2 December, 2025
Learn the essential AI terms accountants should know: Agentic AI, generative AI, NLP, and more. Stay ahead as AI transforms accounting workflows.
Artificial intelligence (AI) is no longer a distant, futuristic idea in the accounting world. It’s already here, from bookkeeping automation to AI-powered reporting, reconciliation, anomaly detection, and even autonomous workflows that take work off your plate.
But for many accountants, the hardest part isn’t using AI.
It’s understanding the terminology that comes with it.
This guide breaks down the most important AI terms every accountant should know – explained in simple, practical language, with examples taken directly from day-to-day accounting work.
Whether you’re a firm owner, a bookkeeper, a finance lead, or an SME handling your own accounts, this glossary helps you understand what AI really does, why it matters, and how to use it confidently.
AI is reshaping accounting at a pace similar to when cloud accounting first arrived. But unlike traditional software upgrades, AI brings a new layer of concepts – models, agents, automation, language processing, and more.
Understanding these terms helps accountants:
Most importantly, AI literacy helps accountants stay competitive in a profession that’s becoming increasingly technology-driven.
Below are the most practical and relevant terms, explained with clear accounting examples.
Definition:
Agentic AI refers to AI models that can act autonomously – making decisions, performing tasks, and taking actions without needing constant human prompts.
Why it matters to accountants:
Agentic AI does work, not just generate text. In accounting, this means:
Think of it as a digital teammate that handles routine processes on its own while you stay in control.
Example:
“Every morning at 9am, review yesterday’s transactions, match them to invoices, flag anomalies, and prepare a draft reconciliation.”
Agentic AI can do that with no manual input.
Definition:
Generative AI describes models that create new content, such as text, summaries, explanations, or reports.
Why it matters to accountants:
This type of AI can produce:
It dramatically speeds up communication and reporting.
Example:
“Summarize this month’s P&L for my client in simple language.”
Generative AI converts raw numbers into clear explanations.
Definition:
Machine learning refers to systems that learn patterns from data and improve over time.
Why it matters to accountants:
ML powers many behind-the-scenes features:
The more data the system sees, the better it becomes.
Example:
Over time, your accounting platform learns that “Gong Cha – $6.90” should be categorized under “Staff Welfare,” and it starts doing it automatically.
Definition:
NLP allows AI to understand and generate human language.
Why it matters to accountants:
It enables you to type instructions the way you naturally speak.
You don’t need to write specific prompts or learn technical syntax.
Example:
Typing “Show me all overdue invoices for Company ABC and draft a follow-up email” feels just like messaging a colleague.
Definition:
LLMs are advanced AI models trained on massive amounts of text. They understand context, generate answers, and perform reasoning.
Why it matters to accountants:
LLMs power many AI accounting assistants, including those that help with:
Think of LLMs as the engine behind many AI features accountants use today.
Example:
Upload a PDF statement → ask the AI to extract amounts → ask it to explain discrepancies.
The LLM handles the interpretation.
Definition:
Automation refers to rules-based or AI-powered workflows that complete tasks without human involvement.
Why it matters to accountants:
Accounting already has many automation opportunities:
When combined with AI, automation becomes more flexible and intelligent.
Example:
“If a supplier invoice exceeds $10,000, notify the finance lead and prepare a draft payment approval.”
Definition:
OCR converts images, PDFs, or receipts into digital text.
Why it matters to accountants:
OCR enables:
OCR is often used together with AI to boost accuracy and reduce manual data entry.
Example:
Snap a photo of a restaurant receipt → system extracts date, amount, GST, and saves it under the correct expense.
Structured data: Clean, organized data that systems can understand easily (e.g., transactions).
Unstructured data: Text, emails, PDFs, photos – less organized, harder for traditional systems.
Why it matters to accountants:
AI converts unstructured data into structured data, which unlocks automation.
Example:
A messy PDF of a supplier invoice becomes a clean, structured record ready for reconciliation.
Definition:
AI systems that identify unusual patterns or potential errors.
Why it matters to accountants:
It helps catch:
AI becomes a safety net that highlights risk before it becomes a problem.
Definition:
A technique that helps AI understand relationships between words, concepts, or data.
Why it matters to accountants:
Embeddings power intelligent search:
AI doesn’t just match keywords – it understands meaning.
Understanding the terms is one thing.
Seeing how they work together is what makes AI truly powerful.
AI can now:
Everything connects into a faster, smoother close.
AI can:
This reduces admin work and allows firms to serve more clients with the same team.
AI isn’t replacing accountants – it’s removing the repetitive work that slows them down.
It strengthens your judgement, saves time, and lets you focus on higher-value work.
Modern accounting platforms like Jaz are already built with AI-native workflows, helping accountants:
You don’t need to be a tech expert to use AI.
You just need to understand the key terms, and start experimenting.
AI is becoming a core part of modern accounting.
The accountants who thrive in the coming years won’t be the ones who memorize every tool or trend, but the ones who understand how AI helps them work smarter.
By learning these foundational terms - agentic AI, NLP, machine learning, generative AI, and more - you’re already ahead of the curve.
If you’d like to see how AI works inside an actual accounting platform built for SMEs and accounting firms, we’re here to help.
Try Jaz and experience AI-powered accounting, designed for real workflows. Book a demo.
