Despite the rise of artificial intelligence, only 24% of small business owners using it for financial management or accounting.
However, the problem has become even worse for the majority of small businesses. More than half of this is because they either rely on spreadsheets for their core accounting functions, such as bookkeeping and billing, or because the technology is not dependent on at all. Worse, 10% of businesses operate without any accounting software or tools at all.
In fact, results from another study showed that small business owners spend 20 hours each week on accounting tasks. For some, it's even worse. One in five business owners spend more than 30 hours each week on accounting functions.
“Despite all the topics around AI, most small businesses still don't even use basic accounting tools,” explains Raj Bhaskar, Tight.com's SME expert and CEO. “That's why owners lose 20-30 hours a week in manual bookkeeping. This is the time they can grow their business as well as floating books.”
However, Bhaskar said adoption of AI in accounting doesn't mean that businesses can already automate paths from poor financial infrastructure.
“Business owners often expect AI to become silver bullets, but when accounting is scattered across spreadsheets, multiple apps, and manual processes, even the most sophisticated AI tools can't help you. Foundations have to come before technology.”
For those who have adopted AI but still struggle with accounting tasks, Bhaskar has identified three important reasons why this happens.
1. Scattered systems: “When one app invoices occur, another app costs tracking, Excel bookkeeping, AI can't connect dots. This is like asking someone to solve puzzles when pieces are scattered across different rooms.”
2. Too many manual tasks: “You can't use AI to automate tasks that are still being done manually. Most small businesses try to stack AI on top of manual processes rather than digitizing these processes first.”
3. The wrong foundation: “Small businesses are trying to build AI solutions on top of broken accounting foundations. They can't fix messy and messy systems faster.”
For small businesses ready to actually save time in accounting, Bhaskar offers the following advice:
Let's start with the basics
- From submitting your invoice to preparing your taxes, write down everything you do for your accounting weekly.
- Note where you are copying information from one location to another.
- Each week, add up the amount of time you really spend on financial tasks.
Find an all-in-one solution
- Select the accounting software that works with the business tools you already use.
- Find a system that automatically draws sales and cost information.
- Make sure your accounting, payments and invoices can “speak” to each other.
Focus on what's important
- It measures success with every time saved, rather than flashy features.
- Find better cash flow visibility to know where your money is and when it comes in.
- Choose tools that will help you make faster business decisions.
“We're going to stop adding AI tools to a broken system. We'll fix the basics first,” says Bhaskar. “Companies that see the real results of AI in accounting use more integrated software. When accounting is properly embedded in business operations, AI can be very powerful. But without that integration, they automate inefficiency.”
Photo credits: Hirun/istock
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