Many accounting executives seek efficiency in their finance and accounting departments by utilizing tools and resources that lighten the workload. However, CFOs, Controllers, and the like are hesitant to make the jump towards automation because for years, the accounting function has been primarily a manual job. And according to Big Four firm, PwC, there’s a 97.5 percent probability that basic chartered accounting will be replaced by automation over the next 20 years. Read on to explore some of the top accounting automation pitfalls and what tasks you should and shouldn’t automate.
If you’re thinking of investing in accounting software that automates your tasks for you, it’s easy to believe the hype that automation will solve all your accounting problems. But is it true? Sure, it’ll alleviate the burden of completing some of your low-impact tasks and it frees up extra time in your day to focus on big picture items. But what about the work that the robots can’t do? And how does human capital fit in when taking on an automation overhaul project?
These are the top accounting automation pitfalls:
Pitfall #1 of Using Accounting Automation: Lack of Trained Professionals and Maintenance Difficulty
As an accounting professional, you probably graduated from school with a degree that correlates to finance and accounting. You did not graduate with a degree in computer science. But, the role of an accountant is expanding. So much so that most employers now have a checklist of required skills they are looking for in their next hire – and at the top of that list is being able to utilize and successfully operate accounting automation software.
In addition to being unfamiliar with accounting technology, accountants are now having to add another thing to their work plate: training. Accounting automation software still requires team members to use it in order for it to be efficient. And no matter how simple the software is to operate, there will always be restrictions that hinder its effectiveness – inexperienced employees and outdated technology. In fact, training your team on the program is rendered useless if you haven’t upgraded your software to the latest version.
If you have a dedicated IT department, thank them. It’s a challenge having to juggle a myriad of issues – add in a new software to maintain and heads will start spinning. However, if you work for a small to midsize company that does not have an IT department, those issues will fall on your plate (on top of your other job responsibilities).
Pitfall #2 of Using Accounting Automation: Lack of Human Interaction
As humans, we crave interaction – it’s embedded in our biological foundation. Technology can never truly replace a person. And as we previously mentioned in our blog post People + Technology: Why Humans Still Matter In The Age of Automation, the driving force behind tech is a living, breathing person.
An accountant’s role has evolved over time. What was once considered just number crunching has now moved towards a more strategic role – analyzing and interpreting data – something automation can’t do. You can’t teach a machine to interpret data in a meaningful way. In fact, automation can’t tell you what to do next, it can only tell you if the data is good or bad based on the criteria you set forth. In fact, according to Alanna Klassen Jamjoum, Director of Digital Transformation at A.T. Kearney, “In a future where we are increasingly surrounded by AI, we will crave human interaction even more.”
Pitfall #3 of Using Accounting Automation: Security Risks
COVID-19 has shown us just how reliant we’ve become on technology and digital processes. We can order food for delivery through a mobile-app; we can buy a car online; we can deposit checks via our bank’s mobile app – and now, we can automate the most basic accounting functions without lifting a finger. But with these new advances comes additional security risks. In fact, as stated by the FBI, there’s been an uptick in the number of cybersecurity-related complaints each day.
Reliance on software and technology can leave accounting professionals vulnerable. With more accounting data being stored in the cloud, there are greater opportunities for hackers to expose that financial data and use it for their means. And while this doesn’t mean you shouldn’t get on the cloud (you definitely should). I simply means that security becomes an even more important priority when using accounting automation.
Pitfall #4 of Using Accounting Automation: Lack of (or Too Many) Features
The evolution of automation has transformed from the Visicalc in 1978 to what we now know as automation: cloud-based systems. And although utilizing this technology seems like an easy way to eliminate low-impact tasks, it also presents a problem: how to dissolve errors. Accuracy is vital in the accounting department. Automation is not fail-proof – it can’t correct itself.
If you pick an accounting automation based on cost alone or just because it’s the latest and greatest, you’re doing your team a disservice. Your accounting software needs to match the needs of your business. If the software you choose doesn’t allow for automation of invoicing or expenses, are you really getting your time and money’s worth? Probably not.
Your needs may differ from that of other organizations in terms of automation. Choose a technology based on your company size, number of transactions, what type of work you need the most help with, etc. Look at whether the technology might be too robust or lacking in features based on how you will actually use it every day.
Not sure where to start? We wrote a whole blog about. [READ] We Ranked the Best ERPs for Small Business (So You Don’t Have To).
How Much of Your Accounting Should You Automate?
We’ve looked at a few of the pitfalls of using accounting automation, and now it’s time to turn our attention to what we should automate.
Payroll – If you’ve ever missed payroll, you’ll understand why this task needs to be automated. Not only is it a tedious task that’s time-consuming, but you’re also dealing with somebody’s lifeline.
Expenses – Keeping a drawer full of every receipt isn’t practical. What happens when you’re out sick or on vacation – who will have access to that drawer? By automating this task, you’ll never have to second-guess where you put that receipt.
Invoicing – If you want to get paid faster, automate your invoicing. Automating this process allows you to prepare and deliver invoices in real-time without having to rely on the good ‘ole postal service.
The Solution: Outsourcing Eliminates the Issues Present With Automation
There’s no right or wrong answer to whether or not automation is beneficial for your company. Automation is great for eliminating low-impact tasks, but it doesn’t negate the fact that accountants are still needed to man those tasks. An alternative solution is to outsource your accounting tasks and remove the need for automation all together, thus saving you time and money.
At Personiv, we’re dedicated to creating a tailored outsourced solution designed to fit your needs. If you want to save money, we’re here. If you want to get time back in your day, we’re here. If you want to avoid having to use accounting automation because it doesn’t align with your business needs, we’re here.
Get in touch with one of our experts to explore how we can help you avoid these accounting automation pitfalls and adopt the perfect virtual accounting solution.