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How accountants can use automation to overcome the data entry challenge

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Does your accountancy practice spend more time focusing on data entry tasks than you’d like? There’s a way to get around it.

The recent Practice of Now 2019 research by Sage showed that nearly two-thirds of accountants plan to automate tasks in the next three years, primarily to overcome the data entry challenge.

Repetitive, time-consuming tasks such as data entry and number crunching are by far the most popular choices for automation, with just under half of accountants in the survey saying those tasks are the most likely to be automated.

Yet contrary to what the survey respondents believe, there’s no need to wait. Automation is already here and is in use in practices worldwide. The benefits for your practice could be huge.

And with UK accountancy practices spending on average nine million hours during tax season on manual data entry, “it’s important to start now,” says Narayanan Vaidyanathan, Head of Business Insights at the ACCA, “even if that means starting small and iterating from there on.”

He adds: “The automation of routine tasks is a stable trend in accountancy, with a high likelihood of intensifying further in times to come.”

Read this article to learn more about automation and how you can use it within your practice.

What is accounting automation?

Let’s take a moment to define accounting automation.

While it’s a story continuing to be told by evolving artificial intelligence, in the here and now, it means two things:

  • Automation of data entry by photographing or scanning invoices and other documents.
  • Automation of account reconciliation.

Data entry is a well recognised area with potential for automation. The use of machine learning related approaches such as optical character recognition (OCR) for example can greatly improve the speed and accuracy of data entry.

Furthermore the use of software ‘bots’ in the form of robotic process automation (RPA) can increase the ability to conduct process tasks all day and all week, without stopping or tiring.

For smaller practices, it’s particularly relevant to note the benefits from migration to cloud technology that provides access to data that is consolidated in a secure environment and can support scaling up more easily.

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Why automate accounting?

Whether that’s scribbling transactions in a paper ledger or keying in data to accounting software, most accountants know how time consuming data entry can be. They also know how, despite their best efforts, it’s hard to avoid errors, such as when numbers are transposed or wrongly coded.

Errors are not just annoying. They have a cost in terms of identifying and fixing them later on, and could have an indirect cost in declining client satisfaction.

If there’s one thing clients expect from an accountant, it’s 100% accuracy.

Then there’s the digitisation of tax, and the burden of increasing legislation, leading to what Vaidyanathan calls “a world with exponentially exploding amounts of data”.

The move to automation isn’t a choice, he adds, but a necessity. He says: “Traditional and fragmented ways of input and reconciliation keel over quickly.”

But there’s much more to it than even this.

Keying in data is trivial and repetitive work that requires little if any expertise, yet it can consume even the most highly trained members of staff in a practice – especially in smaller firms that have limited resources.

“Automation lets accountants transition up the skills value curve,” says Vaidyanathan. “For example, you’ll have more time for understanding the business and opportunities for improvements in your clients, or to focus on interpretation of standards for particular or complex situations.”

Seen in this context, a lack of automation costs you money.

Put simply, you are blocked from earning higher hourly fees for more complex work. Similarly, a lack of automation can hinder growth plans in the practice because you are blocked from taking on new, different kinds of work for clients.

A lack of automation can even drive away staff who hate repetitive drudgery. The millennial generation is tech-savvy enough to understand that automation technologies can be applied to repetitive tasks.

“New entrants to the profession are much more likely to be interested in an organisation that embraces digital, relative to one that feels like it’s living in denial,” adds Vaidyanathan.

The benefits of accounting automation

Accountants typically list the following benefits after the introduction of automation:

Efficiency

As with all technological changes, it’s cost savings that typically drive the introduction of automation, measured as hours of staff time that are saved. Automation has been described as like recruiting a new member staff, yet one that doesn’t require holidays or a desk.

Days and even weeks of staff time savings are often quoted.

Staff satisfaction

Nobody enjoys the repetitive and mind-numbing work of data entry and reconciliation. If staff are freed to use their expertise and experience in more diverse situations, they’ll be happier in their roles.

This has real value in lower recruitment costs and decreased business disruption.

Mobile convenience, plus ‘open all hours’

Automation opens another door to the convenience of mobile working and working outside mandated office hours.

Buy a sandwich as an allowable expense, for example, and you can snap a copy of the receipt there and then. Its details will be understood and entered into the correct ledger automatically. Your clients can be encouraged to do this too, which avoids the box of receipts being dropped on your desk at year-end.

Growth – for you and your practice

Perhaps the ultimate benefit of automation can be found in the time it frees up for you. With a lot of the hard slog taken care of, you can expand your role and your practice towards becoming a trusted adviser.

You can develop additional clients offerings to help client businesses grow and to share your knowledge and experience inspired by insights into their accounting.

Introducing automation to your practice

It’s natural to lack in confidence about introducing new technologies and have concerns about changing working processes (and finding the time to do so).

But the technology typically slipstreams alongside your existing solution, making adopting it extremely simple. You will probably find a data entry automation solution in your accounting software’s app store, for example.

Here are some tips to get started.

  1. Start small. A good tip is to trial the software on your own personal accounting, to get an idea of its capacities and anything that might catch you out. Don’t forget to try out the mobile apps too, if there are any, to get an idea of how the software works together with your accounting solution. But ensure you push the software to its limits in your trial to really get an idea of its capabilities.
  2. Create a plan. As mentioned, stage one might be to utilise the automation software on your own personal accounts. Stage two might be to introduce it to your own business accounts and to trial it in a wider context. Stage three might be then to roll it out to clients, which is the biggest step because it will involve a significant education element, plus potentially upgrading your service offerings if you become a reseller of the software.
  3. Structure your plan. Remember that successful roll-out plans have two components: an owner who acts as a single point of contact, and milestones by which progress can be measured and that act as triggers for other phases of the plan. How will you know when it’s time to roll out the automation to clients, for example? Well, one suggestion might be to have a certain amount of time pass when the automation is deployed within your practice without any issues of confusion among staff.
  4. Make use of support. The vendor behind the automation solution will have support staff ready to answer queries about not only how to integrate the software within your existing solution but also the best way to roll it out for your clients as time goes on. There’s a whole body of experience out there, so ensure you make use of it.
  5. Set expectations and be prepared. “The technology generally only succeeds when properly integrated with people skills, organisational processes and alignment with the business model,” says Vaidyanathan. “There’s not much point automating data entry if you haven’t thought about time and costs of training for your employees, managed risk of good people leaving because they fear job loss, or grumpy clients because your changes are having an impact on them, and they weren’t properly advised and prepared for this.”

Conclusion on automating data entry

Data entry within accountancy is a 19th-century task that in a lot of practices is handled in a 20th-century way. Yet, we’re now in the 21st century. Technology is leaping ahead and solutions previously thought of as science fiction are available here and now.

Can a computer read and understand invoices and receipts, and ensure the details are filed into the correct ledger? Yes. And it can do this for both yourself and your clients, leading to potential revolutions in the way you work – or, at the very least, leading to amazing time and cost savings.

The solutions can be introduced slowly to your practice and added in alongside your existing cloud accounting software. There’s nothing to lose and everything to gain.

Editor’s note: This article was first published in December 2019 and has been updated for relevance.

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