“Automation will replace accountants!” … “Robots will take away accountants’ jobs!”
Like a snowball rolling on a downward slope, this “feeling” is rapidly gaining mass and momentum in the accounting profession. But, accounting is one profession that has always adapted to technological and regulatory evolution over a long period of time. And, I am sure accountants will ride the new, so-called fire-spitting-jobs-guzzling automation dragon within no time. But first, let’s think about the underground shift that will happen because of the automation in accounting.
Why will automation mean more business for accountants?
Technology has been capturing accounting related knowledge in the software codes. So much so that small business owners could buy off the shelf accounting software and (try to) do their own accounting(?).
But, with the advent of automation technologies, even the largest selling accounting software companies are (now) admitting that there are “coding mistakes” that business owners make. Accountants call it “messy books”.
I speak with accountants day-in-day-out. When asked “why do small business owners do their own bookkeeping?”, accountants tell me one common reason: “they want to avoid the cost of bookkeeping”. But those small business owners, more often than not, ultimately have to pay for “fixing the errors”. And they don’t like to pay those costs. It feels like punishment and penalty for trying to save some hard earned money.
But, now with automation, which is priming to take care of most of the repetitive, data-intensive tasks that business owners were doing themselves, it will soon be time that business owners will feel that they are freed up from those tasks, so much so that they will not find a justification to own their accounting software (access). They will rather have accountants take care of the actual “accounting” while automation takes care of the “creation of books”.
“The accounting business will shift back to accountants – provided accountants are ahead of the automation curve”.
Here’s how to train automation dragon to power your practice
Review your clients’ industries/professions
Yes, automation will need to benefit your practice but it is your clients who will need to benefit from it first. Hence, first summarize the industries/professions mix of your clientele. You want to research if and how much is automation affecting their industries/professions. Those are the “stealth” threats to accountants. Why? For example, if your top clients’ industries are experiencing automation of their business systems/softwares with financial softwares, suddenly, accountants will see far lesser “transactions” to be entered into the accounting softwares. As an accountant, you should take a proactive step to make your clients aware of such automation possibilities. In any case, they will find out sooner or later but if you tell them, they will trust you much more as it will undeniably demonstrate that you genuinely have their interest in your mind. And it also gives you the time you need to prepare for the impact of automation in your clients’ industries on your practice.
Review your revenue mix
How much each of your service types contributes to your revenue? This analysis will make it clear if there is any revenue type that contributes significantly to your total revenue and IF that service type is based on repetitive, data-intensive processes at your firm. For example, a Big 4 firm identified that about 37% of its revenue comes from audit and is reviewing how BlockChain can automate audits. These repetitive, data-intensive processes are your top opportunities for automation (or the top threat if you don’t automate them). With your existing resources, augmented by automation, you will be able to serve more clients. The “economies of scale” will compensate for the possible reduction in your pricing (although you need not reduce the pricing).
Identify “hand-offs” in each process
From clients to your firm. Within your firm – from a staff member to another to partner. From your firm to clients. Each service type you have has a process where data/documents/information changes hands. Each of these “hand-offs” can potentially be affected by automation. Identify which of these hand-offs are technology driven rather than human-cognition-communication driven.
Don’t restrict to “accounting”
Yes, accounting software automation will impact the most but you want to ensure that automation opportunities in marketing, sales, HR, workflow etc. are not overlooked. One simple thing to do is to make a list of softwares that you currently use (or want to use in future if the process is totally manual) for “every touchpoint with your clients”. You want to review if there are automation opportunities in such interactions with your clients. Keep track of automation features your chosen accounting software – and that used by your clients – roll out. Get familiar with the new automation features. Adapt your internal processes at your firm to leverage these new automation features. Analyze the impact on process steps, time taken to complete the tasks, cost etc. But, again, don’t restrict to automation features in your accounting software. You can integrate other solutions to create even more comprehensive, more powerful automated processes at your firm.
Inspire your team
Once you clearly identify what will get impacted by automation, you want to involve those whose day-to-day work will get transformed by automation. There will be justifiable job fears in the minds of those employees. They will possibly resist your automation initiatives. You want to tell them that you will provide an enhancement in their roles and responsibilities – and a new assistant – called the robot or the automation assistant. You will tell them what you will do to re-train them to be able to deliver on their new responsibilities. Identify the skill sets they will require to develop in their new roles – and train them on those skill sets now.
Look for relevant technology solutions
Only after you complete the steps above, look for relevant technology solutions. Do NOT start with a technology solution and then change your processes accordingly. It can cause chaos. You’d prefer to find solutions that more or less fit your current/proposed business processes. In other words, RIDE the automation dragon and DRIVE it to the results you want.
Define target outcomes and timelines
Obviously, all of these efforts will have an impact on several key results areas of your practice. Cost. Revenue per employee. The number of clients serviced per employee. Profitability. Etc. Think of what the picture will look like once you implement automation to the extent you plan to. Write down that “future balance sheet” of your own firm. Make assumptions. You do not have to be precise or accurate. It will still give you a direction; and measurement tools. Also, define your timeline to achieve significant milestones in the automation journey – with quarterly milestones. Don’t go too far because automation technologies themselves are evolving. You want to ride them at an appropriate time but you don’t want to wait till everyone else has already done it. Quarterly milestones give you opportunities for measuring, refining, re-measuring adjustments of your automation journey.
Define your new value
Your pricing may or may not need change. But the experience of your clients will change. They may get their deliverables much faster. They may get new insights from you. They may get new services from you. In other words, your value – as experienced by your clients – will change. You want to re-package-new-package your service offerings – and price (if need be). You want to change your website, your marketing materials, your sales email templates, your presentations to prospects and so on. Spread the word on social media (you can automate. One of the best ways to understand and exhibit your new value is to create a “before and after” contrast document.
Augment your marketing and sales
Automation does things faster and cheaper. It will free up time for your resources. You want to increase your revenue and profitability by increasing the number of clients and/or the number of client projects you work on. You, therefore, want to do all you can to augment your marketing and sales to bring in new clients and projects. Give your marketing and sales the “new value” to message into your target market.
Start, but Prioritize
If you force too many changes at the same time, it will be overwhelming for your team; and for your clients too. Not to mention the impact on cost and timelines. Pick your service types and processes to automate on priority. Also, pick a few clients to roll out automation. These clients will be your progressive, ambitious, tech-savvy, truly entrepreneurial clients. If need be, give them incentives to wholeheartedly participate in your automation journey.
Keep everyone informed, frequently
As you go along, keep measuring progress and refine your processes as needed. But keep your clients, your staff and partners informed of the current status as well as the immediate next steps. You might want to automate even your communication systems – including implementation of a drip mail software.
That’s not the end
On the contrary, it is the beginning. It is the beginning of your transformed practice that will create new value for its clients and staff. AGAINST automation or WITH automation IS a choice.
Hitendra R. Patil is the Author of “Accountaneur: The Entrepreneurial Accountant” and the Director of Practice Development at AccountantsWorld, a leader in cloud solution for accountants. Hitendra’s insightful articles are published by accounting profession’s leading publishers like CPA Trendlines, Accounting Today, Accounting Web, Inside Public Accounting, CPA Magazine, Insightful Accountant, etc.