This is the end of the accounting profession as we know it. 86 percent of all current tasks undertaken by auditors, accountants and bookkeepers can be automated, according to a McKinsey report. Technology doesn’t simply streamline traditional approach. It actively displaces the work of Accounting professionals.
- Technology is Causing a Change of Paradigm in the Accounting Profession
New technologies such as blockchain, A.I., big data, machine learning, robots are about to transform accounting methods and processes. For instance, by enabling complete, conclusive verification without a trusted party, there is no doubt that blockchain technology will be adopted as a new standard in accounting and audits. All commercial and financial transactions will be automatically audited and notarized. This will drive a major change of paradigm in the accounting profession as a whole. Less manual tasks will be involved for bookkeeping. However new client requirements will emerge.
Indeed, since the 1970s, accounting firms have been used to quickly adapt to technological changes, such as the emergence of computers and the Internet. But today more than ever, the way the accounting industry is embracing digital, automated solutions is increasingly critical to their success. Because digital solutions are shifting the nature of accounting missions from bookkeeping and financial statements to advisory services. Clients now expect a wide range of consulting missions from accounting firms. From tax planning, consulting, to business valuations, controllership and family office services, Accounting professionals’ landscape has changed a lot on the past 10 or 15 years.
- New Payment Methods are Playing an Important Role in Bookkeeping Automation
The shift to new and more efficient B2B payment methods is playing an important role in the way accounting professionals work.
Historically, there have been many obstacles to efficient and automated reconciliation. If most accountants and businesses still use an accounting system to automate general ledger and accounting processes, it often stops there. Reconciliation and certification processes are often completed manually, via the use of a spreadsheet. Not only this manual process is tedious, but it is also prone to human error.
Among others, manual reconciliation is not only due to the inability to aggregate or extract comprehensive banking data but also to the “old” methods of payment. However, some banking aggregators can now extract payments data and make it processable by financial and accounting software. Some financial institutions are also giving a better access to transactions data to their clients.
Also, the extensive use of paper checks is the second culprit for manual reconciliation. Paper checks are still the standard payment method for B2B and real estate transactions. However, they are inefficient when it comes to accounting. They have to be recorded manually and matched to a specific invoice. Let’s also point out that checks are subject to bounced payments – aggravated by a significant clearance delay – and they cause indirect processing costs.
In contrast, Online Banking, Electronic Fund Transfers (EFT), Automated Clearing House (ACH) and Credit cards payments are much more efficient. They also are progressively replacing checks and cash. All those payments contain more data – about transactions and clients – so they can be tracked. As a result, receivable automation solutions such as Wellbilled allow professionals to directly match payments to transactions or invoices. EFT and ACH payments are especially appropriate in the case of recurring payments. They are even more predictable whenPre-Authorized Debits (PADs) are used, because the funds are “pulled” by the merchant.
Credit cards payments also provide similar benefits, via the integration of payment gateways to Enterprise Resource Planning solutions (ERPs).
In order to benefit from those technological changes, accounting firms should adopt new automated solutions and provide them to their clients as a paying service. Indeed, some cloud-based solutions automate the full invoice-to-cash cycle. E-Invoicing, online payment solutions, automated reminders to clients, automated reconciliation will cut the number of tasks that are still manually processed by many accounting professionals. Also, workflow management solutions help accounting professionals to interact more efficiently with their clients. Once those repetitive tasks will be mostly automated, accounting firms will have free hands to concentrate on consulting and advisory services.