Accounting Automation: How to Future-Proof Your Firm

For hundreds of years, technology has paved the way for a faster, more efficient way of doing things. From cars to computers and everything in between, it has allowed us to achieve more in less time. In this scenario, automation has proven to be a powerful tool. While there are those that doubt or, in some cases, fear it, automation is here to make our lives easier – not to replace us. So what does automation mean for accounting?

Some claim accounting automation is set on removing human intervention altogether. Others disagree, while some remain unsure or unconvinced by its potential. There is an ongoing discussion. And, with the ever-growing catalogue of apps and software, it’s one that will only gather more pace as time goes on. 

At Dext, we are firm believers that accounting automation is a step in the right direction for the industry and its people. But we also understand there’s uncertainty and questions that need answering. Here, we want to address those and share why accounting technology is a must-have for firms. 

You’ll find out:

• What accounting automation is; 
• Why it’s not here to take your job;
• How it influences recruitment for accounting practices;
• Why firms need to say goodbye to manual accounting;
• The benefits of using technology in accounting and bookkeeping;
• Technology solutions for each accounting process;
• How to find your firm’s digital expert.

Treat this as your handbook for accounting automation: everything you need to know is on this page. To get started, let’s take a moment to define what it is we’ll be talking about.

What is Accounting Automation? 

Accounting automation is the use of software to automate financial operations. In an industry that’s brimming with repetitive, often time-consuming tasks, automation makes these processes more efficient and quick. As a result, accountants and bookkeepers can then focus on more value-adding work. 

Automation can be applied to most stages of the accounting cycle. Whether you’re recording transactions, posting them to your general ledger or creating financial statements, you can leverage automation to help streamline the complete workflow and make your work more productive. We’ll be taking a deeper look at the accounting cycle and automation later on. 

Can Technology Replace Accountants and Bookkeepers?

This question has followed accounting automation around since it was first mentioned. Of course, the rise of technology at the expense of the human workforce is part of a much bigger discussion. In 2014, it was estimated that 47% of job categories were susceptible to automation within two decades. Accountants and auditors were second highest on the list of those at risk. To add to that, a McKinsey report in 2018 found that technology had the potential to fully automate 42% of finance activities.

Why is accounting going to be automated?

It’s important to ask why, out of all industries, finance faces such a high level of potential automation. As you well know, much of the day-to-day work in accounting and bookkeeping is systematic. There are processes within processes, and tasks that form a much larger output of work. It’s a profession defined by the finer details. 

These tasks are far from straightforward: they take time and heaps of attention. When you have to do these tasks manually, there’s little time for anything else. The real value-adding work like advisory falls down the pecking order.

How technology is changing accounting automation

This is where accounting automation comes into its own. Software allows you to automate tasks that, let’s face it, few accountants or bookkeepers actually enjoy doing. We’re talking about manually entering data from receipts, then categorising that data based on the type of transaction. Or checking that data for mistakes once it’s in your general ledger. 

These tasks, while fundamental pieces of the accounting jigsaw, are far more constructive when you’re able to spend less time on them. In this instance, we’d like to think that most accountants and bookkeepers would welcome technology.

Technology also lends itself to other parts of accounting, like data. The numbers, and how you process and analyse them, have always played a prominent role in accounting and bookkeeping. Now, with the ever-growing need for accountants to be business advisors, data is a great way to substantiate that advice. 

That data must be visible. It also needs to be accurate and now, more than ever, actionable. The good thing about automation is that it supports the entire data workflow. It ensures accuracy, reduces doubt and helps reduce the need for double checking. It also gives firms a central location for all that data. And the deep insight they need to spot trends and opportunities that they can then relay to clients. 

Before we go on, it’s important to address a few of the concerns we’ve heard from accountants and bookkeepers. Fear not, though: these are all common myths that we’ve busted.

• Myth 1: Accounting automation will replace business’ needs for accountants 

The Truth: Technology gives you better insights into your client’s business and the time to analyse it. By itself, technology is a brilliant tool. But the true opportunity lies in its use alongside humans. There are some things that only humans can do: we provide context, empathy and innate social skills where technology cannot. Automation will only allow you to do those things better, creating an even greater experience for your clients.

