Everywhere you look, AI is taking over day-to-day tasks, allegedly freeing up time for more important work.
And while a lot of people use AI every day, it’s not always the better choice. In fact, it doesn’t even always save time.
There are thousands of reports and stories about the latest versions of AI serving up incorrect information, giving harmful advice, and creating a huge mess when asked to come up with solutions for specific problems.
This is especially true in the world of bookkeeping. And I see it happening all the time.
Many of the big software companies that offer bookkeeping services now use AI exclusively, instead of human beings. While this may make the service cheaper, it’s definitely not better. And sometimes, it makes things much worse..
You need to be able to rely on the information in your books. You use it to figure out your taxes. Set your prices. Keep your business afloat. Apply for loans. Pay yourself.
But if the reports you’re seeing contain garbage numbers, that can cost you and your business time and money.
Here are 8 reasons why humans are better at bookkeeping than AI.
1. AI Doesn’t Know What You Don’t Know
AI takes the information you give it and uses it to make its calculations and decisions. It accepts that whatever information flows into its system is correct.
If it is correct, great. You may get accurate reporting.
If it’s not correct, because numbers going in are wrong or the system doesn’t notice when things are entered the wrong way, AI will give you inaccurate results.
This will affect whether your taxes are filed correctly. And it will affect every decision you make for the future of your business.
A human bookkeeper will look at the information and analyze it, understanding “what goes where,” so your books will make sense to you. When you need to make decisions like “how much inventory do I need” or “is my business on track for profits this year”,” you have accurate information to base them on.
2. AI Guesses When It Comes to How It Enters Your Information
AI is learning from user input. But not just from your user input. It’s learning from everyone’s user input. So if other people using your AI-driven bookkeeping software are making mistakes, AI is learning those mistakes and applying them to your bookkeeping.
For example, a client of mine purchases one of her products from a company called Mount Royal Soaps. This name has one word in common with a chain of gas stations in her area, called Royal Farms.
AI automatically entered those purchases into her records as “fuel expense” instead of “cost of goods sold.” It assumed, based on the common word in the names of the two companies, that she had purchased gas instead of products to sell.
Most small business owners don’t even know they need to check for things like this. Would you? Or would you just figure that it’s been categorized by your bookkeeping software, so it must be correct?
A human doing your bookkeeping would quickly catch this problem and fix it for you. Because people understand what actually took place with each transaction.
More importantly, a human bookkeeper can distinguish one company from the other easily and categorize the purchases correctly to begin with. And you’ll know you always have accurate data on how your business is doing.
3. AI Is Auto-Processing Some Transactions That You May Never See
I’m completely serious about this. AI is going through all of your transactions and processing them, regardless of whether it’s correct or not.
This happened to me the other day, even though I turned off the AI functions in my own bookkeeping software (at least as much as the software allows to be turned off). I noticed that one of my clients hadn’t paid their invoice. So I contacted them to follow up. They said that, of course, they’d paid their invoice and gave me the date they paid.
When I looked for that payment, it turns out it was auto-matched and applied to a different client, whose invoice was for the exact same amount.
Fortunately for me, my clients are extremely understanding. However, depending on what you do and the people you serve, misunderstandings like this could cause some serious problems. Especially if it happens multiple times, which could be the case because AI tends to process repeated transactions the same way every time.
When a real person is taking care of your bookkeeping, they will make sure that customer payments are applied to the correct invoices. And if something slips through, they’ll know where to track it down, so you don’t spend a lot of time going back and forth with a client about whether or not they’ve paid their bill.
4. AI Force Reconciles Your Accounts
Everyone’s goal is for their books to balance properly, right?
When AI auto-reconciles your accounts every month, if there is a discrepancy, it can make an adjustment to force the reconciliation to work.
It doesn’t take the time to go through the records to see where the problem is. It doesn’t look at your bank account to make sure the numbers match correctly. It just makes a correction in your register, so the process is complete.
