By Russ Banham
he manual nature of accountants’ work is evident in the unflattering phrases used to describe their job—“numbers crunchers” and “bean counters.”
“Many of us accountants spend so much of our time today doing routine manual work—punching in the same journal entry, the same reconciliation, every month,” said Tammy Coley CPA, chief strategy officer at Los Angeles-based BlackLine, a publicly traded provider of financial and accounting automation software. “The instructions are laid out for us—go find this number, put it there, and do the calculations—careers have been spent doing this.”
Yet now, much of this crunching and counting is performed by robotics processing automation (RPA), software with artificial intelligence (AI) and machine learning capabilities to handle high-volume, repeatable tasks previously performed by humans. In the case of accountants, RPA has liberated them to do more of what they were trained to do: analyze the financial and operational results of the business to drive better strategic and tactical decisions.
A Game-Changing Partnership
According to an analysis by Accenture, nearly 40 percent of transactional accounting work will be automated by 2020, allowing accountants to spend more than three-quarters of their time analyzing performance.
“We’re now able to spend our time doing important things—like evaluating the best way to account for a new big contract the company has just signed,” Coley said. “CPAs are trained for just these sorts of activities and events that require our professional analysis and judgment.”
The arrival of RPA is just in time, given the profession’s mounting workload. “The volume of data that accountants have to work with today is enormous and growing,” said David Perlmutter, executive director at global consulting firm EY. “Accountants are being asked to do more and more. If they’re still using paper-based processes and spreadsheets to do this work, the burden is tremendous.”
Automation has been game-changing not just for accountants, but also for their employers, Perlmutter said. “In the mad rush at the end of the accounting period, the finance organization often must retain additional accountants on a temporary basis to close the books on time,” he explained. “Balances must be validated, records need to be consolidated, journal entries have to be adjusted, and financial statements must be prepared. Relying on the current staff alone may not get the job done.”
With robo-accountants, employers can shoulder some of this workload, reducing corporate spend on additional live accountants.
“Robots can be programmed to perform the repetitive period-end accounting tasks typically performed by accountants, such as account reconciliations, journal entries, and transaction matching,” Coley. “The bots can do this work faster, better and more accurately than a human being can because they’re programmed to do routine things the same way every time.”
Robo-accountants also work on a 24/7/365 basis, never need coffee breaks, don’t use the facilities, and are never sick. “To be fair, they do need to take time off for routine maintenance now and then,” Coley said.
Extracting Maximum Value
It’s a small wonder why businesses are inviting a veritable army of robots into the workspace. According to a 2018 survey by Deloitte, more than 1,700 finance and accounting professionals marked increasing efficiency and internal controls in the coming year—through the use of robots for transaction processing—as their top priority.
“Well-honed RPA programs can help organizations improve the quality of their governance, risk mediation, predictive insights, working capital management, and financial reporting,” explained Dave Stahler, Deloitte risk and financial advisory partner.
Yet, robo-accountants are just part of the efficiency play now underway in finance and accounting organizations. Companies already use financial and accounting software for account reconciliations, transaction matching, inter-company transactions, and resolving variances. (It’s the backbone of finance and accounting.) RPA, then, is a tool used to perform repetitive processes against these other tools.
Humans still need to use financial and accounting automation software to look into the details of transactions and other financial data. This software resides on top of the corporate Enterprise Resource Planning system to perform accounting tasks.
“To extract full value from automation, companies need to be able to validate the accuracy of information,” said Perlmutter. “To do that, you need financial and accounting automation software.”
Down the line, technologies like machine learning and artificial intelligence will enhance the software’s efficiency. “We’re at the beginning of partnering machine learning with RPA,” said Coley. “Once AI becomes more mainstream, there’s a whole new world of possibilities out there, where the software begins to think and make judgments based on the data.”
Making Room for Humans
These days, it’s impossible to think about automation without also considering what this means for the workforce. According to McKinsey & Co., over the next 13 years, as many as 70 million workers in the U.S. will be displaced by robots to find others ways to make a living. This isn’t, however, the end of the story.
In-depth analysis by London’s Center for Economic Research shows that, in the long run, automation helps businesses run more efficiently and cost-effectively. The study of robot use across 14 industries in 17 settings indicated an annual growth in labor productivity and GDP by 0.26 percent and 0.37 percent respectively.
For many companies, that growth will likely translate into the potential to hire more people, who are better supported, down the line. “I don’t see robots replacing accountants,” said Coley. “Rather, I see them evolving our role and augmenting our effectiveness to provide the most value we can to the finance and accounting organization.”
There’s no going back to counting beans by hand, anyway. “Today’s younger generations expect things to work with fewer clicks, where they can quickly access and consume information and then move onto the next thing,” said Perlmutter.
Like most technology solutions, RPA will eventually vanish into the process itself, becoming a routine part of performing a work task. As Permutter sees it, “Automation will be so deeply embedded into finance and accounting that no one will refer to `robo-accountants’ doing the mundane work in the background.”
It will just be human nature.
Russ Banham is a Pulitzer-nominated financial journalist and author.