AI in accounting: What the latest tools actually do (and how to evaluate them)

Published Wednesday 22 July 2026

Table of contents

• What is AI in accounting?
• How AI accounting tools work in practice
• What are the benefits of AI for accounting firms?
• Will AI replace accountants?
• What are the challenges of AI in accounting?
• How to evaluate AI tools for your practice
• Simplify your accounting with Xero
• FAQs on AI in accounting

Key takeaways

• AI tools for accountants can take care of certain regular tasks, like bank reconciliation and tax return preparation. But, human accountants and bookkeepers still need to provide oversight and use their judgment.
• AI in accounting works best across repetitive admin tasks, and summarizing information. This gives you more time to focus on delivering advisory services and providing support for your clients and team.
• There are plenty of options for adopting AI tools, but be cautious: some public AI programs use the data for training purposes. The easiest way to access secure AI tools is through your existing accounting software, where features are designed specifically for accounting professionals.

What is AI in accounting?

AI in accounting is artificial intelligence, including machine learning and generative AI, used to complete and support tasks like bank reconciliation, data extraction, and reporting.

Generative AI has moved it from a niche capability to standard equipment across the profession, and half of employed American adults now use AI in their role.

AI in accounting can be used to complete regular tasks in your practice. Jobs like reconciling bank statement lines and preparing tax returns can now be done by AI tools for accountants. Plus, AI can also help you go deeper into your client’s financial data to reveal patterns, trends, and opportunities you may not have been able to spot.

The benefits of AI in accounting include time savings, improved accuracy with admin tasks, and deeper insights into client financial data. With this in mind, AI can help you run a more productive and successful practice.

How AI accounting tools work in practice

There are multiple ways you can access AI tools for accountants: through accounting software with AI features, AI software for specific tasks, or Generative AI tools like ChatGPT, Gemini, and Claude. Here are some examples of how AI accounting tools work in practice:

• Recommending matches for client transactions during bank reconciliation, based on past financial data
• Extracting transaction information from photos of receipts, bills, and invoices, uploading it to software automatically
• Spotting errors and anomalies in financial data that could signal fraudulent activity
• Generating reports, forecasts, and summaries you can review and take to clients
• Predicting future financial performance using past data
• Creating client communications and marketing materials, including proposal templates and email newsletters

What are the benefits of AI for accounting firms?

Using AI in your practice means you can spend more time on the work that matters most to your clients. With AI crunching the numbers, you can use the data to guide advisory services and help your clients make better financial decisions. When AI speeds up tax return preparation, you can spend more time training your team and expanding your range of services. The benefits of AI in accounting also extend to:

• Less time spent on admin tasks, freeing you up to focus on clients and support your team with their workloads
• Better ways to use clients’ financial data for forecasting and forward planning, not just tax return prep
• More opportunities to expand advisory services with access to better financial data and tools for presenting it effectively
• Better client experience and smoother processes with less administrative work required from clients
• Increased productivity and performance, with up to 8.5% of accountant time redirected to high-value tasks, according to MIT Sloan

The time savings can be significant. The Thomson Reuters 2025 Future of Professionals report found that respondents estimated AI would save them an average of 5 hours per week. That’s time you can redirect toward advisory work and client relationships.

Will AI replace accountants?

The short answer is no: AI changes how accounting work gets done, but it doesn’t replace the professional behind it.

Given how effectively AI can perform certain accounting and bookkeeping tasks, many in the industry have raised concerns about the technology replacing human professionals altogether. But as you’ll know, while AI can complete tasks, the role of an accountant or bookkeeper is much more complex than checking off a to-do list. Accounting professionals work closely with clients, and it’s the quality of these relationships that often dictates the outcome of the work.

While AI can speed up admin and take care of more formulaic tasks, clients will still need you to deliver the deeper analysis and tailored support. Your empathy, expertise, and experience is something that AI can’t replace.

With this in mind, it’s unsurprising that employment of accountants and auditors is projected to keep growing over the coming decade. The most likely scenario is that AI tools for accountants will become a partner, not a replacement.

What are the challenges of AI in accounting?

AI tools for accountants aren’t a fix-all. Think carefully and strategically about how to use AI in accounting; don’t just adopt a tool because it’s popular. If your practice is purposeful about how it uses AI to solve real team and client problems, you can avoid the common challenges, such as:

• Application: Accountants and bookkeepers still need to apply their own judgment, because AI can be confidently wrong and present inaccurate output as fact. Skipping human review could lead to errors, and penalties for clients whose accounts contain mistakes or inaccuracies.
• Tech literacy: Many AI tools are designed to be simple to use, especially those that use conversational Generative AI, where you can chat to the AI as you would a human colleague. Even so, you, your team, and your clients may need to develop new skills to use the tools effectively.
• Perception: You may come up against some resistance from your team and clients about using AI. It’s worth positioning these tools as supporting the work, not replacing it altogether, particularly if your team is concerned about whether AI could replace them.
• Data security: Different AI tools offer different levels of protection, and some public and generative AI models train on the inputs you provide. Keep sensitive client data out of those models, and favor tools that encrypt data and keep it private to your practice.

How to evaluate AI tools for your practice

There are so many AI tools out there that choosing the right one for your practice can feel overwhelming. Use the following checklist to guide your selection:

• Think about client and team usage: Both your team and your clients could be using the AI tools you implement regularly, so consider the usability of each one for both groups before adopting them.
• Prioritize data security: If you plan to use AI tools with sensitive data, choose programs that keep information private to your practice. Look for security features like encryption and multi-factor authentication so data stays safe.
• Look for integration capabilities: Select AI tools that integrate with your existing practice software so that you’re not spread across multiple programs and subscriptions. By accessing AI through your existing accounting software, you can do more with a single subscription.
• Apply one at a time: Don’t change all of your processes at once, try one tool, for one process, with a small group of clients first. Set goals so you can measure the impact of AI and review team and client feedback before making additional changes.

Simplify your accounting with Xero

The easiest way to start using AI to grow your practice is to access it through accounting software, like Xero.

Existing Xero features like bank reconciliation predictions and cash flow forecasting use AI to speed up admin tasks and give your clients a clearer picture of their financial performance. With Xero, you also have a smart business companion on your side: Just Ask Xero (JAX). JAX can prepare and send quotes and invoices, answer questions on your clients’ finances, and provide summaries and insights on reports and forecasts.

Join the partner program

FAQs on AI in accounting

These frequently asked questions cover a few more details on AI in accounting and finance.

Is AI a threat to CPAs?

No, AI isn’t a threat to CPAs. CPAs are highly qualified and experienced professionals who can offer strategic guidance and regulatory support for clients. While AI for CPAs could change the nature of the work, it won’t replace human professionals altogether. What’s more likely is that AI will take more responsibility for processing data, with CPAs providing vital review, interpretation, and strategic guidance for clients.

What is the best AI tool for accountants?

The best AI tools for accountants are the ones built specifically for financial and accounting work. While you can use generic AI tools to come up with ideas or create client and marketing materials, using AI accounting software means you get access to features that actually solve the tasks you spend the most time on. Because the AI is geared towards specific accounting and bookkeeping tasks, you don’t need to build your own processes or work out how to apply the AI yourself.

What is the difference between AI and automation?

The distinction matters most when you’re choosing tools. Reach for automation when a task follows fixed rules and needs consistent, repeatable output, like scheduled reminders or rule-based categorization. Reach for AI when a task calls for interpreting messy data, drafting communications, or surfacing patterns that fixed rules can’t anticipate.