AI Accounting: How AI Can Help Your Business in 2025

Published August 14, 2025

Thanks to artificial intelligence, the future of accounting is changing fast. In 2025, you no longer need to spend hours on time-consuming, routine tasks like data entry, reconciliation, or expense tracking.

Instead, AI-powered tools are automating the busywork and giving companies like yours time to focus on what really matters: strategic decision-making and long-term growth. In this guide, we’ll break down the ways that AI accounting is reshaping how businesses track their finances and how your business can take advantage of it.

What is AI accounting?

AI accounting means that machines are trained to understand financial data. These accounting tools are designed to take over repetitive tasks, spot patterns, and provide useful insights that help companies make better financial decisions.

Instead of your bookkeepers manually entering transactions or sorting through spreadsheets, AI can handle tasks like expense categorization, bank reconciliation, and financial reporting with little input from users.

If your company buys office supplies every month, the AI tools learn to recognize the supplier and your spending patterns to categorize those expenses without human input. It can also flag things that seem unusual, like a sudden spike in spending, and alert your team to check it out.

More advanced platforms (including Digits) offer features like real-time dashboards, cash flow projections, and automated bill payments. These tools help reduce the need for manual data entry, lower the risk of errors, and allow accounting teams to focus on higher-value work, like planning, analysis, and decision-making.

How does AI make financial management better for businesses?

AI accounting software helps finance teams focus on bigger financial tasks, like growth strategy, by taking over manual workflows that used to consume hours of their time.

By handling these time-consuming tasks, AI frees up your business to focus on activities like sales, budgeting, and fundraising. Here’s how AI makes financial management better.

Faster turnarounds

Traditional financial management often depends on manual data entry, slow processes, and outdated tools like Excel. AI accounting tools speed everything up.

For example, manually reconciling hundreds of transactions in a spreadsheet might take a bookkeeper a full day. On the other hand, an AI system can scan, match, and verify the same data set in minutes.

Generating monthly financial reports typically requires pulling numbers from multiple sources, checking for errors, and formatting the final version. AI tools can now do all of this automatically with built-in rules and real-time data feeds.

Real-time insights

AI technology also unlocks powerful financial insights. By analyzing your historical data and pulling from your live accounts, AI tools can instantly produce up-to-date financial statements and key performance metrics. With real-time visibility into your cash flow, burn rate, and runway, you can make smarter business decisions faster.

Lower administrative costs

AI reduces the need for large finance teams by handling the repetitive, manual work that typically requires hours of human input. Even accounting firms and professionals benefit, as AI allows them to serve more clients efficiently and spend less time on bookkeeping tasks. The result is lower administrative overhead and more resources freed up for strategic growth.

How can businesses use AI in their accounting systems?

While AI accounting doesn’t replace human oversight, it does help reduce human error, streamline a wide range of financial tasks, and detect irregularities in spending to create more efficient workflows. Here are a few ways AI accounting can ramp up your financial management system.

Invoice automation

AI accounting can simplify invoicing processes by generating, sending, and even following up on payment requests automatically.

For example, a marketing agency that bills multiple clients every month would need to send invoices manually, track whether they've been paid, and send reminder emails if a payment is late.

With AI automation, their accounting system can generate invoices based on project timelines or billable hours, send them out immediately, and notify clients if payment isn’t received by a set date. Once payment is made, it’s automatically matched to the correct invoice in the system. If something doesn’t line up, like a partial payment or a mismatch in invoice number, AI flags the issue for review. This improves cash flow consistency and reduces the administrative load on staff.

Cash flow forecasting

AI tools can identify patterns and generate more accurate cash flow forecasts by analyzing historical data and real-time transactions. These forecasts are especially helpful for budgeting and financial planning, giving your business a better understanding of when to expect inflows and outflows.

For example, imagine a small e-commerce company that experiences seasonal spikes in sales. With AI-driven forecasting, the business can predict when to increase inventory or hire temporary staff well before the busy season hits. This insight allows the company to avoid cash shortages and better manage expenses during slower months.

If you’ve got investors, they’ll want to see how much cash your business has, how long it will last, and whether the company can sustain its operations. A solid forecast helps them understand if you’re managing money responsibly and planning for what’s ahead.

Audit and fraud detection

AI accounting tools can support audit processes by quickly scanning large volumes of financial data and highlighting discrepancies or missing documentation. For instance, they can automatically verify whether receipts are attached to expense reports or if approval workflows were followed correctly. This speeds up internal audits and helps ensure compliance with accounting standards.

In addition to audit support, AI can flag potential fraud by identifying unusual or suspicious activity. If a vendor suddenly charges a much higher rate or an employee submits two very similar expense claims, AI tools can detect these patterns and raise alerts.

