In 2015, an Accenture study—menacingly titled Death by Digital—predicted that 40% of transaction accounting work would be automated, even eliminated, by 2020. The paradigm shift is touted to be a game-changer for the financial industry, allowing businesses to “perform” repetitive, labour-intensive tasks with little to no human intervention.
Six years later, however, automation remains a long way still from mass adoption. But we know that the looming idea of computers displacing jobs continues to cause anxiety among finance workers.
You only need to look at the findings of a 2019 survey by Robert Half, which shows 12% of accountants expressed concerns that automation would:
- Eliminate their role
- Reduce opportunities for creativity
- Force them to excessively rely on technology to do their job
And as COVID-19 forces companies to accelerate their digital transformation plans, we’re once again seeing automation and artificial intelligence (AI) at the forefront of conversations about the future of work.
Is automation a threat to accountants?
Historically, many of the tasks performed by accountants involved manual data entry work, often taking hours a time on siloed legacy systems. Think manually updating spreadsheets, logging receipts, and doing the same reconciliation every month—over and over again.
Of course, this begs the question: is this what accountants really bring to the table? Of course not.
Accountants offer financial expertise and in-depth insights on how to comply with government regulations, optimise spending, and scale your business. These skills require a high level of strategic and creative thinking—things that can’t be automated.
In other words, automation won’t make accountants obsolete. It may be more accurate to think of automation as liberating accountants, freeing them from repetitive manual tasks and allowing them to focus on serving strategic and advisory roles.
In fact, the Death by Digital report estimates that automation will allow finance staff to spend more time on higher-level tasks such as decision support, performance management, and predictive analytics—from 25% in 2015 to 75% in 2020.
This percentage will only get higher as accounting software becomes smarter. For example, Xero recently updated their popular bank reconciliation feature, adding AI-powered actions designed to save accountants and business owners time by reducing manual data entry and reducing the risk of human error.
Additionally, these developments are particularly exciting for SMEs that have limited resources and are under pressure to do more with less. Accounting software with automation features also makes it easier to generate more value from your financial data by expediting time to insight, action, and deployment.
The importance of time to insight, action, and deployment metrics for SMEs
While Singapore is one of the most tech-forward countries in the world, it’s estimated that only 30% of SMEs have adopted data analytics. The majority of small businesses are more familiar with traditional databases and spreadsheets, which, if you ask us, means they’re leaving a lot of money on the table.
Data and insights can do wonders for SMEs. Solutions like Xero Analytics, for example, track their cash flow and financial health in real-time—something your average spreadsheet can’t do. Analytics platforms also show everything you need to know about your finances in one consolidated dashboard, eliminating the need to check different and often siloed databases.
This is a game-changer for the average small business owner. For starters, it means being able to make decisions, fast—a crucial competency to have in today’s increasingly volatile and uncertain business landscape.
But even among organisations that understand the value of data, not everyone is using it effectively.
Traditionally, analysing financial data was done through the “batch” approach. Accountants gather data, analyse it, and come up with actionable insights—a process that could take weeks, if not months. Nimbler SMEs today powered by automation can crunch the numbers and generate insights within days.
To keep up with the rapid pace of collecting and analysing real-time data, your business will need to track new key performance indicators (KPIs):
- Time to insight (TTI): This is the time it takes to interpret data and distil the analysis into actionable insight.
- Time to action: The time it takes to take action based on your analysis
- Time to deployment: The time it takes to successfully deploy a change.
As Stephen Tracy of Analythical puts it, “The faster you can collect, analyse and produce insights through lean reporting, the less time you end up producing bloated reports that end up in the trash. And better yet, the faster you deliver those insights, the faster you can benefit from them,”
Simply put, these KPIs measure the ROI of your analytics, letting you know when data is generating the most impact, and when it’s not—an awareness that can help you further optimise your resource allocation.
How automation enables faster, more actionable insight
Apart from eliminating routine work, automating accounting processes offers several benefits, such as faster access to information, quicker work cycles, improved accuracy and security, better workflows, and enhanced client experience.
Examples of accounting tasks that are already being automated at scale include:
- Data creation: Platforms like Xero allow you to automate accounts receivable and let clients create workflows for invoices to follow. The software does the hard work of sending invoice reminders, creating repeat invoices and linking to third party payment solutions. This also speeds up incoming cash flow receipts along with your TTI by reducing turnaround times for information processing.
- Cash flow forecasting: Predictable cash flow is the lifeblood of SMEs. Platforms like Futrli Predict calculate and analyse thousands of financial data points in real-time to create accurate predictions of your cash flow. For example, the system can warn you that your payroll may be at risk because five of your top clients are releasing payments in 60 days.
- Data capture: Accounting apps allow your employees to scan and upload print-based data sources such as receipts, invoices, and purchase orders. This simplifies expense management and makes life easier for your travelling employees.
- Data consolidation: If you’re running an international business or investment group with entities in different countries in Southeast Asia and beyond, consolidating reports and records in different currencies can be a nightmare that would take your accountant hours of cross-referencing on Excel and tracking the latest exchange rates. Platforms like Fathom can crunch the numbers and create a consolidation from different currencies, providing a single report in your desired currency.
Now is the time to free your accountants from manual work
A 2021 survey of 200 accounting and finance professionals from 26 countries found that about two-thirds of accounting departments still process their invoices manually.
Sure, you could argue “If it ain’t broke don’t fix it.” But with modern automation able to cut the costs of accounts payable by as much as 80%, any SME with limited resources would be foolish to ignore that opportunity to save money.
If you’re tired of tedious manual processes and are eager to improve your organisation’s time to insight, action, and deployment, we’d like to help. Get in touch with the Harvest Accounting team to learn how we can help simplify your accounting workloads with automation solutions.