The new bookkeeper is in the software
Robots (bots, to be specific) are replacing accountants and taking over corporate finance departments and performing work that often required teams of people. Many small and big companies alike are among those using software to automate many corporate bookkeeping and accounting tasks.
Erik Brynjolfsson, innovation researcher and author, in his Ted Talk overhearing a conversation where a guy says, “Nah, I don’t use H&R Block(tax preparation company) anymore. TurboTax( software) does everything that my tax preparer did, but it’s faster, cheaper and more accurate.” How can a skilled worker compete with a $39 piece of software?”
Wall street journal reports that businesses use accounting programmes to save time and staffing costs. Since 2004, the median number of full-time employees in the finance department at big companies has declined 40% to about 71 people for every $1 billion of revenue, down from 119, according to Hackett Group, a consulting firm.
Many accounting schools like those at Brigham Young University, in Provo, Utah, and the University of Denver, now also provide training on SAP, Oracle and Microsoft Corp. systems in addition to training in bookkeeping.
That is a microcosm of what’s happening, not just in finance, but in media and music, in software and services and manufacturing, in retailing and trade – in short, in every industry. People are racing against the machines, and many of them are losing that race.
Our perspective
Accounting softwares are nothing new and accountants have relied on them for decades (it was among the first corporate functions to be automated). But the scenario is changing, with software becoming powerful and much easier to use that they have started replacing the accountants themselves. The replacement is more pronounced in startups and small businesses where automating their accounting needs is an obvious alternative to paying an expensive accountant.
The software robots toil quietly behind the scenes 24×7, easing the burden of routine monthly tasks including data collection, complex journal entries, reconciliations, compliance testing and master data management. Once ‘taught’, they faithfully follow the processes accurately and reliably until told to stop. A fleet of them can be upskilled (or upgraded) as fast as a snap of the finger. Millions of bits of data can be processed, analysed, and computed more quickly and efficiently by a handful of digital accountants than by dozens (even hundreds) of live assistants.
Accounting profession will go the same way as law where software will automate all business and accounting processes and then present the results to experts who may use his professional judgement to review them and make any necessary adjustments, in areas from audit to tax.
Beyond the accounting function, Artificial Intelligence (AI)I has already transformed stock trading. The trading floors in any stock exchange do not have humans anymore but only TV screens with stock tickers running. Artificial intelligence technology has been used for two main purposes within the stock market: to increase speed and to synthesise data for use in logical predictor models. The automated stock trading platforms can make five trades in the amount of time it would take a trader to simply press a button on their computer (after the time spent in thinking about which all buttons to press!) .
Lower to mid level accounting and finance professions will lose their sheen at a mass scale. For generations, these were very lucrative professions. And much like other top professions who face digital Darwinism, they need to reinvent themselves to be useful.
Gazing through the crystal ball
- The finance professionals in future need to be equipped with multidisciplinary, technology, business acumen besides the plain rule based accounting skills. Overall development of perspective and personality will matter a lot more.
- Entrepreneurial opportunities in accounting and finance will grow as more businesses will seek to get ‘higher order’ finance direction through outsourced service firms. And the outsourcing will be global in scope for the brighter professionals.
- The impending micro-enterprise revolution will offer attractive co-founding opportunities to finance professionals.
- For those who will remain in business as finance professionals, life will be less risky (professionally), less stressful and more impactful for overall business.