• Myth 2: Clients won’t embrace accounting technology

The Truth: It’s up to you to help your clients realise how technology can transform their business. While some may resist change, the best way to overcome that is by showing them how the right tools  help solve everyday problems. For instance, let’s take receipt-scanning software. With this type of tool, you can show the benefits of automated accounting first hand. Instead of clients storing their paperwork, they can snap receipts and other financial documents on the go. This not only reduces the risk of those documents going missing, but it also saves them hours of time sending hard paper copies onto you.

• Myth 3: Implementing accounting automation is technical and expensive 

The Truth: In the past, building your own accounting tech stack could be tricky. It was a complicated and costly addition, exclusive to those who could afford it. Fast forward to now, and the picture is very different. There are hundreds of automation tools, many of which are either free or inexpensive. They’re also easy to adopt and use. The fact that these connect and work together in some capacity again makes the entire process much less of an ordeal.

So back to the original question – can technology replace accountants and bookkeepers? It’s clear that automation is a powerful asset for accounting and bookkeeping firms. While it has the potential to replace humans in routine mechanical tasks, it does have its limitations. 

Accounting will always need a human touch. So much of the work that firms work so hard to deliver, builds on a foundation of strong social and cognitive skills. We know it’s far more than number crunching. In fact, automation will only allow more time for jobs that demand more human interaction. So when asked: ‘will technology replace accountants?’, we say no. There may be changes but, on the whole, they are changes that will only benefit accountants and bookkeepers further down the line.

“Whilst a computer might be able to store a lot of data that a human can’t, the person knows how to apply that based on each specific situation – situations that keep changing, too. The accountant knows everything about the client: their business, their personal life, their goals, their challenges… that goes beyond data. And they use all that plus their knowledge on compliance to deliver a service.” – Dayle Rodriguez, Systems Advisory Manager at Kreston Reeves.

Accounting Automation and Recruitment 

It’s worth acknowledging one area where this debate has rumbled on. As we’re sure you know, recruitment is an ongoing issue for some firms. As workloads are stretched to their limits, those tasked with finding the right people face a skills shortage. This only leads to more internal pressure on capacity and sometimes the mental health of those doing the work. 

Back in 2016, reports suggested that artificial intelligence was being used to replace work done traditionally by fresh accounting graduates. This led to predictions of a sizable reduction in graduate employment. It may have been true back then – but more recently, this level of technology is, in fact, a major pull-factor for graduates. 

In 2021, Glenn Collins, Head of Policy, Technical and Strategic Engagement at the ACCA, discussed how firms that embrace technology are winning on the recruitment front. “Firms that have had a digital approach actually have really good involvement and empowerment of their teams. Many of them have a back list of candidates coming through that are really high quality”, he said.

Automation and its role in recruitment is somewhat typical of automation in accounting altogether. In the early stages there was scepticism, technological advancement was seen as an emerging threat to the industry. Now it’s seen as a clear indicator on whether a firm is willing to evolve. Those that do, have a far better chance of navigating the recruitment problem. 

Technology supports retention and career progression

In fact, ensuring your practice makes the most out of automation and it’s in line with new, exciting technologies also help with retention. Young accountants are not willing to spend their time with manual data entry or other uninspiring tasks before they can move on to more interesting work. This generation is digital, and know how to use technology to automate what can be automated, giving them the time to learn and get involved in other areas that’s more valuable for the firm and its clients.

Digital-savvy firms have a strong chance of dealing with the skills shortage internally, without the need for recruitment. As mentioned, automation tools can be the difference between a task taking minutes or hours to complete. With more time, managers can encourage staff to upskill and focus on their own development. That might mean developing your own cloud accounting specialists – but more on that later.

