Accounting Workflow
Will Robots Take Our Jobs if Accounting is Automated?
The 1984 movie, The Terminator, portrays a dystopian future where robots and intelligent machines seize control of the world. In the movie, an intelligent killer robot — a terminator — is sent back in time from the early-21st century to change history. Now clearly, none of that has come even close to coming true, but what is clear is that technology will disrupt our future in ways we can’t yet predict.
Perhaps the most pessimistic view of the future of accounting comes from a website tool developed by Deloitte and Oxford University that predicts the likelihood that a robot will take your job. According to that tool, accountants have a 95% chance of losing their jobs to robots.
Taking a more optimistic view, a study by the Brookings Institution predicted that occupations with a high percentage of repetitive tasks may be at a high risk of automation, while those that require a high level of education — such as accountants — will be pretty safe. However, a later study by that same Brookings team found that advances in artificial intelligence may make better-paid and better-educated workers the most vulnerable.
We can’t stop these new technologies, but I don’t believe that the accounting profession will go extinct any time soon. Let’s look at how automation may impact accounting.
Will Accounting Be Automated?
Until we got computers and Excel, most accountants did their work pretty much the same way it had been done since Luca Pacioli first described double-entry bookkeeping in 1494. Ledger sheets, pens, and adding machines were the tools of the trade. The development of QuickBooks in the early 1990s put computerized bookkeeping within the reach of small businesses who couldn’t afford the expensive mainframe computers and ERPs used by finance departments at Fortune 500 companies.
Now, thanks to accounting workflow automation, bookkeepers don’t need to spend hours and days on data entry when bank feeds can pull financial data into an accounting system in minutes. Automation streamlines processes and converts inefficient, error-prone, labor-intensive processes into efficient, error-free processes that need very little human intervention. Automation doesn’t just save time, but it also gives you more accurate numbers. Real-time updates mean that business owners always know what their numbers are.
Automation in accounting has been made easier by the development of APIs, or application programming interfaces, which allow different pieces of software to interact with your accounting system. Before APIs, connecting two systems often required coding. Now, you can largely plug and play to create automated workflows quickly and easily.
Applications like Expensify and Dext use APIs to push data from PDFs and photos of invoices and receipts into the general ledger. APIs also make bank feeds possible, so that transactions from bank accounts and credit cards can be directly downloaded into an accounting system.
Accounting firms use automation to extract information from tax documents and import it directly into tax returns. Finance professionals use automation to extract data from contracts and leases to create the journal entries and footnotes required by accounting standards. Business owners use automation to keep an eye on their business needs in real time.
Today, many accounting tasks can be automated, as this graphic from McKinsey shows:
Automation can be something as simple as setting up rules in your accounting software to classify transactions that come in via bank feeds. The next step up is adding software applications to handle specific accounting tasks and to automate entire business processes. One example is order to cash software, which can grab orders from a customer portal, and route that information to the correct places for order fulfilment, customer invoicing, and collecting payments. This type of rule-based software is an example of robotic process automation, or RPA. RPA is like an Excel macro, but more powerful.
Some automation software leverages artificial intelligence and machine learning to expand its functionality beyond programmed rules. In machine learning, access to a large database of knowledge or accounting transactions allows the technology to figure out the patterns in that data and improve its decision-making, with perhaps minimal correction from humans. Cash flow forecasting software such as Jirav or Helm are examples of this.
Will Accountants Be Replaced by Robots?
We’re a long way from the nearly-human robots of The Terminator, and there are still many things that humans do way better than technology, at least so far. Accounting teams won’t be so much replaced by robots, as augmented. Automation is ideal for the kinds of mind-numbingly repetitive tasks that you don’t need degreed accountants or CPAs to do.
Automation gives accountants the time and bandwidth to do more interesting work and to add value. They won’t be spending as much time on the low-value work that has to be done before the high-value work can be started. When they can trust that the numbers are correct and up-to-date, combining accounting information with data from different parts of the business and applying data analytics helps them see patterns the naked eye can’t. Those kinds of high-value work are what business leaders need as input for the decision-making process, and it’s what provides those leaders with the actionable insights they need to move their businesses ahead of the competition.
This means that accountants will need to upgrade their skill sets and learn to use different tools. Being the fastest and most accurate with a ten-key will no longer be a prized skill, but being the one who can use data analytics tools and other new technologies to extract useful insights to improve your company’s operations will make you highly sought after.
When Will Accounting Be Automated?
Accounting automation has been going on since at least 1907, when businesses began using punch-cards for accounting. These days, many accounting teams employ optical character recognition (OCR) as a way to get information into accounting software.
Within five years, about 90% of finance functions should be fully automated, according to a 2020 survey of CFOs by Grant Thornton. As you can see from the figure below, accounts payable is the most automated function, with 61% of respondents having that currently implemented. In five years, 96% expect to have that fully implemented.
For anyone who spends good chunks of their workdays on repetitive data entry, automation can’t come soon enough.
How Do You Automate an Accounting Process?
The first step is to look at all of your existing tech and business processes. Are there particular pain points in your workflow that need improvement? Are you using standardized processes and templates to make sure the work is repeatable? Does any of your existing tech have unused capabilities that could streamline your processes?
If there’s a specific accounting process that’s a pain point, implementing an application that automates that functionality can make a big difference. Or, if the problem is a lack of communication between parts of your business systems, one option is Zapier, which can knit together different applications to create automated workflows. Today, there are RPA software platforms, which can be used to automate tasks across the entire business.
Once you’ve selected the tech, test it. You may want to let it operate side-by-side with your existing process just to make sure it’s working correctly, then make any necessary adjustments.
Automation, like any method for optimizing accounting processes, is an iterative process. And with the accelerating speed of advances in technology, what was cutting edge yesterday may be old school tomorrow.
Is Accounting a Dying Profession?
Accountants and bookkeepers who are willing to expand their skills to work alongside machines and who are willing to take on more of an advisory and strategic role for business owners need not fear being part of a dying profession. In fact, automation will make accounting work more fun.
Automation means that accounting and finance departments will have fewer entry-level positions and will be leaner, but that’s a good thing, since the shortage of accounting talent has no end in sight.
We will finally have the opportunity to do work that’s actually commensurate with our education. Let’s be honest — you don’t need a CPA or degreed accountant if the job is just data entry and repetitive, rote tasks like analyzing credit card records for invoicing mistakes. Automation frees us to do the work that we do best — thinking, analyzing, and advising business owners and the C-suite on strategy.
Far from killing accounting, automation will make accounting the coolest job around. So go grab yourself some of that coolness!
