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Automation mindset: Beyond the numbers


The history of automation in accounting reveals a complex relationship. Here we look at how today’s digital accountants operate and whether new tools will usher in an era of software efficiency.

11th Jul 2023
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Automation in one form or another has been an accounting buzzword for almost as long as the profession itself has existed, offering practitioners the tantalising prospect of more efficiency, higher-value work and greater profit margins.

And for as long as the prospect of automation has existed in accounting, so has the fear that new technology would put accountants out of a job as machines take over their day-to-day tasks.

However, despite any number of lurid headlines from mainstream publications, this fear has generally been unfounded. The majority of innovations in accounting systems and processes have evolved and elevated the profession, allowing accountants to go beyond the numbers and provide more in-depth analysis and advice.

Recently a new wave of artificial-intelligence-powered tools has hit the profession, promising to automate portions of the work accountants do. Will this finally trigger the fabled rise of the machines and cause mass redundancies, or result in a further shift up the value chain?

Spreadsheet success opens up automation pathways

The past of automation in accounting is rooted in the introduction of computers to the profession. At first large and expensive, their use was limited to major corporations and government agencies, but as technology improved, computers became smaller, more affordable and more accessible. 

Spreadsheet tools such as VisiCalc, Lotus 1-2-3 and Microsoft Excel harnessed this new computing power to take away much of the manual calculation done by a previous generation of accountants. 

However, rather than spark a wave of redundancies in the profession, the rise of spreadsheets may have actually played a role in the increased rate of accounting, audit and analysis job creation. 

While being careful not to mix correlation with causation, US Bureau of Labor statistics (shown below as part of this Wall Street Journal article from 2017) demonstrate that at the very least the introduction of various spreadsheet software packages did not negatively affect accountant numbers – and may have actually boosted demand for them.

A graph of spreadsheet adoption versus accountant and bookkeeper jobs
Bureau of Labor Statistics/Wall Street Journal

Instead, bookkeeper and clerk job numbers fell sharply, as many of the manual calculation tasks associated with such roles were absorbed by software that in the majority of cases could do the work faster and more cheaply.

The spike in management analyst and financial manager roles is also indicative. 

While not always part of the accounting family, the rise of such roles points towards an overall shift in where businesses see value in accountants, with higher-level, more “human” skills such as analysis and advice given greater credence.


The cloud accounting revolution: A platform for innovation

Accounting software is built on the success of spreadsheets, making it easier for accountants to manage financial data. This software has evolved over time and today we have sophisticated accounting systems that can automate many accounting processes.

In recent years, automation in accounting has often been characterised by the widespread use of cloud-based accounting software. This allows businesses to manage their finances from anywhere in the world using an internet browser instead of being tethered to location-specific desktop solutions. 

This new breed of cloud accounting tools provides real-time access to financial data, the ability for multiple users to access and edit key information, and allows businesses to extend the functionality of their basic packages by plugging into complementary tools such as cashflow forecasting, time-tracking and payments via app ecosystems.

This platform for automation makes it possible to streamline many other accounting (and non-accounting) processes, including bookkeeping, payroll, invoicing and financial reporting, saving businesses time, allowing accountants to focus on other aspects of their operations and often acting as the operational nerve centre for businesses.

One way in which automation in accounting has manifested in recent years is through the use of machine-learning algorithms to categorise transactions. Machine learning is a type of artificial intelligence that allows computers to learn from data without being explicitly programmed. By analysing historical financial data, machine learning algorithms can automatically categorise transactions, making it easier for accountants to reconcile accounts and prepare financial statements.

Closely aligned to category transaction software are optical character recognition (OCR) tools, which form a key component of what are known as “pre-accounting” packages. Plugging into the front-end of cloud accounting systems, OCR tools extract data from invoices or expense reports, automatically categorise them using machine learning, and then feed the information into the cloud accounting platform for accountants to review, saving time on multiple fronts along the way.

Another example is the use of robotic process automation (RPA) to automate repetitive tasks. RPA is a type of software that can mimic human actions, such as data entry and copy-pasting, to automate repetitive tasks. 

AI offers insight into automation future

Perhaps the most potent example of a technology with the potential to transform the way accounting work is conducted is artificial intelligence (AI). 

Already used at the “back end” of many accounting software systems to categorise and analyse large amounts of financial data and identify patterns and insights that might not be visible to humans, a new wave of generative AI tools driven by the likes of OpenAI’s ChatGPT model has emerged. 

Designed to generate coherent, original outputs from a simple prompt, provide iterative responses based on further feedback, and in some cases autonomously perform tasks and interact with other software, generative AI is a rung above what previously existed on the accounting automation evolutionary ladder.

While at a relatively early stage, generative AI models have the potential to move into the front-office functions of accounting firms, plugging into existing cloud accounting and practice management systems to drive further efficiencies.

Uses already trailed in upcoming releases include responding to basic client queries, pulling relevant documentation together and helping accountants make better-informed decisions by acting as a co-pilot in client conversations, allowing practitioners to provide better advice in real time.

In time, generative AI tools are expected to automate large swathes of basic tax and accounting functionality, ingesting tax codes and financial reporting standards to answer questions and generate company reports.

Keep an open mind to automation

Whether the latest incursion of AI into the profession is seen as a positive way to remove unnecessary admin or an existential threat very much depends on the mindset of the accountant or firm in question.

While the fear that automation will put accountants out of a job will always remain to some degree, the evidence of past automation trends speaks to the contrary. Accountancy remains a human-to-human profession, with the need to provide bespoke advice to unique situations unlikely ever to be fully automated away. 

The accounting technology landscape is forever changing and evolving, serving up new tools and ways of working. Accountants who are willing to keep an open mind about new products, put in the groundwork to research or play with the tools, listen to product experts and be ready to “surf the wave” as new automation technology emerges are the most likely to reap the benefits. Those who aren’t will not, and risk finding themselves left behind.

This article is an extract from our new editorial special report:“Alternative guide to solving your skills crunch”. Download the free guide to discover practical strategies and real-life examples for recruitment, retention and using outsourcing and automation as alternative solutions.

Replies (3)

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By jrnewton
12th Jul 2023 10:21

Interesting article, Tom. I am now retired but I can go back to the days of 14 column analysis paper and adding up rows and columns on a calculator. When automation came along in the form of an IBM PC with Multiplan spreadsheet on a truly floppy disk I gladly embraced it and never looked back. Further enhancements in automation came along and will continue to do so but a good accountant has nothing to fear from the rise of the machines.

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By johnjenkins
02nd Aug 2023 13:01

Rising of machines and software is good unless (like MTD) it becomes mandatory. When you start forcing knowledgeable people to do something that they know won't work then your up a gum tree and that's not fear.

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By johnjenkins
02nd Aug 2023 12:57

Great article, Tom. I'm not so sure about this digital world, especially how quick it's going. I've only just learned how to use my smart phone with all it's gadgets, and they have been out some time, although I know I'm still far behind.

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