AI driven accounting will replace the traditional monthly close. Credit: photo_gonzo/shutterstock

New research commissioned by global accounting software platform Sage predicts that, by 2030, three quarters of businesses will abandon the accounting practice of the traditional monthly close in preference to AI driven real-time accounting.

The research found that 98% of respondents anticipate that AI will improve monthly close accounting efficiency in the next five years, and 54% anticipate an efficiency boost of 20% or more. Some 53% of respondents agreed or strongly agreed that AI would allow them to completely abandon accounting to a monthly close schedule.

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AI enabled real-time financial insights and reporting will eliminate the need for periodic closures and give employees time for more nuanced work. This new accounting process will allow for faster, more informed decisions to be better in responding to changing market dynamics.

Dennis Donovan, Controller at Sage customer Nisbet Lodge said: “With AI-powered tools, we’ve moved away from repetitive tasks and focused on more strategic work that drives real value for the organisation and our team. By cutting down on manual data entry, we’re free to pursue initiatives that strengthen our financial health and support our mission. Plus, with deeper insights, we’ve identified key areas to optimize, like reducing costs by balancing our staffing approach.”

Sage CTO, Aaron Harris, said companies will have more resources to do strategic things that they couldn’t do stuck in a long monthly close.

Accounting teams spend 25% of their resources and time closing the books, and it can take up to three weeks for companies to close their books, according to Harris.

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“If you can succeed in taking that three weeks down to say three days or two days, you have the opportunity to make more decisions closer to real-time,” said Harris.

As an example, another Sage customer CB insights, brought its 60 day close down to three days by implementing AI driven accounting resulting in a much better picture of its cash flow.

“They were able to focus more of the resources on improving their cash flow, and ultimately, it gave them the confidence to launch a new product. And so it’s not just the time savings, it’s not just money, it’s better business performance that leads to to better strategic outcomes,” said Harris.