Our team at SBO.sg is committed to being a one-stop avenue to connect local businesses and consumers. We hope that our research efforts can help you save time and money by finding you the best deals without having to search around the vast world-wide-web.
[pullquote]With automation threatening accounting jobs and accounting software experiencing strong growth, it’s no wonder people have a fatalistic view of the future for accountants.[/pullquote]
Every other week, a magazine or newspaper article warns of job obsolescence, thanks to the threat of artificial intelligence and automation. Some go on to call out the most vulnerable occupations, and as certain as the sun will rise again tomorrow, accountants will make the list.
The strong growth experienced by accounting automation software companies doesn’t help quell the speculation as well. Xero added 380,000 new members between September 2017 to September 2018 and posted a 37% increase in revenue over the same period. Quickbooks saw a 41% increase in subscribers from August to October 2018, ending the quarter with nearly 3.6 million members.
With automation threatening accounting jobs and accounting software experiencing strong growth, it’s no wonder people have a fatalistic view of the future for accountants.
But beyond the intuition that a wider accounting software adoption may make humans more dispensable, demand for accountants remains high. There must be something these big boys know that small fries like us don’t, right?
Accountants are your finance-speak translators
All business owners have to deal with their company finances at some point, no matter if they understand accounting or not. You may be thinking that you can turn to Google for help and save some money, but Google isn’t going to tell you when you misunderstand a concept or do things wrong.
After all, accounting is the dialect of finance that takes accountants years to learn. The more competent ones are CPA or ACCA qualified, and those certifications are known for their rigorous syllabus, tough exams and low passing rates. Since 2006, the passing rate for CPA hovered between 45% to 50%. But when you have CPA- or ACCA-qualified accountants helping you, you can be sure that they are capable of translating the numbers into something you can understand.
[pullquote]After all, accounting is the dialect of finance that takes accountants years to learn.[/pullquote]
Going back to dialect, accountants provide the translation for people who don’t understand the language. They help business owners break down the vast amounts of financial data into simpler, digestible nuggets of information that will eventually allow business owners to make decisions that directly impact their company’s bottom line.
Leave the thinking to accountants.
Accountants help you plan and analyse your finances
Although automation can assist you in aggregating data quickly, raw data is not useful for business. You’ll still need specialist knowledge to interpret financial information for analysis and planning purposes.
No AI (at least for now) is able to sit down with you to understand the company’s unique structure and operation, explain the quantitative data in relation to those and turn those insights into qualitative suggestions. But a human accountant is able to make sense of the numbers in the business context to cater to your business needs and objectives.
[pullquote]But a human accountant is able to make sense of the numbers in the business context to cater to your business needs and objectives.[/pullquote]
For example, a restaurant business owner knows that his raw beef steaks typically last three days before they spoil. The supplier has a delivery turnaround of one business day and that there is a bulk purchase discount of 10% for purchases above 12kg. Restaurant revenue is also twice as high on weekends as compared to weekdays.
The above represents knowledge and data that the business owner gathered through experience. This data alone is raw and will only be helpful in business decision-making after data transformation.
This is where the accountant can step in to add value. In the above scenario, based on the raw data and information, the accountant is able to transform the data into usable information by performing techniques like calculating EOQ (Economic Order Quantities), cash flow management and also calculating the optimal timing to place the restocking orders with the suppliers in order to better match inventory supply to restaurant demand.
This vital step of data transformation into insightful business decisions is a result of a deep understanding of the business’s operations. Until AI is able to determine the diverse factors that affect business decisions independently, an accountant is still needed to contextualise business experience into optimal business approaches that maximise profits.
Accounting judgements can’t be left to machines
Law is up for interpretation, and the legal regulation for accounting is no different. There is usually more than one way to view a particular accounting principle. This means that you can choose the way you want to account for certain things.
[pullquote]Ultimately, [decisions] can’t be left to the machines and has to be made by the business owner.[/pullquote]
Let’s say a trade association charges an annual membership of $12,000. The owner of the small business can choose to pay the entire annual membership fee of $12,000 upfront or make monthly payments of $1,050 on a monthly basis for 12 months. The business owner has a choice of whether to pay a lower total amount or pay a higher total amount with multiple instalments.
If a business has tight cash flows, the business owner would perhaps prefer to not put such a heavy burden on their cash flows and pick the instalment payment method as compared to the lump sum payment.
If a business has higher cash flows, it would be advantageous to pay the lump sum as they would save $600 in total costs.
Ultimately, this decision can’t be left to the machines and has to be made by the business owner. Even if the technology has the ability to decide based on pre-programmed rules, the business owner still has to let the machine know their preference with regards to decisions that will affect the owner’s bottom line. AI may be able to predict cash flows based on historical trends and data, but AI is unable to replace the business experience and judgement that a business owner or accountant can provide.
[pullquote]AI can take care of mundane work and speed up data population, which frees up time for accountants to do higher value work.[/pullquote]
Accountants are staying put
Artificial intelligence and automation is not a zero-sum game. Including software into your business does not dispense the need for humans. AI can take care of mundane work and speed up data population, which frees up time for accountants to do higher value work.
Until AI can think like humans, accountants would still be hanging around for the foreseeable future.
This article was brought to you by Perfecten Corporate Services, an accountancy practice that uses software to improve accounting efficiency. The hours that they save from handling cumbersome paperwork is spent strategising for your business.
Seen anything interesting? Tip us off.