“Technology definitely plays a role in recruitment. And, in terms of retention, it makes it a far more interesting role. Nobody really wants to sit and type the same thing on a spreadsheet all day, every day. What kind of satisfaction would anyone get from that?” – Rebecca Roberts, Senior Manager & Head of UHY National Cloud Group at UHY Hacker Young

The Trouble with Manual Accounting

We hope it’s clear by now that we’re huge advocates for accounting automation – but only as a tool to help you do your job even better. No form of technology, no matter how smart, comes close to your expertise.

Manual accounting, in today’s industry, has its flaws. By definition, manual accounting is a system which chooses not to use computers or digital means. Some say it’s outdated, while others say it still fits the bill. Whichever side of the fence you sit on, it’s hard to ignore what’s possible with accounting technology.

If your firm likes things the way they are, remember that automation can complement existing systems. You may look to implement one or two tools to help certain areas where there’s room for improvement. Or perhaps you could introduce your clients to a specific software to help them with the process at their end. Either way, there are plenty of options when deciding how to automate your accounting firm. Accounting technology doesn’t mean you have to rip up the script that got you to where you are today. 

The Benefits of Accounting Technology

If you’re still unconvinced by accounting technology, we’ve compiled a list of the key benefits. Much of the time, these benefits are either linked together or mirror each other in some way. For example, when you get a real-time view of your client’s business activity, they then benefit from real-time business advice. Without further ado, here are those benefits:

• Save time

There is an ocean of software providers in accounting. And most will refer to ‘saving time’ when describing what they do. Why? Because this is the primary function for the majority of technology providers. Whether you’re chasing clients for paperwork, analysing transactional data, or advising clients on their next business move, technology is there to help speed up proceedings. It is the time-saving assistant. 

• Higher levels of productivity 

This links to the idea of saving time. Thanks to accounting automation, you’re able to spend less time on routine tasks. As a result, you can then redirect that attention, energy and time to more value-adding activities. It’s a case of getting more done in less time.

• Show clients you’re digitally ambitious

While there are many firms yet to adopt technology, that may all change soon. The rise of digital commerce is a seismic trend that spans more than accounting alone. Changes to consumer behaviour have forced businesses to adapt how they operate. An example of this is point-of-sale systems that we now pay through when in store. And the same goes for accounting firms. As businesses become more digitally adept, it’s likely they’ll look to firms who show that same level of adaptability.

• Data accuracy

With so much of accounting and bookkeeping revolving around data, errors are inevitable. While these are innocent mistakes, they can be costly. As you know, there’s no room for error when doing a client’s VAT return. Accounting technology reduces the likelihood of these mistakes happening. Without the need to enter data manually, and with automated data checks, you add another layer of accuracy to your data management process. 

• Actionable data

There’s a growing demand for data to be actionable. When it is, you can assess a client’s business activity, benchmark insights, and even leverage it to incentivise teams at your own firm. The days of ordinary data are behind us. And, as clients continue to turn to their accountants and bookkeepers for business advice, those able to do more with their data are sure to stand out. 

• Stronger client relationships

Think of it like this: with automation, you save time; you can also get more done in less time, enabling you to focus more on advising your clients. Back that up with accurate, actionable data and you’re now an invaluable asset to your client’s business. This will only strengthen your working relationship. It may also justify any increases you make to their pricing plan.

Whether you’re starting from scratch, or looking at how to improve your current accounting workflow, technology is a powerful addition to your operating model. In the next section we’ll be identifying what technology is available to help you automate your accounting workflow. 

Technology Solutions for Accounting

The tech landscape in accounting is vast. If you’re new to accounting technology it’s sometimes difficult to spot a clear starting point. There is a lot to take in. That’s why we’ve tried to narrow it down where possible. Here, we’ll be highlighting the types of technology you can apply at each stage of the accounting cycle. And, more importantly, how it can help you and your clients work even better. 

• Accounting process: Identify and record transactions

Technology’s solution: Data extraction tools

Most accounting workflows start with identifying transactions, then recording them. As you know, this is a not-so-glamorous stage of the accounting cycle. Those doing the work have to be meticulous. But also proactive in ensuring clients send on the relevant paperwork. 

