The future of automation and accounting
Source: Accounting Today
Author: Blake Oliver
Automation is transforming the accounting profession. My experience proves it. Over the past five years, I’ve gone from working as a low-paid hourly bookkeeper to billing fixed fees as high-value virtual controller — and one who does almost no data entry, by the way.
We’re quickly approaching an era of “no-code accounting” — truly zero data entry. But that’s not all automation will do for us in the future. While we sleep, artificial intelligence will prioritize our next day’s work and provide us with insights about our clients, enabling us to redefine our role as accountants and bookkeepers in a way that is far more lucrative for us, and more valuable to our clients.
Automation will lead those of us willing to adapt into a bright and prosperous future.
Making accounting easier
The data entry component of bookkeeping, or what I think of now as historical recordkeeping, has nearly been eliminated by automation and cloud accounting ecosystems.
Manually keying in bills, printing paper checks — these are just a couple of the tasks I once billed clients for on an hourly basis. And I had to drive to them one-by-one to use their desktop accounting software. The amount of money I could earn was limited by the number of clients I could see in a day or in a week.
Switching to cloud accounting apps in 2011 provided huge efficiencies that immediately cut the time I spent on client work in half. By necessity I transitioned my clients from hourly billing to fixed monthly fees — otherwise I would have gone broke!
I was able to cut my bookkeeping time in half because cloud accounting software can already automate 80 to 90 percent of transactions for many clients — after a lot of setup work. In the future, artificial intelligence will save us from even having to configure them.
Increasingly, accountants and business owners will come to expect accounting software and services that utilize automation to deliver a better experience. Research from the United Kingdom has revealed that 37 percent of small and medium-sized business owners think that accountancy is becoming more automated and that they can complete a range of tasks themselves.
Machine learning is a form of artificial intelligence that is built to recognize patterns and accurately predict an outcome. Currently, very little machine learning is being applied to accounting software, but that will change quickly over the coming years.
As this technology becomes more advanced, software companies will integrate it into applications to highlight patterns and anomalies automatically. And that will enable those accountants and bookkeepers using the latest technology to give more back to our clients.
What does this look like, exactly? I can imagine machine learning being applied to general ledger applications to analyze historical and pending transactions to predict future cash flow without spreadsheets. Or perhaps it will be used to analyze sales trends and suggest purchases that maintain ideal inventory levels.
More efficient and insightful practices
Yes, many tasks that machine learning will assist with are tasks that we do and bill for today as accounting professionals. But this new technology won’t replace us. Judgement will still be required. Automation will just help us get from collecting data to making decisions faster.
Think about it — often, just figuring out which client work needs to be done today and what can be deferred is half the battle. This is where automation is already starting to have an impact. For example, Xero recently released their “open practice platform,” Xero HQ, which prominently features an Activity Feed. The feed helps users know which clients have work that is priority such as upcoming payroll deadlines or accounts that haven’t been fully reconciled for a given number of days.
We’re already seeing cloud accounting platforms move beyond transaction automation and into analysis. In future, machine learning will give accounting professionals unprecedented insights into their client base. We’ll be able to spot patterns and trends among our client base and give them better advice and recommendations.
Thanks to automation and machine learning, accounting professionals will be more efficient and therefore have more time to talk to clients about their reports or review payables and payroll — the higher level advisory services that help clients feel more in control of their finances and help solidify us as their trusted business advisors.
Data custodians and trusted business advisors
So, once we reach the era of no-code accounting and we’ve got all this data streaming into elegant dashboards for our clients, what exactly is going to be the role of accountants and bookkeepers in the future?
Most compliance processes will either be no-touch or limited-touch in the future. We won’t be able to bill much for these traditional services. But it will free us up to find ways to add more value for our clients.
True insights go way beyond standard data aggregation services both in the skill required and the value provided. Someone needs to manage all the integrated accounting systems and interpret the output. That’s what accountants and bookkeepers will be doing.
In the case of the bookkeeper, we’ll see the role transition to what I like to call an “information systems manager.” This is someone with unparalleled knowledge of the cloud accounting ecosystem and the expertise to build systems using multiple applications, all interlinked. This person will oversee the flow of information among apps and reporting tools, and help their clients feel in control of both data and cash.
Automation and accounting go hand-in-hand. It’s a partnership that will enable us to take our heads out of the general ledger and advise our clients on what they need for their businesses to truly succeed.