Artificial Intelligence in Accounting: A Case Study of Radial Tires Company

Artificial Intelligence in Accounting: A Case Study of Radial Tires Company
This case study explores the application of Artificial Intelligence (AI) in the accounting function, using Radial Tires Company (RTC) as a primary example. As AI technologies have advanced, their integration into various industries and functions has become increasingly prevalent, offering significant benefits such as automation of data processing, enhanced productivity, improved accuracy, optimized revenue, and reduced costs.
The Evolving Role of AI in Accounting
AI's capabilities in accounting extend to automating tasks within accounts payable, accounts receivable, procurement, expense management, consolidation, and trading management. Furthermore, AI assists in strengthening internal controls, ensuring compliance, aiding in audits, and facilitating more informed management decisions.
Radial Tires Company's Challenge
Radial Tires Company (RTC), a manufacturer of radial tires based in mainland China with its headquarters in Hong Kong, faced a new directive from its holding company. The holding company mandated more extensive reporting and a reduction in reporting time, starting from the next financial quarter. David Lee, RTC's CFO, recognized the potential of AI technology to meet these demands but lacked personal experience and readily available contacts with expertise in AI for accounting.
Seeking a Solution with FlexSystem
To address this challenge, Lee turned to FlexSystem, RTC's existing provider of accounting and enterprise resource planning (ERP) software. FlexSystem was tasked with advising on the implementation of Robotic Process Automation (RPA), other AI tools, and automation processes that could seamlessly integrate with RTC's current ERP and accounting software. Additionally, FlexSystem was to develop a comprehensive proposal outlining a workflow that leveraged various IT solutions. This proposal would detail how these solutions could enhance the speed and efficiency of accounting processes, estimate the required project timelines, and recommend key performance indicators (KPIs) for measuring results and return on investment (ROI).
Decision-Making Process
Following the submission of FlexSystem's proposal, Lee, along with other department heads and the CEO, faced the critical decision of selecting the most suitable IT solutions. The decision-making process involved a careful evaluation of the costs and learning curves associated with the proposed AI technologies against the anticipated benefits of the automation processes. This strategic choice was crucial for RTC to achieve the holding company's objectives and maintain its competitive edge.
Key Takeaways and Considerations
- AI's Transformative Potential: AI offers significant opportunities for businesses to streamline operations, improve efficiency, and gain a competitive advantage.
- Strategic Implementation: Successful AI adoption requires careful planning, a clear understanding of business needs, and collaboration with technology partners.
- ROI Analysis: Evaluating the return on investment is crucial for justifying AI initiatives and ensuring alignment with business goals.
- Change Management: Implementing new technologies like AI necessitates effective change management strategies to ensure smooth adoption and user buy-in.
This case study highlights the practical application of AI in a real-world business scenario, demonstrating how companies can leverage technology to overcome operational challenges and drive strategic growth.
Original article available at: https://store.hbr.org/product/artificial-intelligence-in-accounting/HK1306