With the help of data extraction tools, this entire process is doable in a fraction of the normal time. Clients can scan receipts, bills, invoices and more, then send them onto their accountant or bookkeeper. At this point, technology extracts all the information you need. So you don’t have to spend time identifying whether transactions are business related. You can also apply smart tools to automatically categorise transactions based on a client’s particular supplier. 

• Accounting process: Deadline management 

Technology’s solution: Virtual calendars and task management systems

A lot of accounting and bookkeeping hinges on deadlines. Those deadlines can be client related, like VAT returns or self-assessments. Or they might be internal markers and targets within your firm’s own workflow. Because there are often so many deadlines to manage, it’s no wonder that some get missed from time to time. 

Virtual calendars and task management tools help to mitigate the risk of deadlines being missed. These tools are customisable and can adapt to suit the needs of your firm. They encourage better time management and allow all staff members to monitor a project’s progress, while flagging any issues. 

• Accounting process: Tax accounting

Technology’s solution: Tax software

There are many facets to tax accounting. It demands strong analytical and problem solving skills. From preparing your client’s tax return, to assessing which government credits they may be eligible for, there’s much to do. 

These tasks are far more manageable with tax software. With automation, you can track their business income, expenses and sales far more efficiently. This kind of technology also creates reports which detail any potential liabilities. 

• Accounting process: Client management 

Technology’s solution: CRM software 

As clients ask more of their accountants and bookkeepers, the need for robust communication is at an all-time high. While you may not want to spend too much time talking to clients, how you do so should allow for proactive conversations. A CRM system centralises how your firm talks to existing and potential clients. So you can better prioritise those that may need support. 

• Accounting process: Advising clients

Technology’s solution: Data analysis software

As mentioned, much of today’s advisory hinges on having accessible, accurate and actionable data. While this level of insight is possible without technology, it can take a considerable amount of time and a lot of head scratching. 

In this instance, technology allows for another level of data analysis – using more variables, more real-time data and more sophisticated modelling. You can compare data sets for different clients, spot trends and flag errors that need actioning. All from one central location. It adds another layer of analysis, helping your expert advice shine through. 

Do you need help implementing accounting automation in your firm? No problem – here’s a step-by-step guide with tips from experts!

The Accounting Automation Specialist

We hope it’s clear by now that accounting automation isn’t the job-stealing, expensive and overwhelming concept it was once made out to be. If you’re still struggling to get your head around it, though, there is another option. 

In recent years, you may have seen the rise of the cloud accounting specialist. This can go by other names like cloud champion, digital expert and tech advisory manager – it varies from firm to firm. 

What does an accounting automation specialist do?

A cloud accounting specialist is someone tasked with identifying and implementing technology at a firm. They’re often an existing employee, passionate about the possibilities that technology brings. More often than not, it is their job to convince partners why they should invest in a certain type of software. And then onboard employees to ensure they are getting the most out of it.

This cloud champion must have enough time to both seek out and install software, as well as be able to train the team and even clients, if needed. Of course, this is sometimes easier said than done; at some firms, it’s all hands to the pump during busy periods. But in order for them to deliver on a digital strategy, they need the full backing from those at the top. 

In the past months, we’ve been interviewing a few cloud accounting specialists to learn their stories. Check how Ryan Alderson, from Harold Sharp, saw his career evolve. Or how Charlotte Ing went from a cloud champion to starting her own practice, fully cloud-based.

Are accounting automation specialists feasible for smaller firms?

For smaller firms that may not be able to allocate the resource to this area, there are still options. Instead of creating an official cloud champion role, you can turn to those interested in technology. If they’re curious about automation, they will likely be doing their own research. As a firm, you can leverage that to your advantage, without having to move a member of staff from a chargeable to non-chargeable role. 

If you’re still struggling to picture how this might look at your own firm, don’t worry. We’ve published an extensive guide to help you understand everything about this role. You’ll find out what it takes to be your firm’s very own tech specialist (or how to hire one), how they can help your firm generate revenue and so much more – as told by those specialists themselves. Download it for free here!

Still don’t have a cloud accounting specialist in your team and need help implementing automation in your firm? Download our step-by-step guide with tips from experts themselves!