounting industry. It’s important for all business owners to understand why this is, how it can benefit them, and what AI tools they can use by choosing the best accounting software.

The growth of AI in accounting

While it’s unsurprising that industry titans like the Big Four accounting firms (Deloitte, Ernst & Young, PwC, and KPMG) have invested massive amounts of time and money into in AI, the rest of the industry hasn’t been dragging its heels either.

The 2025 Generative AI in Professional Services Report from Thomson Reuters showed that 21% of tax firms who responded, are “already using GenAI technology, with 53% either planning to use the technology or considering it”. The number of tax, accounting, and audit firms using generative AI took a substantial jump in just the last couple of years: “21% in 2025 from only 8% in 2024“. 

AI has become something of a spectre over the business landscape. The rise of machine learning has left many industries feeling uncertain, but the world of accounting has taken a more positive outlook on AI: the same survey from Reuters showed that “68% of tax and accounting professionals are excited and/or hopeful about the future of GenAI”.

How is AI being used in accounting?

Primarily, AI is being used to eliminate the tedium of monotonous manual tasks, like data entry. However, its uses are far-reaching and in practice, AI is being used to optimise multiple different areas of accounting, including:

Automation

This has quickly become one of the dominant uses of AI in accounting. Accountants and business owners can use AI-powered tools to eliminate time-consuming daily to-do lists. Tasks like generating reports, organising your transactions, and bank reconciliations can all be automated through AI.

With massive amounts of tasks being processed automatically, jobs that would’ve taken hours manually can now be executed in just minutes. This means that less time is being spent on dreary admin, and more focus can be put on complex and nuanced objectives.

Tax research and preparation

According to the Reuters report, tax research is currently the number one most common use case for AI in smaller accounting firms. It’s being used to speedily extract useful data from tax-related content.

In addition to AI-boosted research, these firms are also using AI to more efficiently file tax returns for their clients. The AI is used to automatically extract and analyse information from documents to make the process of preparing tax returns much faster and more efficient.

Deeper data analysis

Businesses are using AI algorithms to analyse their data (such as financial transactions), and pull out insights that inform their strategy and boost profitability. Some firms are taking this a step further by using these algorithms to create predictive insights.

These are being used by tax firms to plan ahead for their clients, identifying trends for a more effective tax strategy. The real-time insights gained from AI can create dynamic budgets which are able to adapt to market shifts.

Eliminating errors

Accountants are using AI to spot errors in real time, flagging up mismatched balances or figures that don’t quite add up. It can also be used to analyse data to ensure it’s compliant with the latest tax codes and rules.

This same principal can also be applied to detecting suspicious behaviours: with AI, accountants can now scan huge amounts of data to identify potentially fraudulent activity.

Additionally, a post from The Institute of Chartered Accountants in England and Wales (ICAEW) detailed some of the more interesting ways its own members had been using AI to improve at their jobs:

• Audit documentation: an improved understanding of a client’s sales process
• Reporting standards: using generative AI to learn differences in reporting standards
• Review control processes: using AI to quickly understand a company’s unfamiliar control process
• Improve data sharing: moving data from Excel to Power BI to get a different look at finances

An interesting trend from the Reuters report is that so far, firms are not prioritising specialist tax or accounting AI tools. They’re sill primarily using open-source AI apps like ChatGPT. The benefit is that these tools are accessible to anyone, and this means that even the most basic, cash-strapped startup can integrate a free AI tool into their processes.

The benefits of using AI in accounting

It’s clear what the industry is using AI for, but what effect is that having on accountants and their clients? To give a better understanding of what this means, here are are four clear benefits from using AI in accounting.

1. Save time: by automating tasks and generating reports, you and your staff will have increased time to dedicate to more important priorities.
2. Faster growth: AI allows businesses to grow and expand at a rate that was previously unattainable. Agentic AI can be used to inform and support scalability.
3. More multitasking: with less time dedicated to data entry tasks, this frees up accountants to juggle multiple high-value tasks at once.
4. Improved service for clients: not only does the time saved by using AI mean clients can receive more attention, AI can also be utilised to analyse your clients’ information in order to provide a more tailored service for them.

A word of caution, though: AI is far from infallible. Be extremely cautious with any accounting or tax information you’ve gleaned from AI, as the technology isn’t perfect. Take any guidance given with more than just a grain of salt. Make sure you do your due diligence and thoroughly research any AI-derived “facts” to ensure the information you’re working with is correct.

Factors to consider before using AI in accounting

Many businesses might still feel (understandably) hesitant about introducing AI into their workflows. The technology is still very recent, and there’s a lot that can go wrong.

Accounting is an incredibly complex topic with a lot of nuance. To fully understand accounting, you need years of knowledge. Not only that, but the whole business requires specific skills. This can’t just be replaced overnight with an algorithm and nor should it.

One area to be very cautious about: AI doesn’t always self-update. Accounting is a complex industry with tax codes and laws that are constantly updating and changing. AI won’t necessarily be able to adapt by itself.

