For years, forward thinkers have been having conversations about how artificial intelligence (AI) has the potential to transform the way we live and work. But it wasn’t until ChatGPT exploded onto the scene that everyday people started to sit up and take notice. With this chatbot from OpenAI, everyone with internet access has the opportunity to see just how smart AI can be.
You might be more familiar with ChatGPT’s uses for things like customer service or content generation. But it can be just as helpful when it comes to numbers. In fact, this tool could make accounting at your tech company significantly easier.
Accounting use cases for ChatGPT
Let’s look at a few ways companies are using ChatGPT to help with their bookkeeping, tax preparation, and more.
#1: Categorize expenses
You could prompt it to categorize expenses from a bank or credit card statement or a batch of invoices. To get the most precise results possible, it can be helpful to include the categories you generally use in the prompt.
For example, you could say, “ChatGPT, can you organize the expenses from this monthly bank statement into the following categories: travel expenses, utilities, office supplies, advertising, payroll, and loan payments?”
#2: Create spreadsheet formulas
You likely know that spreadsheets like Google Sheets and Excel can help you analyze your company’s finances, provided you have the right formula. The trick is finding that formula. Instead of scouring the internet, you can ask ChatGPT to help.
You could ask it to make you a formula that calculates things like the:
- Cost of goods sold
- Gross profit margin
- Depreciation of assets
- Amortization of a loan
- Dilution of equity
The more information you provide this tool (e.g., depreciable base, interest rate, applicable fees), the more accurate the resulting formula will be.
#3: Simplify tax law
You can ask ChatGPT to tell you about applicable laws and to explain those to you. For example, “What state tax laws apply to my tech company in Minnesota?”
You can also leverage this tool to wrap your head around more complex regulations. Asking ChatGPT to explain certain sections of applicable tax code to you allows the AI to rephrase complex regulatory language into something conversational. Reading the response can help you get a better feel for what your business needs to do to comply without having to pull out your dictionary.
One big caveat here: OpenAI developed ChatGPT in 2021, feeding it all of the information that was available up to that date. That means that this AI doesn’t know about any new tax regulation that’s gone into effect over the last couple of years. In other words, ChatGPT can be a good place to start — but don’t lean on it too heavily.
#4: Automate repetitive tasks
If you show ChatGPT how you’ve completed certain repetitive tasks — like entering digital receipts into a spreadsheet you can upload to your accounting software — it can generally take it from there. As with the other use cases we’ve explored, the more info (in this case, the more examples) you can show ChatGPT, the better the job it will do at replicating the work.
You can also use ChatGPT to reconcile bank and credit card statements. You can ask it to match transactions and call out discrepancies. That way, you can address what needs your attention without getting too into the weeds with all of the granular details.
#5: Identify trends and create forecasts
A lot of forecasting comes down to analyzing historical financial data to spot trends and crunch the numbers accordingly. You can prompt ChatGPT to look over historical data (e.g., sales over the last three years) and make projections based on it. Giving it extra information — like market conditions or growth rates you expect — can help it create the most accurate forecast possible.
You can also task ChatGPT with identifying trends based on your historical financial data. This can help you pinpoint areas for growth so you can angle your tech company to thrive as you move forward.
Understanding ChatGPT’s Limitations
Before we dive into using ChatGPT, let’s make sure you have the knowledge to protect your company from potential problems.
First, be advised that ChatGPT is not without its issues. For starters, as we already mentioned, ChatGPT has limited input post-2021. That means it doesn’t know about all current tax regulations or accounting best practices.
ChatGPT also struggles with context, so you may need to adjust your prompts to get the AI to think the way you want. In fact, you might want to include, “Act as an accountant” at the start of your prompts. This way, ChatGPT will tailor its responses to be applicable to your tech company’s books.
Perhaps most importantly, using ChatGPT opens you up to potential security issues. Italy has already banned this tool because the data it scraped from the internet as it learned included personal information.
Once you enter a prompt into ChatGPT, OpenAI says you can’t delete it and it has the potential to get reviewed by the OpenAI team or used for further AI training. So don’t put any private information into your prompts, from personal information about your investors to proprietary company details.
Getting started with ChatGPT
Keep all of that in mind as you get started with ChatGPT. If you’re ready to dive in, you can head to OpenAI’s ChatGPT webpage to create an account. You’ll need to provide your name, birth date, and phone number to get set up. If you want more detailed info, check out this instructional guide.
Once you’re set-up, you can start playing around with this AI tool to see what it could do for your tech company.
ChatGPT can help you streamline and even improve your accounting, but it does have its limitations. To learn more about how to safely use it at your tech company, don’t hesitate to chat with our experts here at ShayCPA. Get in touch and we can help you identify use cases and best practices for using AI in your accounting.