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The Do's and Don'ts of Using ChatGPT for Accounting

The Do’s and Don’ts of Using ChatGPT for Accounting

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The Do’s and Don’ts of Using ChatGPT for Accounting

ChatGPT for accounting, or finance, is being used 32% of the time for factual and how-to guidance. For data transformation and brainstorming “what-if” scenarios, LLMs are great tools.

But there is a list of do’s and don’ts that every business owner should read. You may “think” you’re saving money initially by using ChatGPT and end up paying more in the end.

The Do’s of Using ChatGPT for Accounting

AI in accounting is transformative but often not in the way that you think. You’ll find great success with LLMs (ChatGPT, Claude, Gemini, etc.) in the following areas:

Brainstorming “What-If” Scenarios

What will your business look like if:

  • You sell 10% more products
  • Sales fall 25%
  • You hire 3 more employees
  • You grow at 10% more year-over-year

What-if scenarios are ideal when working with ChatGPT. Think of your chat as a springboard to guide your business, but be sure to provide it with the initial data necessary to make an accurate assessment.

Using the “hire 3 more employees” scenario, this may mean:

  • Cost to hire
  • Time to fill positions
  • Sales brought in by expanding
  • Benefit and wage costs

Provide your chatbot with the information necessary to analyze the data and provide an accurate response. Your initial prompt and details will make a world of difference in response accuracy.

Note: Just a reminder. Double-check the math with any scenario that you run. LLMs are fantastic tools, but they do get things wrong sometimes.

Data Transformation

You have a wealth of financial data that takes hours to read and digest. ChatGPT for accounting shines when you feed it data to transform into:

  • Trend charts
  • Graphs
  • Readable lists

Another neat way to use this data is to ask ChatGPT to extract transactions from bank statements or research uncategorized transactions. Remember, your prompt must be clear and detailed for data transformation to work well.

Report Summaries and Drafts

Say that you receive a report from your accountant. ChatGPT can summarize them for you or make complex regulations into simple-to-understand language. If you receive a financial statement, you can feed it to your chat and ask it to provide summaries for you.

Drafting reports is also one of the superpowers of LLMs, but be sure to review them for accuracy.

CPA Practice Advisor has a guide on how to use ChatGPT to analyze financial statements. You can then follow up with questions, such as:

  • Is there a downturn in my business?
  • How much debt do I have?
  • Which debt should be paid off first?

Create Human-in-the-Loop Workflows

AI workflows are great and save you a lot of time. Create workflows with ChatGPT with breaks for human interaction. For example, you might have ChatGPT run a standard workflow with 10 steps that a human checks after step 5 and 10 to verify accuracy.

The Don’ts of Using ChatGPT for Accounting

You’ve seen what you can do with ChatGPT, but what should you avoid?

Don’t Input Sensitive Personally Identifiable Information (PII)

PII is one of the major concerns in cloud accounting security because you, or your employees, may insert data that the AI model uses to train future models on. For this reason, you may want to avoid:

  • Names
  • Addresses
  • Financial information

One interesting scenario played out not too long ago where Google indexed shared ChatGPT histories and then all of their data was made public on search. What was exposed?

  • Emails, names, addresses, business information
  • Source code
  • Private conversations

Don’t Use it for Final Tax Advice

LLMs are trained on data, and while it knows a lot, final tax advice is best left to professionals. You might not know what to prompt it to receive accurate answers, and with law changes occurring so often, it may miss critical tax requirements and breaks.

Don’t Trust Advice and Guidance Blindly

ChatGPT makes mistakes, which is why it states. “ChatGPT can make mistakes. Check important info.”

If you trust advice and guidance blindly without double-checking sources and data, how can your accounting be accurate?

The Takeaway

ChatGPT is a powerful tool that businesses can use for accounting-related insights and reports. But when it comes to final tax advice or math, you want to cross your Ts and dot your Is to ensure that the data is accurate and processed properly.

To learn more about ChatGPT for accounting or how we can help you with your accounting needs, schedule a consultation now!

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