This limited adaptability affects AI’s accuracy, which is a key concern when using AI in accounting. The respondents of the Stanford University survey included “62% who were worried about errors and accuracy in AI-generated reporting“.

You shouldn’t become too heavily reliant on the automation either, as pre-filled data suggested by AI can in fact be incorrect. While AI can be a massive time-saver when doing your accounts, you should always check that everything is correct. This requires a discerning human eye.

If incorrect data is inputted into AI, then this can spiral out of control quickly. It’s important not to leave AI on autopilot, but make sure it’s being monitored thoroughly.

AI isn’t capable of nuance or applying strategic thinking. Don’t see it as a replacement for a member of staff, but a tool that can be used to optimise your workflow. It can’t apply judgement to a situation and it should never be solely responsible for handling your business’s accounting.

It’s perfectly fine to responsibly use AI tools to make your daily life easier, but we’d recommend businesses of all sizes to seek out an accountant, who will be able to advise on complex areas like tax.

How to start using AI in your accounting workflow

By far the easiest way to start using AI in your accounting workflow, is through accounting software. Especially if you’re a one-person-band and using accounting software for the self-employed.

While accounting firms themselves are using more sophisticated AI workflows, for the average small business owner there are more simple (but highly effective) ways to use AI to make your bookkeeping easier. These will also help to minimise stress when its time to do your accounts.

Your main goal for using AI in accounting workflows is to make your bookkeping more proactive, and less reactive. This means creating visibility through real-time automation and insights, as opposed to trying to quickly sort everything out by the end of the month.

One of the simplest, and most helpful, AI-tools you can fit into workflow is receipt capture. Tools like AutoEntry (through Sage), or HubDoc (powered by Xero), allow you to cut out the time wasted on manually uploading your receipts. By using these tools all you need to do is:

1. Snap a photo of your receipt through the app (this can also be used for bank statements, invoices, and other financial documents) and it will extract the key info
2. Select the right categories on your accounting software (this step can be automated later)
3. Publish! It’s as easy as that, all the data will be sent directly to your accounting software

AI productivity assistants also now come frequently built-in to accounting software platforms. You can ask these chatbots when unpaid invoices are due, and then set reminders for you. For example, with QuickBooks’ Simple Start plan you’ll be able to use Inuit Assist to rapidly categorise your bank transactions with AI.

AI tools like Intuit Assist, or Sage Copilot, are built into the software and intuitive to use, so you don’t need to be a tech whizz. Sage Copilot (Sage’s AI-powered productivity assistant) is built into every Sage plan, and can help you execute tasks faster and provide insights into your workflow.

Zoho Books’ (our number one option for a free accounting software) free learning platform Zoho Academy suggests running targeted AI training for your staff, if you have employees assisting with your accounts. If you have any staff members helping with your bookkeeping, you should make sure they’re fully up to speed on how you’re using AI within your workflows.

Will AI replace accountants?

The short answer is, no. For the moment, accountants aren’t under threat from being replaced by bots. Despite the World Economic Forums’ The Future of Jobs Report 2025 proclaiming ‘accounting, bookkeeping and payroll clerks’ to be some of the top fastest declining jobs, things might not actually be so bleak.

A new study published by Jung Ho Choi (assistant professor of accounting at Stanford Graduate School of Business), along with Chloe Xie (MIT Sloan School of Management), suggests a more positive future for AI’s role in accountancy. It contends that AI is here to help accountants, not replace them.

The results of survey responses from the study suggested that while AI is eliminating a lot of the grunt work, rather than making accountants’ roles redundant, it actually means they can use their extra time to apply their expertise. The study showed that accountants that use AI “support more clients per week and finalise monthly statements 7.5 days faster than those who use traditional methods.”

The study also investigated the concern that using generative AI would lead to lower standards and poorer quality work. According to the study, “accounting firms using generative AI saw a 12% rise in reporting granularity, meaning they kept more detailed records.”

AI is highly unlikely to replace the skill and expertise of a flesh-and-blood accountant in the near future, but it will be able to help them cut down on time spent on admin.

In summary

While rapid advancements are being made in the accounting industry by AI, accountants don’t have to worry about being replaced just yet. The advancements into automation and machine learning are being used to cut out the dull leg-work of accountancy, leaving more time to apply strategic thinking and tackle important priorities.

The good news for small business owners is that you don’t need to have an entire IT department or be a tech guru to be able to start reaping the benefits of AI in your own accounting workflows. There are many tools out there that can make life easier for both you and your accountant, and if you don’t start adopting them now, there’s a chance you could be left in the accounting dark ages.

Even if you’re a solopreneur, there’s a good chance you can start using basic AI-tools through your chosen accounting software platform. With Making Tax Digital (MTD) about to come into effect in April, now ‘s the best time to get acquainted with any AI-tools that can help you be fully MTD compliant, even if it’s as simple as receipt capture.