Why are Accountants Embracing Automation?
In Singapore and across the globe, the accounting profession is confronting a significant manpower shortage. This pressing issue has led to a growing emphasis on enhancing workforce productivity. Historically, training and effective on-the-job coaching were key to improving productivity. The challenge is now being met with a more potent solution: automation. In an era where digital transformation is paramount, the role of automation in accounting has become increasingly crucial.
The impact of automation on accounting goes far beyond just streamlining processes. It represents a paradigm shift in the profession, elevating job satisfaction and altering the traditional perception of accounting work. There’s a widespread belief that accountancy involves mundane, monotonous and repetitive tasks. This view has contributed to a decline in the number of students pursuing accounting degrees in Singapore and their subsequent progression into accounting careers. Automation is addressing this challenge head-on.
This perception holds some truth but doesn’t capture the entire picture. The “boring” tasks are just a fraction of an accountant’s mission and work. Accountants are vital to every organisation and the backbone of market stability. The mundane and repetitive tasks are often not the most valuable part of our role. We should seek to eliminate them from our daily routine through properly designed automation.
A 2019 Forbes survey of senior executives involved in automation implementation showed that 92% indicated an improvement in employee satisfaction as a result of these initiatives, with 52% observing a 15% increase in employee satisfaction post-implementation.
Removing such tasks from our to-dos not only reduces the notorious long working hours common in our industry but also indirectly improves our workforce’s retention rate. It enhances job satisfaction by freeing up employees’ time to focus on value creation – for their professional development, the organisations they work for, and the profession as a whole. By reducing mundane tasks, we can make ourselves and others realise the value of our work and increase our visibility.
Additionally, automation is bridging the historical gap between accuracy and speed in accounting. In an era where technology drives business processes, stakeholders expect both precision and swiftness. Automation offers a solution to this challenge, harmonising accuracy with efficiency. By integrating advanced technology with deep-rooted accounting expertise, the profession is achieving new heights of operational excellence.
The implementation of automation in accounting is not merely about adopting new technologies; it is about fundamentally enhancing the nature of accounting work. It allows professionals to dedicate their skills and knowledge to areas that have a significant impact, thereby adding immense value to their roles and the industry. As the business world continues to evolve, the strategic application of automation ensures that the accounting profession remains relevant and vital.
Is it Really Worth the Cost and Resources? What is Stopping People from Automating Things?
These are critical questions faced in the realm of digital transformation in accounting. Many people are reluctant to invest time in automation due to the initial time investment, which can be substantial. For example, during my first internship, I was tasked with sending intercompany confirmations to group entities, a process requiring 8 man-hours. Unwilling to accept the dullness of the task, I spent 8 hours programming a workbook to automate it. The result was a reduction from 8 hours in the first month to 30 minutes in subsequent months – a saving of 7.5 hours a month or 90 hours a year. This equates to an impressive elevenfold annual return on investment.
However, there’s often fear of being judged by managers for not making visible progress, as well as fear of being replaced. Despite these concerns, I’ve been an advocate for automation throughout my career and have never been replaced. Instead, I’ve received positive feedback and promotions due to the efficiency I brought.
Yet, the barriers to embracing automation extend beyond just the time commitment. There’s often a psychological hurdle, primarily the fear of being judged by managers for not making immediate, visible progress. Imagine that my manager comes over to check on the progress of sending the intercompany confirmations after 8 hours, only to discover that I have sent none of them. This situation can create a perception of inefficiency or lack of progress, even though the time was invested in developing a more efficient, automated solution.
Additionally, there’s the apprehension of being replaced by technology. My advocacy for automation throughout my career has never led to replacement. On the contrary, it has resulted in positive feedback and career advancement due to the efficiencies introduced.
Another story I often share in my training classes involves my mother, an accountant for the past 30 years. She transitioned from manual journals and ledgers to computerised accounting systems. Her colleagues who didn’t adapt to this change had to retire early. I believe history will repeat itself. Technological advancement, in this case – automation, will not replace accountants. The profession will evolve. But those who do not embrace technology and progress will be replaced, not by technology, but by their peers who do.