For you, a discrepancy like this could make it more likely that you accidentally overdraw your account. Or that you think you have less money than you actually do, depending on how the account was reconciled. It could keep you from catching a mistake on a bank or credit statement.
A human bookkeeper will take the time to track down where the mismatch in records happened. They’ll make sure the numbers match properly. And they’ll notify you right away if you’re in danger of overdrawing your bank account or if they caught a mistake, so you can fix the problem right away.
5. The Way AI Categorizes Transactions May Not Make Sense for Your Business
Let’s pretend for a moment that your business sells office supplies.
You place an order for office supplies, so you have products to sell to your customers. To you, it would make sense to categorize this as inventory, right?
AI sees “office supplies” and applies this as an expense because, for most other businesses, that’s what office supplies are. It may not make the distinction that for your business, office supplies should be categorized as inventory.
Mistakes like this can change your gross profit. They can also sometimes change your net profit. Or you might decide to change how you price your products if you’re not seeing how much they actually cost, which means you could lose money. AI’s “little mistakes” can have a serious impact on your bottom line.
A real person doing your bookkeeping would make sure you have accurate information so you can make good business decisions in the moment and far into the future.
6. AI Can’t Answer Your Questions
If you have a question about something in your bookkeeping, AI can’t sit down with you and go over the numbers to help you understand why your accounts look the way they do.
AI can’t explain why it recorded something the way it did, or why a certain transaction is always categorized a specific way. It can’t consult with you like a real bookkeeper can.
So if something in your books doesn’t look right and you’re using AI, you have to figure out why on your own. But if you could figure it out on your own, you wouldn’t need AI to do your bookkeeping in the first place.
7. AI Won’t Give You Sound Financial Advice
Honestly, this is a good thing in my opinion. That’s the last thing I want AI to do, especially considering the level it’s currently at and all the mistakes it’s making.
But that’s something a good bookkeeper can and will do.
When a real, caring human being is handling your bookkeeping, they know what’s going on with your business. They see your cash flow. They know which bills have and haven’t been paid. They know which customers are up to date on their invoices and which ones are behind. And they care about what happens to you.
A good bookkeeper makes sure your invoices are sent and can follow up on those that haven’t been paid on time. They can advise you on when it’s time to change your prices. They can help you see the big picture, so you’ve always got your finger on the pulse of your business.
AI isn’t designed to do any of this. It’s designed to take care of one tiny piece of your business. And it may not even get that part right.
8. AI Is Not a Part of Your Team
No offense to AI, but it’s not on your side. It’s not designed to be. It’s just a tool. And one that you can’t always count on.
Your bookkeeper is a member of your team, whether they’re full-time or someone you hire on a fractional basis, like me.
We’re here to help your business succeed. Because we care if your business succeeds.
We also include additional services to help you stay on track.
For example, I include the following in my Business Support Services:
- Financial coaching (personal and business, because it’s all connected)
- Goal setting
- Tax planning
- Customer invoicing and collection
- Help with loan applications and grant applications
- Regular financial statements for your review
- Business planning and strategy
I also do taxes for my bookkeeping clients, for an extra fee. I already know your financial situation, so it’s easier for me to do than if I weren’t keeping your books up-to-date and accurate. That means your taxes get done more quickly, so you don’t have them hanging over your head.
Basically, if you need help, I’m here for you. Depending on the project, there may be extra costs involved, but we’ll discuss that at the time. You’ll always know exactly what to expect.
Don’t Let AI Screw Up Your Bookkeeping – Hire a Human Bookkeeper
I am able to take on a few more clients right now.
I will be upfront and tell you my services are not cheap. But they are more than worth the expense for the peace of mind you’ll have. You’ll always know what’s going on with your business. You can ask questions – and get answers – any time.
Then you can make current decisions based on accurate information and plan for future growth.
If you’re ready to add me to your team, let’s talk.
Please click on the button below to fill out my contact form. From there, we’ll schedule a free 30-minute consultation to see if we’re a good fit.