Death of the accountant? Online accounting software & artificial intelligence

Chris Thompson on the future role of the accountant as online accounting  software takes hold and the remarkable advances in artificial intelligence.

You may have seen the extraordinary video, "Humans need not apply" (you can view it below if you haven't). It charts how historically, humans have used various tools to make our lives easier. This process is said to have started in agriculture as horses were used for arduous physical tasks to replace people. In time the horses were replaced by mechanical machines.

Human labour was subsequently substituted for robots in other sectors such as engineering, resulting in greater economic efficiency because mechanical muscles achieve and maintain far higher levels of productivity for longer. The thing is this technological process doesn't end with automated components. Software programmed by humans is now being used to replace process driven tasks. It's the next economic revolution and the professional world is already witnessing the power of this trend. 

A good example is the rise of online accounting software which is changing the way bookkeeping and financial reporting works. It raises an important question, as this powerful software at your disposal continues to develop, will you even need an accountant in the future?

How bookkeeping and accounting work

Traditionally, accountants gather and prepare largely historical data for use within a company. Once the data is assimilated, the accountant then "crunches the numbers" and produces management reports and end of year accounts for the owner/directors to digest. This work helps the board understand income, expenses, budgets and profitability.

Such critical information means that business owners are very reliant on accountants to produce accurate reporting to help them understand how their organisation has performed. This intelligence is therefore key in influencing the strategic decisions that form the future direction of the organisation. 

Then along comes the software bots and online accounting

In the late eighties and early nineties things began to change. First came spreadsheets, then specific accounting software such as Sage and Quickbooks emerged that allowed businesses to collect and enter their financial information in one place on a computer. The consequence is the need for paper records and files that has been such an essential part of the traditional method of accounting is being rendered obsolete.

Using calculators, the old pencil work, paper ledgers and rifling through shoe boxes full of receipts has largely been eliminated. This is because software allows transactions and other financial information to be input into the system in real time. Customised reports can then be generated from all of the data at the push of a button. As people and machines have connected through the internet so the software has moved away from the shop shelf and desktop to being purchased and updated online.

The last decade has brought about cloud computing whereby your information is held on a secure server that you access via the internet. Organisations no longer have to purchase and maintain expensive servers and firewalls. That’s all handled on their behalf and the rise of smart phones, tablets and 4G internet enabled mobile networks means that more and more business is now conducted through the cloud and on the move. This functionality is further enhanced through personalised apps for mobile devices.

How online accounting can empower business owners

The rise of online accounting is changing the traditional role of the accountant and this can only be beneficial for the business owner. Where before you were completely reliant waiting on your professional advisor to prepare and present information, now you can have this information at your finger tips in a matter of seconds. Your business can be freed up of admin and processing, thereby saving significant time and money while you are empowered through:

• Access to all your financial records wherever you are
• The ability to manually update your accounts with the latest data while on the move
• Viewing budgets, income and expenditure and tax figures instantly
• Integrating your accounts with your business bank account so that they reconcile with each other in real time
• Managing your accounts receivable and invoices to help you get paid on time by customers
• Greater accuracy of information with a lower margin for error

What this means for the role of the accountant

So what is the accountant left to do, if anything? It would appear at first glance as if the profession is finished, another victim of disruptive technology. However, appearances can be deceptive. Whilst the capabilities of online accounting are empowering to business owners, it is still very easy for them to end up with reporting issues. This is because unless you have sound financial experience then you might not know what to enter and where. So part of the accountants role will evolve into screening and checking the correct data has been submitted under the right headings.

Where one door is closing to the profession so another has opened. Accountants advise numerous organisations of various sizes in different sectors. This combined with the intimate knowledge they acquire from the nature of their work with clients means they are well placed to draw upon their experience and know how to provide intelligent and relevant business advice. Today’s professional is no longer just an accountant but rather a business advisor.

At Wellers, we term this as Business Oxygen and some of this role was covered in a recent blog post on the future of accounting by our Managing Partner, Kathleen Parker. The modern business advisor will perform all, or a combination of some, of the following for their clients:

• Attend board meetings to provide directors with interpretation of the numbers
• Analyse the risks and opportunities facing a company and be a critical friend
• Highlight how an organisations financial position can be used to help the business and assist with growth and succession
• Inform clients with economic and sector based knowledge
• Draw upon their experience to advise of business decisions and strategies they have seen implemented with success
• Keep clients informed and assist planning around the latest relevant tax and regulatory developments
• Provide ideas in areas such as cost control and improving profitability

Software bots aren't finished there - the future

Here is the really interesting part or, slightly worrying bit if you’re a professional. The capability of software doesn't end with just processing. You may have noticed the first video touched on developments in artificial intelligence (AI). It highlighted the work of the American company Quill which creates software that gathers data, analyses information and then produces written communication from it. As the video states, if you purchase a newspaper or subscribe to a magazine then the chances are you will already have read a story written by a software bot.

Whilst many professional advisors will struggle to see how software could possibly ever replace their knowledge and skill – it’s actually quite feasible. You see software bots are far cheaper and quicker than their physical robot cousins. White collar workers on the other hand are numerous, high skilled and expensive. This means from a business perspective the incentive to replace them with automation is even greater than for low skilled work and manual labour.  

What's more AI has come a long way in recent years and not just in the United States. Here in the UK this is witnessed in the work done by Arria NLG. You see scientists for many years have monitored the human brain, how we process information and then make decisions. They have now developed software that mimics and simulates human thought processes to produce reports tailored to specific audiences – it’s called natural language generation (NLG).

One of the interesting examples provided in Arria’s video is how data is collected from a baby in an incubator. Arria’s NLG software engine consumes all the data from the sensors connected to the child and then creates a customised report for the doctors and another for the nurses in charge of the baby’s care. The software can even write a letter to the parents reassuring them of their child’s state of health. Furthermore, once set up it does all this in the space of minutes.

Paper work, discovery, analysis, decision making and writing – all key features of white collar work and the professions – could end up under threat. If NLG software can do this with all the complex data generated from the human body, what's to stop it assessing and analysing financial data? As Arria’s video states, “the authoring capabilities of the NLG engine are infinitely scalable and replicable”

The future is bright

So the advent of AI points to a grim future for workers across the spectrum of jobs. Author Jim Mellon in his book Fast Forward: The Technologies and Companies Shaping Our Future, contemplates technology inventor Ray Kurzweil’s prediction that AI will surpass human intelligence around 2045. This new superior intelligence is just round the corner and could take the form of harnessing many people’s combined intelligence and experience.

AI may have come a long way but we still can’t be sure exactly where or how far it will take us. Let’s also not forget that people buy from people and the experience that this delivers creates reputations while driving brands and customer loyalty. Could software ever realistically come close to replicating the emotional human touch, instinct or gut decision making? When it comes to fears over white collar jobs, perhaps it is our perspective that is wrong. Whilst scary when looking at these developments in terms of people’s jobs, this kind of change actually presents phenomenal opportunities.

Instead of looking at all of this as a threat, maybe we would do well to remember that throughout history while technological advances have put humans out of work in one area, the result is something else for people to do in another field that is actually more productive. It doesn’t just lead to greater efficiency and profitability but an improvement in our lives and well being.

We get far more for less - more leisure time, more educational opportunities for all and more imaginative thinking. Whatever course this eventually takes, the point is that technology can make our future brighter and better. It could just make us happier too.

The content of this post is up to date and relevant as at 05/01/2016.

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