The reallocation of time saved from automating repetitive tasks, which often contribute little to our professional development, offers a substantial benefit. It opens opportunities for accountants to engage in more challenging and value-adding tasks, thereby enhancing their professional experience. This shift not only elevates the role of the accountant but also enriches their career trajectory, aligning their work with more strategic and impactful objectives.
How Should You Proceed with the Automation Journey?
Implementing automation in our work doesn’t always have to be a major finance transformation project. Our approach is always to help organisations identify a clear end goal and take baby steps toward it. As we make small changes, we begin to see the impact and enjoy the benefits these steps bring. No budget is too small for automation, making it accessible for all sizes of firms.
Automation can be as simple as a well-designed workbook template used in your monthly close. The objective is to achieve maximum impact with minimal effort – aiming for an 80% improvement from just 20% of the effort. So, identify areas with the most manual, repetitive tasks. More often than not, you’ll find them in the Excel workbooks in your finance shared folder. Many finance teams’ activities, if not done in the ERP or accounting system, are executed in Excel or other spreadsheet tools. Therefore, when talking about automation or improving productivity, Excel is naturally the first step.
The choice between developing in-house capabilities through training or outsourcing to a professional lies with the organisation. The crucial factor is taking that first step on the automation journey.
Many automation projects fail because requirements are lost in translation from business needs to technical requirements. Being an accountant, familiar with both the technical accounting rules and the technical aspects of available technological tools, I can confidently tell you that accountants are the best candidates for this job. We know what can be generalised and what cannot. We know exactly what the expected outcome should be.
The Tips
Elon Musk once said, “Possibly the most common error of a smart engineer is to optimise a thing that should not exist.” Not all processes and steps are worth automating. If a step isn’t necessary, remove it before considering automation.
Newly graduated accountants often start by casting financial statements, a task that has evolved through various methods: from calculator or printing calculator to Excel, then outsourcing to a typist, and finally using Word add-ins. To me, this is something that should not exist at all, as is the Word add-in to help with casting. We look at the fundamentals and find that the most effective approach that solves the root cause of the need is to have a rounded, balanced trial balance that serves as the data source for all primary statements and notes in the financial statements. When this happens, there is no need to worry about casting and internal inconsistencies.
In automation, a crucial consideration is the scope and applicability of the processes being automated. My principle is straightforward: I avoid automating processes that don’t apply to at least 80% of the transactions or the population. The rationale behind this is rooted in the practicality and effectiveness of the automation project. When a process is riddled with numerous exceptions, automating it often leads to more complications than solutions.
Consider a scenario where an automated system is implemented, but it fails to handle exceptions, which occur in half of the use cases. This inconsistency not only undermines the reliability of the automation but also leads to frustration among its users. The consequence is a low adoption rate, as the automation, instead of being an asset, becomes a liability. It’s seen more as a source of complication rather than an enhancement to the workflow.
This approach to automation is about striking a balance between innovation and practicality. It’s about ensuring that the automated processes are robust enough to handle the majority of cases they will encounter. This increases the likelihood of successful adoption and integration into the daily workflow, making automation a valuable tool rather than a burdensome addition.
Conclusion
The integration of automation into accounting practices is a pivotal shift towards a digital-first future in the industry. This transition not only boosts efficiency and accuracy but also reinvigorates the accounting profession. As accountants embrace these technological advancements, they are positioned at the forefront of strategic, value-driven operations, significantly contributing to organisational success. The evolution towards automated accounting ensures that the profession remains dynamic, relevant, and crucial in an ever-evolving digital landscape. Embracing this change, accountants are not just future-proofing their careers but are also spearheading a new era of innovation and strategic significance in accounting.
The choice between developing in-house capabilities through training or outsourcing to a professional lies with the organisation. The crucial factor is taking that first step on the automation journey. Backbone is here to assist. Talk to us!