What are some challenges to using AI for accounting?

While AI accounting software brings speed and efficiency to accounting, it’s not without its hurdles. Businesses should be aware of the limitations and risks involved when adopting AI tools for financial management.

Data security

AI accounting platforms rely on sensitive financial data to do their job. This includes payroll details, bank account information, tax records, and more. Ensure any AI platform you use follows strong security standards. Look for software that is compliant with security standards like SOC 2. You should also ask vendors how they encrypt data, handle backups, and monitor for suspicious activity. (Digits takes bank-grade security seriously and is SOC 2 Type II compliant.)

Staff training

Introducing AI into financial processes often means a learning curve for your team. CPAs, bookkeepers, or operations staff may need training to properly use new tools and interpret AI-generated insights. Without that training, the software’s full potential may go untapped, or worse, be misused.

It’s important to make sure your team understands how the system works and where human oversight is still required. Maintain clear workflows that define when a human needs to step in, especially for tasks involving compliance, financial forecasting, or exceptions that the system isn’t trained to handle.

The shift to AI also brings a change in how people work. It can be hard for teams to trust that a machine is doing things correctly. A clear onboarding process and a change management strategy are essential. Gradually introduce AI tools and support employees as they learn for long-term success.

Accuracy

AI systems are only as good as the data they’re given. If the data going into the system is messy, inconsistent, or incomplete, AI may make mistakes. Businesses still need regular checks and controls to ensure the AI does what it should. Building in human review processes and validating reports before acting on them will help maintain accuracy. Over time, as the system learns from more high-quality data, it will become more reliable.

Legal and Compliance Risks

Accounting is a highly regulated field with compliance and tax implications. To reduce this risk, choose an AI accounting platform that is built with compliance in mind. Look for tools that offer features like automated audit trails, role-based access controls, and real-time regulatory updates.

How startups and SMBs can get started with AI accounting

Adopting AI for accounting doesn’t have to mean replacing everything your startup or small business already uses. Begin by identifying which accounting processes are most time-consuming or error-prone, then explore AI systems that can streamline those specific tasks.

Whether you're working out of spreadsheets or using a full ERP system, the goal is to make your existing workflows more efficient, not to rip out and replace them. Many AI accounting tools are designed to integrate with what you already use, from invoice software to e-commerce platforms.

Look for tools that work with your stack

Before committing to any AI-driven accounting solution, make sure it works with your current software stack. If you're using tools for expense management, accounts payable, or tax filing, your new system should integrate with those services. The more connected your systems are, the more value you’ll get from automation and the less manual work your team will need to do.

Look for AI accounting providers that can handle core accounting tasks like reconciliation, expense categorization, and report generation while syncing seamlessly with the platforms your team already relies on.

Start with one workflow

You don’t have to automate everything at once. A good starting point is a single, high-friction workflow, such as invoice processing. These areas are often repetitive tasks that are ideal for automation.

By focusing on one workflow first, you can test how the system fits your operations, evaluate its accuracy, and train your team without overwhelming them. Add additional workflows over time until you’ve fully leveraged AI accounting capabilities.

Measure efficiency, not just cost savings

While cost reduction (in terms of saving on the cost of human labor that previously handled manual accounting tasks) is one of the benefits of AI, it shouldn’t be your only metric for success. Pay attention to how much time your team saves on repetitive tasks, how often errors are caught early, and how much faster you can close your books or prepare reports.

Efficiency gains, like faster invoice approval or fewer manual corrections, are often more valuable in the long run than cutting headcount or how much you spend on accounting solutions. Look for measurable improvements in speed, accuracy, and decision-making support as signs your AI solution is working.

Why Digits is the smart way to start with AI accounting

Digits is the best way to get started with AI accounting because it’s purpose-built, accurate, and includes all of the features a business might be looking for.

Unlike other tools that add AI features to legacy systems, Digits is AI-native from the ground up. It’s powered by the Autonomous General Ledger (AGL), a proprietary system trained on over $825 billion in financial activity across 170 million transactions. That foundation makes Digits 54% more accurate than large language models at classifying financial data, giving you dependable results you can actually trust.

Plus, Digits has all kinds of AI features designed to simplify both accounting and bookkeeping. This includes:

Autonomous transaction categorization and reconciliation: Digits keeps your books accurate and up to date automatically. There is no need for spreadsheets or manual tagging.
AI Bill Pay: Approve and send payments with fewer clicks while Digits handles matching, categorization, and reconciliation behind the scenes.
Real-time, customizable dashboards: Track key metrics like burn rate, cash flow, and runway on live dashboards without waiting for end-of-month reports.
Seamless integration with your existing financial tools: Get started quickly without needing to migrate platforms or overhaul your processes.