The machine age: What does the future hold for accountants
In the machine age, what does the future hold for accountants? Sam O’Connor has some answers
Accounting automation is something that’s fascinated me ever since I qualified in 2011. I’ve seen many doomsday scenarios predicting an end to accounting as we know it. And to an outsider, accounting must be ripe for automation because it’s just a case of adding some stuff up, right?
When I left PwC, where I trained as an auditor, I moved into the tech start-up world. ProConfirm, my first business, was a platform to automate bank confirmations. We sold ProConfirm in 2014 and I had some time to reflect on the future of our profession and whether robots would be taking over soon.
I now run my second accounting technology company called Coconut. There is no doubt that technology will drive some massive changes in accounting over the coming years. And, overall, I think this will be a good thing for customers and accountants.
But through all of this what I’ve realised is that there’s no way accounting will be automated in the way that outsiders expect it to be.
The human touch
I’ve spoken to thousands of self-employed people and small business owners and accountants provide something that computers are a long way off from replicating: peace of mind.
Having a human to talk to, someone who understands how you’re feeling, has experience built over many years and professional judgement, gives customers ultimate reassurance. Experience lets you navigate complexities that machines just can’t conceive of, no matter how smart.
That’s why accountants are the go-to business adviser.
It’s just not adding up
When we were starting Coconut we asked ourselves: if it’s the advisory work that clients crave, how can we do more of it? What we found is that there’s lots of manual preparation and cleaning up work to do. And this is under attack from the outside because clients don’t see the value. It boils down to:
- Gathering customer data, cleansing and preparing it.
- Communicating with the client to understand context of the transactions.
- Making lots of different tools and systems talk to each other.
Automation starts with metadata
We looked for ways of solving this problem and decided to start with the data. We identified that transaction metadata holds the key to automation. Metadata is information that describes the transaction in more detail. As traditional banks don’t pass metadata on to the customer it’s hard to understand the tax context of a transaction automatically.
So the starting point for Coconut was to create a business current account, giving us transaction data from the source, including the rich metadata.
Changing customers’ experiences
We also realised that a lot of work is created by putting off the bookkeeping until it absolutely has to be done. We wanted to find a way of interacting with the customer when a transaction happens.
This is really hard to do with traditional banking data, but by building on a smart current account we see the data in real time, making it much easier.
The instant interaction changes bookkeeping from something retrospective into something instant because we can:
- Remind the customer to take a photo of the receipt when it’s in their hand.
- Use the metadata to make a judgement about what tax category the transaction relates to.
- Prompt the customer to check, giving them relevant guidance increasing the chances that it’s right.
- Make sure everything is ready to go, along with notes, for when any review or filing needs to be done.
To make this to happen we have built a proprietary process to understand the tax context of a transaction. We’re finessing this all the time to improve accuracy. And it means within a few seconds the bookkeeping for a transaction is done and stored in a neat system ready to go.
But if the bookkeeping is done, what next?
Our aim is to free accountants up to provide insights and advice to clients. With very little effort both parties can concentrate on the hard stuff, eliminating the mundane and repetitive. The objective is that accountants can do more advisory work or expand their client portfolio.
Working with the UK’s accountants
We’ve engaged closely with customers from the beginning and it’s meant we’ve created a product that they love. In the same way, partnering with the accounting community on our accountant tools is really important.
Elaine Clark, the founder of Cheapaccounting.co.uk, is one of our key advisors. She is supporting with development of tools for independent accountants and networks like hers. We’re also very excited to be working with Tony Margaritelli and the ICPA and will be making sure ICPA members get priority access to our products – see you all at Practice Evolution 2019 conferences where I’ll be sharing more!
What Coconut does
The Coconut product is a current account for sole traders that they can open in a few minutes from their phone, available on iOS and Android.
Coconut gives business owners guidance about the tax rules, categorises their income and expenses, and gives a forecast of their tax bill. It also has an invoicing tool, which will match off invoices automatically to the payments into the account.
Alongside our customer accounts, we’re building an Accountant Portal. The aim is to give accountants a window into the transactions your customers are making on their Coconut accounts. You’ll be able to see transactions, receipts and notes in a really accessible format. You’ll be able to download them easily. We also want accountants to be able to communicate with the client through the portal to make the bookkeeping process much more efficient.
Want to get involved?
Our aim is to develop the next generation of tools that really help accountants service their clients. If you’d like to get involved, have a chat or just want more information, please get in touch by going to getcoconut.com/icpa
Sam O’Connor is a Co-Founder of Coconut
Sam will be speaking at the ICPA’s 2019 Practice Evolution conferences in London (27 June) and Manchester (4 July). For details and to book a place go to https://practiceevolution.co.uk/
This blog is taken from the ICPA website. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or by phone on 0800-074-2896.