With AI implementation being all the rage and more than being just the latest fad, what approach should software vendors and small business owners take so they are not left “holding the bag” while AI is being implemented on their business data? Here are some items to think about.
“Trust but Verify” should be every consumer’s motto when it comes to software usage and implementation that involves software these days. The most visible and costly example is small and medium-sized business owners who are using accounting software (i.e. QuickBooks Online) that is leveraging AI to perform routine tasks in the accounting process. What most business owners may not be aware of is that with the AI implementation rollout of QuickBooks Online, historical rules are now being ignored by AI as AI is having to “re-learn” the client’s data from ground zero in the new AI-generated bank feeds.
In QuickBooks Online, one of these AI-generated routine tasks is Categorizing Bank Transactions and setting up or “Suggesting” rules in the Bank Feeds. When set up correctly, this saves a significant amount of time and expense for everyone. Unfortunately, users that don’t understand accounting or how QuickBooks Online works will rely on the AI to categorize transactions correctly without having an understanding of when a transaction should be on the Balance Sheet or when it should be on the Profit & Loss. Entering transactions incorrectly will cause significant issues on the Company’s final numbers. We here at P&L Business Solutions have seen a material amount of the AI-generated answers to be incorrect when we have done cleanups on Client’s QuickBooks Online accounts. Some other articles also highlight the benefits and risk of AI such as The role of AI in finance and accounting. Real-life ways accountants are using AI
In QuickBooks Online, it is very easy to duplicate transactions whether income or expenses. If someone does not understand how to “Match” transactions (invoices, paychecks, expenses, etc.) or how to search for matches, transactions can definitely and very easily be duplicated. Duplicating income transactions can happen if you “Receive Payment” on an Invoice in QuickBooks, but then you don’t “Match” the deposit with the Payment and just apply the Deposit to an Income/Revenue account. There are some situations that you might need to categorize deposits directly as income, but you should have an understanding of when this would be an acceptable procedure. Overstating revenue is a really bad practice when it comes time for paying taxes!
Also, if trust accounting is being used, you need to be really careful with transfers. In trust accounting, transfers may not always be straight transfers from bank to bank. If there are loans, the loan payments will need to be split between the Loan Liability and the Loan Interest Expense in the Bank Feeds.
If you are concerned about the integration of AI in your business’ accounting system not having the proper oversight, you should talk to a professional accounting firm that understands these risks. At P&L Business Solutions, we help our clients keep their books clean and correct according to Generally Accepted Accounting Principles.
If you notice that some things just don’t seem correct in your QuickBooks Online Account or your CPA is noticing some possible discrepancies, please give us a call at 804-561-1600. We can help! Bookkeeping Chesterfield – P&L Business Solutions
