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 2020 survey and report from Sage showed that nearly two-thirds of accountants consider automation of processes, workflows and payments the biggest challenge that will impact accountancy in the next 12 months.
Only 6% of accounting professionals said they don’t believe automation can help with any business tasks at their firm.
Automation is already here and is in use in practices worldwide. The benefits for your practice could be huge.
And with Irish accountancy practices spending a large percentage of time on manual data entry during tax season, “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.
Why automate accounting?
Whether that’s scribbling transactions in a paper ledger or keying in data to accounting software, you know how time consuming data entry can be.
You also know – despite anyone’s 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.
How automation can help your practice
Shaz Nawaz owns and runs AA Accountants, a chartered accountancy practice. He and his staff embraced automation a decade ago, and have been building on their achievements ever since.
He explains the benefits:
“I see more of the basic compliance work being automated through AI systems and processes in automation. And going forward, we’ll see bank reconciliation being done automatically.
“So, many of the number crunching jobs are going to start going away. They’ll be done quicker and with fewer mistakes – which is something people don’t often mention.
“This leads to accountants being able to add value.
“The accountant can take the role of an adviser for businesses, which is really important, and an area where the profession has been lacking – but which clients have been requesting for the past 20 years.
“Businesses want their accountant to be more productive and give more advice, but accountants can’t give more advice because they’re too busy number crunching.
“Until now, accountants have been considered by businesses as a necessary evil – but now they can be more.
“Automation for us has freed up time. We’ve now got time to say: ‘OK, what can we now do to add more value to our client’s business?’
“It’s having those conversations and meetings, but also thinking: ‘Let’s look at their business, let’s think about it, let’s brainstorm.’ What other opportunities are in their business that they haven’t thought about, that we can go to them now?”
The benefits of accounting automation
In addition to what Nawaz says, accountants typically list the following benefits after the introduction of automation:
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.
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 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’ll probably find a data entry automation solution in your accounting software’s app store, for example.
Here are some tips to get started.
- Start small. A good tip is to trial the software on your own personal accounting, to get an idea of its capacities and anything you might be unsure about. 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.
- 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’ll involve a significant education element, plus potentially upgrading your service offerings if you become a reseller of the software.
- 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.
- 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.
- 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.
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