Technology and accounting are two of my favorite things. Both have changed dramatically in recent years, but nothing has changed the profession quite like the cloud, automation and all its related technologies. We do have COVID-19 to partially thank for the rapid industry-wide adoption of cloud technology, but there’s so much more to it than that.
Recently, I had the opportunity to speak with two industry leaders who are pioneering a technology revolution: Joris Van der Gucht, co-founder and CEO of Silverfin, and Enrico Palmerino, founder and CEO of Botkeeper. Each deals with opposite ends of the accounting spectrum, pre- and post-accounting. They have unique perspectives on everything — from the cloud as the great enabler, to changes they see coming to the accounting industry in the next five years, to how data can transform and repower accounting.
The cloud is the great enabler
Van der Gucht and Palmerino’s respective journeys to technology transformation began with some of the same frustrations those in the accounting industry have faced for years — delays in processing, human errors, duplicate tasks and the lack of a streamlined process to get from Point A to Point B in client service. As technology advanced, so have the opportunities to solve those age-old frustrations to revolutionize accounting.
Digitizing in the area of pre-accounting means connecting, streamlining and automating unstructured financial data into meaningful reports on risks and opportunities.
It’s like “management reporting for clients at the click of a button,” Van der Gucht said.
On the other end of the spectrum is post-accounting automation and streamlining the bookkeeping process. Both platforms enable humans to do their jobs faster, better and more accurately.
In general, the cloud is the enabler that gives access to these different technologies to automate and speed up the accounting process, which is really cool. The tricky part is that it’s not about adopting new technology; it’s about change management, and we know that’s where many firms really struggle.
Technology adoption is change management
Most accountants have a conservative risk perspective built into their DNA. Talk about the impact of these technologies ultimately comes down to change. If your firm is on the fence about adopting a new cloud-based technology platform, start with one small project so you can see the impact step by step.
“Step out of [your] comfort zone and have a look,” said Van der Gucht.
See what could be different, and understand that change management is crucial to adopting new technologies.
The benefit for accountants here is that they’re always so busy with what they have been doing that they sometimes don’t quite know exactly what they’ve been doing! If there’s an easier, more efficient way to do things, it’s sometimes an easier sell for partners who are still on the fence about digital transformation.
And when it comes to change management, the biggest thing firms can do to set themselves up for success is reevaluating their processes. You can’t just put a shiny new technology on an old, outdated process.
The best-of-breed technology platforms are no longer vendors who sell a platform and leave. Digital transformation is a partnership. That’s how you get the change you desire. Assistance with change management can take different forms. Botkeeper has growth partners working alongside the firm, coaching partners, advising on new processes and workflows, and answering questions. This value-based model is similar to Silverfin’s focus on collaboration and partnership where the firm and the technology provider help each other — like a symbiotic relationship.
With those partnerships, firms can better understand what needs to change in traditional processes. The result is added value, more data, new services and, ultimately, a fundamental shift in the business model. Palmerino and Van der Gucht both emphasized a “we’re all in this together” mindset, which is reassuring because the technology space changes so quickly, and institutional change needs to be lasting and meaningful.
What can we do with all this new data?
When you bring accountants together with all kinds of new data, it’s like a kid in a candy shop. You are totally in your zone, but that zone can quickly become overwhelming. What do you choose?
It can be challenging because accounting firms traditionally have only ever looked at one client at a time. It’s a new change in perspective to look at what they can do across the entire client portfolio to enhance automation.
Another shift is in hiring people to service the entire client portfolio, not just one client or one industry. These people sometimes don’t have accounting degrees at all but have skills more suited to data engineering. (Side note: If you are a more seasoned CPA and haven’t taken any courses in data science or data engineering, do it!)
Is data really all that different from accounting, though? They’re in the same relationship, but they’re two different entities. It’s the language; it’s taking a set of numbers and normalizing them into compliance standards. What happens next is that you start to look at the data from a quantitative mindset.
Great accountants ask themselves, “Now that I’ve got everything ticked and tied out, what does this mean for the business,” Palmerino said. “A balance sheet and cash flow statement can tell you a lot about a company. But it only matters if you can connect the dots and understand why the numbers matter.”
Data helps you understand the context of the business. Find the patterns and insights, risks and opportunities. It’s like a managerial accounting versus public accounting mindset. Technology connects the data to accounting.
When data is checked continuously using automated technology, the accountant gets an alert when something happens or needs to be reviewed. Or maybe they get reminders to talk to a client. Data enables client relations and advisory.
The next five years
These days, accounting is more about after the fact. In the future, accounting will be more connected. That means using technology to connect all the different tools in an ecosystem, which will spur a change in fundamental accountant skills and then the entire business model shifts. Digital transformation doesn’t happen overnight, but technology helps you get there faster.
Five years from now, technology will repower the accounting industry. Technology doesn’t deliver value to the client unless it’s plugged in somewhere. Palmerino likened this to electricity. Technology will become the standard middle layer between the firm and the client, automating a lot of the processing and core bookkeeping along the way.
Some accountant best practices will change; for example, waiting to reconcile a bank statement until it’s posted. Processing speeds will become faster. It will be more commonplace to close out month-ends instantly.
Van der Gucht anticipates that technology in the next five years will help accountants interpret risks and opportunities and advise clients proactively. On a balance sheet, he gave the example of seeing legislation changes play out in terms of their impact and potential opportunities. He’s already testing tools to find potential cash flow problems based on unstructured data that he’s seen in other clients. Imagine a world in the not-so-distant future where you can advise clients about cash flow issues before they occur.
Technology and automation aren’t here to take anyone’s jobs. These are tools to help accountants do their jobs more effectively, faster and with fewer errors. Maybe you spend that extra time on advisory, or developing your people, or heck, even going home early. Digital transformation is already here. Consider how you can use it to your advantage and what that could mean for your firm.