Is accounting automation hurting finance careers?
We’ve all heard dire predictions about possible negative repercussions of technological advances on the accounting profession. To name just one example, in 2015 NPR released a widely circulated tool that ostensibly predicted a given career’s odds of being eliminated by automation. To many accountants’ dismay, accounting and auditing came up with one of the highest odds, at 93.5 percent. A closer look at what automation is really doing, however, reveals that its impact is to shift focus, not to eliminate jobs. Automation has opened up new possibilities for accountants to play more strategic, proactive roles, a reorientation that has the potential to make an accounting career even more valuable and gratifying over the long term. Accounting professionals need to ensure they have the training and skills in order to meet these new challenges.
How has automation changed accounting careers?
To answer the question, it’s important to consider the breadth of possibilities behind the term “automation.” The ability to use technology to automate mundane accounting tasks and save time is no longer revolutionary. In fact, for many finance professionals, it’s a given. But advances in artificial intelligence (AI) and machine learning, when combined with the ability to synchronize multiple automated processes, provide unprecedented visibility into financial data. As a result, finance teams have more time and better tools to make fast, data-driven operational decisions.
This shift puts the focus back to the real value of accounting teams: their ability to analyze financial data and use their conclusions to drive business results.
Part of this shift is the result of more intelligent automated processes. Rules-based automation has supported basic accounting processes for a long time, but problems can arise when an exception is introduced. For example, during a recent 20-minute tales from the front-lines of finance talk, Meir Rotenberg, Director of Operations at Spiff, recalled a time at a previous company when he had to process every single subscription manually because just a few were outliers and couldn’t be processed automatically. With machine learning, automated processes can “learn” as they go, so analysis becomes more sophisticated as it is used. That means that if a worker submits receipts through an intelligent spend management system, machine learning can develop knowledge of their spending habits in order to correctly categorize their expenses.
Automated data collection: saving time, improving accuracy.
The value of being able to automatically process data is defined by the quality and availability of that data. Unfortunately, many companies struggle with data organization. In one Accenture survey, 77 percent of respondents felt that from 50 to 90 percent of their data was unstructured and inaccessible. At the same time, 93 percent of respondents said that data-driven decisions will be a key driver of their ability to meet their goals. For accountants and auditors, the value of real-time data collection goes beyond the time saved, and empowers deeper analysis to help a company reach its goals.
For example, the ability to automate document collection ensures that all supporting materials are available whenever they’re needed, providing a clear audit trail. This has the obvious advantage of freeing up a finance team to spend more time analyzing data and focusing on its meaning. When multiple financial functions are combined into a single system, the benefits go even further. In most companies, operational efficiency depends on a smooth flow of information between multiple departments (FinOps, HROps, RevOps, and SalesOps). The real-time, consolidated collection of information across a company is particularly efficient during the month-end close. Instead of chasing down employees to gather missing information and gathering info from multiple sources, finance teams have everything they need right at the start. Some are even able to move to a continuous close.
Technological advances in other industries have been incorporated into accounting systems to optimize the automation of information collection. A good example is optical character recognition (OCR). OCR can recognize the different elements of, for example, a submitted invoice and categorize it accordingly. As technology allows more information and workflows to be automatically captured, the need for data entry diminishes.
These advances in technology empower finance professionals to do higher-value work and to play a more informed role in driving decisions. This expansion of the finance department’s role in determining policy coincides well with an increase in the need to make faster, more strategic decisions in the face of the COVID-19 pandemic.
A recent McKinsey survey looked at the timelines for successful companies’ responses to, or implementation of, changes related to COVID-19 and found that timelines were dramatically faster than the companies would have expected them to be before COVID-19. For example, the average anticipated timeline for “increasing use of advanced technology in operations” was 672 days, but the actual timeline in the spring of 2020 turned out to be just 26.5 days. That’s an astounding difference, and one that relies on accurate, up-to-date data to be successful over the long run.
The importance of continuing education.
Those in the accounting profession must adapt their skill sets to reflect this new reality. It will be increasingly important to stay abreast of developments in strategic finance, and to be able to see the story behind the numbers. As the emphasis shifts from journal entries and bookkeeping to financial planning and analysis, continuing education with an FP&A focus can help finance professionals stay relevant. Communication skills are also becoming more and more important, as finance departments now play a larger role in improving efficiencies across all parts of a company. That increases the need to explain financial concepts in a way that non-finance people understand.
The need to commit to lifelong learning is a common theme in Airbase's popular Path to Becoming a CFO series. Fortunately, there are are many resources available. Organizations like the CFO Leadership Council and the American Institute of CPAs offer an array of courses for CPE credits. Online learning organizations such as Udemy offer CPE credit courses, and accounting firms such as Price Waterhouse Coopers and Deloitte have resources for CPE, including many that are free.
Also, look for opportunities to develop those vital FP&A skills on the job when you can. In a recent Path to Becoming a CFO talk, Kate Bueker, CFO at HubSpot, talked about the importance of being current in this area for anyone aspiring to top finance positions. “There are some experiences that are must-haves for any CFO. The biggest thing is running corporate FP&A. Everyone needs that experience before they will be a good, successful CFO,” she said. In fact, a common theme from speakers in the popular Path to Becoming a CFO series emphasize
What the future holds.
When automated processes are combined with machine learning and other innovations in a comprehensive system, finance teams can perform work that is ultimately more valuable — not to mention more interesting.
As a result, the negative job outlook predictions of just five years ago have not played out. According to the Department of Labor’s Occupational Outlook Handbook (OOH), the number of job openings for accountants and auditors will grow about as fast as the average for all occupations through 2029. In fact, the OOH sees automation as playing a positive role in the field’s future. “Although [automation] will allow accountants to become more efficient, this change is not expected to reduce the overall demand for accountants. Instead, with the automation of routine tasks, such as data entry, the advisory and analytical duties of accountants will become more prominent.”
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