Despite the rise of artificial intelligence, only 24% of small business owners are using it for financial management or accounting.
But the problem is even worse for the majority of small businesses, as more than half of them still rely on spreadsheets or no technology at all for core accounting functions, such as bookkeeping and invoicing. Worse yet, 10% of businesses operate with no accounting software or tools at all.
In fact, results from another survey showed small business owners are spending 20 hours each week on accounting tasks. For some, it’s even worse: one in five business owners spends over 30 hours each week on accounting functions.
“Despite all the buzz around AI, most small businesses still aren’t using even basic accounting tools,” Raj Bhaskar, small business finance expert and CEO of Tight.com, explains. “That’s why owners are losing 20 to 30 hours a week on manual bookkeeping, time that could be spent growing their business instead of just keeping the books afloat.”
However, Bhaskar says AI adoption in accounting doesn’t mean businesses can already automate their way out of a poor financial infrastructure.
“Business owners often expect AI to be a silver bullet, but when your accounting is scattered across spreadsheets, multiple apps, and manual processes, even the most sophisticated AI tools can’t help you. The foundation has to come before the technology.”
For those who have adopted AI but are still struggling with their accounting tasks, Bhaskar identifies three key reasons why this happens:
1. Scattered systems: “When your invoicing happens in one app, expense tracking in another, and bookkeeping in Excel, AI can’t connect the dots. It’s like asking someone to solve a puzzle when the pieces are scattered across different rooms.”
2. Too much manual work: “You can’t use AI to automate tasks you’re still doing by hand. Most small businesses are trying to layer AI on top of manual processes instead of digitizing those processes first.”
3. Wrong foundation: “Small businesses are trying to build AI solutions on top of broken accounting foundations. You can’t fix a messy, disorganized system by making it faster.”
For small businesses ready to actually save time on their accounting, Bhaskar offers the following advice:
Start with the basics
- Write down everything you do for accounting each week—from sending invoices to preparing for taxes.
- Notice where you’re copying information from one place to another.
- Add up how much time you’re really spending on financial tasks each week.
Look for all-in-one solutions
- Choose accounting software that works with the business tools you already use.
- Find systems that automatically pull in sales and expense information.
- Make sure your accounting, payments, and invoicing can “talk” to each other.
Focus on what matters
- Measure success by time saved, not fancy features.
- Look for better cash flow visibility, knowing where your money is and when it’s coming in.
- Choose tools that help you make faster business decisions.
“Stop adding more AI tools to a broken system. Fix your foundation first,” Bhaskar said. “The businesses seeing real results from AI in accounting are using better-integrated software. When your accounting is properly embedded in your business operations, AI becomes incredibly powerful. But without that integration, you’re just automating inefficiency.”
Photo credit: hirun/iStock
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