Reversible vs Irreversible - Where AI Belongs (and where the bank wreck starts).

Ah, yet another big week in AI. This is The AI Exhale, hosted by Vibe CFO with Jez and Cam. Five minutes, one thing that matters, or maybe two. We ignore the rest so you can too.

Jez: All right, we're going to dive into a bit of a first-hand account Cam experienced over the last weekend. Before I hand to Cam, this, generally speaking, is talking about that system of record and source of truth, in the code base or in the ledger if we're talking about accounting. Cam, share with us, what was the bloody pain point of your last weekend? What did you spend hours doing?

Cam: Well, I had turned on JAX. So JAX sits across all of Xero, and JAX has got different roles, but in this role its job is bank reconciliations, right? And you can auto reconcile. Say there's like 300 transactions for the month, it might decide to auto reconcile maybe 100 or 200 of those 300. So I turned this on back in July, and I picked up the bank rec file and, my goodness. It had decided to post payments. It didn't put them against the invoices, because sometimes these overseas invoices are in foreign currency, or sometimes these amounts were exact.

Like, this was a matching invoice, just a cent out that it didn't match, and if I'd just turned auto rec off, it would have actually come up and matched it, right? But it didn't match it. It just literally decided to post it as a payment. So then we've got an unpaid invoice sitting there and the payment's gone through. The other example was literally bank transfers. I mean, this is so simple, paying your credit card, and it got the dates mixed up.

Now, anyone who uses the transfer feature in these bank rec tools knows it's a pain in the ass if you don't get it aligned. Payments go missing, you've got to go back. And for somebody who's not an accountant or a bookkeeper, it's a nuisance. So it just totally lost control of the system.

Jez: Yeah. And bank rec was built around, essentially, a person matching things up and using judgement as they go. Now we're dropping AI into the middle of that. It doesn't inherit the judgement, it just inherits the button. Very good at clearing the queue, but that's not the job. It's got to match correctly.

Cam: My takeaway, and the reason I bring this up, is because this wasn't a wonderful experience using AI to solve my problems. This was a nightmare, because it cost me hours and hours to go back and unreconcile and work out. I didn't want to unreconcile everything. And then I was, oh, my God. I had screens everywhere, trying to cross-check what it had done versus what was in. This is just shocking, really.

There's an expression I see going around, bank wreck, with a W-R. What do you think is happening to accountants where they've got their small business clients turning this thing on? They must be pulling their hair out.

Jez: I mean, this and many other cases. We could go on for days here, and I'm sure the audience would resonate. There's obviously a lot of client behaviour. Look what I've done. Look what I've claimed. They've thrown it into AI and they've just got a mess to clean up that is more burdensome, more time consuming than if the client had done nothing. So, yeah, a green tick really no longer means good, done, checked and verified. It actually could just be this speed game with AI to clear the success metrics to get the job done. But, yeah, it's all a mess underneath.

Not fun for the accountant nowadays. Another disturbing disruption.

Cam: Don't you think, if we widen this conversation now, because what it triggered for me was the wider white collar world, right, where this is happening everywhere. In comes the business to the lawyer and says, it's all good, I've written it for you. And you think, this is just across the board, where people who have no understanding of your niche are like, I've got it covered.

Jez: It reminds me, if I'd had this stuff when I was at school. I remember asking my Christian studies teacher, but what if I don't believe in God? How do I analyse all of this scripture? He politely sat me down to carry on with the curriculum.

Cam: My worry, right, is that we're already under the pump, the workers, and then this is different. I mean, it's different for me to go off, right, and we prepare a marketing campaign and we cherry-pick its research and we go, that's fantastic, I didn't think about doing it that way, I could just do this and away you go. And you're like, wow, tick, tick, tick, how useful. This other example is the complete opposite. This is system of record. System of record for anyone is like Xero, or HubSpot for your marketing data. It's this store that you have that can't be mucked around with.

It can't be broken. And all of a sudden, we're trying to force AI through it. And it's dangerous, right? Because it can cost you hours and hours of time backtracking to fix problems, and cost you money if you don't know how to fix it.

Jez: And I guess within that client relationship, maybe set a couple of rules. Tell them two or three things to never touch, and tell them that accepting a suggestion is not the same as approving it. So again, it's worth using it to research, but in the technical world that the accountant operates in, it's a much different ballgame.

Cam: It's worth, as a professional, picking up the AI now and saying, it is everywhere. My clients are using it. It's happening. It's exploding. I must be on top of this, because otherwise you get poor behaviour. You've got to be an expert in your profession and know how these tools interact with all of this, so that you can control the situation, saying, do not use bank rec right now. Here's why it doesn't work. I've tested it.

I actually know how AI works. And you pushing that button causes problems that could cost you more money.

Jez: And I think therein you can weave in that using AI to build some of your work, like your reports, doesn't become so much of a pricing challenge with the client. If they say, oh, you're using AI, it's more that AI and your expertise within it is to do with the safety, the governance, the traceability and the source of truth.

And that's your five-ish minutes back. Vibe CFO, Australian founded. An AI CFO for small and medium businesses, out of the box, governed and secure. vibecfo.ai. Now you know.