Something interesting is happening in regional Victoria’s small business community, and it’s got nothing to do with flashy robots or autonomous vehicles. It’s bookkeeping. Specifically, AI-powered bookkeeping tools that are quietly saving business owners hours every week.

I’ve been chatting with small business owners from Ballarat to Horsham over the past few months, and the same story keeps coming up: they tried one of the AI features in their accounting software, it worked, and now they can’t imagine going back.

The Xero Effect

Most of these businesses are already on Xero. That’s not surprising for regional Victoria, where Xero has been the default for years. What’s changed is that Xero’s AI features have matured to the point where they’re actually useful, not just a gimmick.

Rachel Summers runs a cafe in Daylesford. She told me she used to spend three to four hours every Sunday evening categorising transactions and reconciling her accounts. Now, Xero’s auto-categorisation handles about 85% of it correctly. “I still check everything,” she said. “But checking takes 45 minutes. Doing it from scratch used to take all evening.”

That’s a common pattern. The AI doesn’t replace the human oversight, but it does the tedious initial sorting that eats up time.

Beyond Basic Categorisation

What surprised me was how many regional businesses are going beyond the built-in features. A plumbing business in Bendigo started using Dext (formerly Receipt Bank) to automatically extract data from invoices and receipts. The owner, Craig, just photographs every receipt with his phone and the AI pulls out the supplier name, amount, GST component, and date. It feeds directly into Xero.

“I was losing receipts constantly,” Craig admitted. “Stuffing them in the glovebox, washing them in my work pants. Now everything’s digital the moment I get it.”

A landscaping crew out near Ararat has taken it a step further. They’re using AI-powered time tracking that connects to their invoicing. When a job is completed, the system automatically generates an invoice based on recorded hours and materials. Their admin time dropped by roughly 60% according to the business owner.

What’s notable about all of these examples is that nobody hired a consultant or went through a big transformation project. They heard about a tool from another business owner, tried the free trial, and it stuck. An AI consultancy I spoke with recently confirmed this trend, noting that regional small businesses are often adopting AI tools faster than metropolitan enterprises because they don’t have the bureaucracy slowing them down.

What’s Working and What Isn’t

Not everything is smooth sailing. There are some consistent pain points:

Bank feeds can be unreliable. Several business owners mentioned that the AI categorisation only works well when bank feeds are consistently connected. Regional internet reliability being what it is, sometimes the feeds drop for a day or two, and everything piles up.

Industry-specific transactions confuse the AI. A wool broker near Hamilton told me the AI kept categorising livestock-related transactions incorrectly because it didn’t understand the industry terminology. It took about three months of corrections before the system learned his patterns.

GST handling needs human oversight. This came up repeatedly. The AI gets the basic GST split right most of the time, but for mixed-use items or unusual tax treatments, you still need to know what you’re doing. Several accountants I spoke with in Ballarat said they’re happy with AI bookkeeping for their clients, but they always review the GST coding manually.

The Cost Question

For most regional businesses, the cost is surprisingly low. The AI features are built into the software they’re already paying for. Xero’s standard plan is around $52 per month. Dext adds about $33 per month for small businesses. For a business that’s paying a bookkeeper $50-60 per hour, even saving two or three hours per month covers the cost easily.

That said, it hasn’t eliminated the need for accountants. Every business owner I spoke with still works with their accountant for BAS lodgement, end-of-year, and advisory work. The AI handles the day-to-day data entry grunt work, freeing up the accountant’s time for higher-value advice.

Getting Started

If you’re a regional business owner who hasn’t explored the AI features in your existing accounting software, here’s what I’d suggest:

1. Turn on auto-categorisation in Xero or MYOB. It’s probably already available in your plan. Give it a month to learn your patterns.
2. Try a receipt capture app. Dext and Hubdoc are the two most common. Both offer free trials.
3. Ask your accountant. Most regional accountants are across these tools now and can recommend what fits your business.
4. Don’t expect perfection. The AI will get things wrong at first. Correct it consistently and it gets better over time.

The beauty of this technology is that it doesn’t require a massive investment or a complete overhaul of how you work. It just takes the boring bits off your plate so you can focus on running your business. And in regional Victoria, where time is often the scarcest resource, that makes a real difference.

Dave Mitchell covers technology news and trends for regional Victoria.