Entering the era of no-code Accounting
With 1.7 megabytes of information being created per second for each individual, Big Data has been on the rise and the coming of such an era implies a huge transformation for the Accounting industry. Through technologically advanced software applications, businesses and individuals have now come to gather, compare, assess and figure out patterns of numerical data with utmost accuracy.
Manual bookkeeping can be said to come across as a banal and laborious task; the likelihood of a bookkeeper making a statistical error would be quite high than, say, a computer program making one, despite given 20 times more data. For example, let’s talk about creating a simple Trial Balance for a business. Arithmetical inconsistencies that affect both the sides (i.e. credit and debit) of a transaction may not be detected by simply looking at the end balances. Rather, a much more invasive approach would be required to skim through bookkeeping records in detail, devoting resources that could have been used elsewhere. Automation in bookkeeping in this case would ensure that there are no inconsistencies with figures to go back to and fix.
Perhaps computerized bookkeeping can be better understood with the concept of no-code accounting introduced by Xero, a New Zealand-based company that specializes in cloud-based accounting software. No-code accounting takes the idea of electronic accounting systems a bit further by allowing custom-made programs to identify patterns and trends among large sets of numerical data and use it to gain better customer insights. The online retailer Amazon can be a perfect example of a company using such data analytics on a large scale by identifying and processing sales data for online shoppers and recommending them merchandise that may complement their initial purchases.
This so-called method of machine learning introduced by Xero has fundamentally revolutionized Accounting by adding efficiency into the process and deliver performance with greater convenience, all while eliminating repetitive manual and tedious tasks. Such a transformation has earned the company the title “Steve Jobs of Accounting”. Furthermore in light of the estimation that at least a third of all sets of data will pass through cloud computing by 2020, Xero has managed to seize an opportunity whereby majority of the employees, ranging from core specialists to internal auditors, gain access into the accounting database and move one step closer to developing perceptive customer relationships, making the process inclusive as a whole.
Entering into the age of Artificial Intelligence whereby automation would not only take charge of compiling numbers but also translate their meaning to an organization for better strategic decisions, the question arises whether this may be the end to professional accountants and bookkeepers. To answer this question, we first need to understand how automation has molded the roles for these professionals. Talking about bookkeepers, computer-built programs have managed to eliminate the process of tallying values and numbers, the true essence of bookkeeping; however, a deeper look into the matter suggests that the job of a bookkeeper has been adapted to what we may call an ‘information systems controller’ role. The tedious work may be replaced with a role that requires key understanding of the application of cloud-accounting software, data mining, statistical analysis and spreadsheets and how all this may be used to gain insights that help increase the overall productivity of an organization.
Moving our discussion towards Accountants, it goes without saying that there is no computer designed that may possibly have the capability to match the Emotional Intelligence and brainpower of a human. Even though Accounting may deal with quantified data, it cannot possibly eliminate the level of subjectivity required. Professional human judgment, precisely that practiced by Accountants, constitutes as an integral part in the decision-making process. Think about Tax Consultants and Forensic Accounting Specialists, for instance. Tax Consultants may advise clients to attain that fine line of owing a minimum tax liability and complying with state and federal legislations, through years of practice and experience combined with an in-depth understanding of tax law. On the other hand, Forensic Accountants may have different approaches to a white collar investigation, prioritizing evidence accordingly and reaching different conclusions. There may be no clear answers concerning the allegations and transactions giving rise to many resolution possibilities. In essence, the valued professional judgment of these specialists is what sets them apart.
As a final point, whether it be determining a make-or-buy decision or evaluating an investment appraisal project, their insights are at the heart of the decision making process and far from irreplaceable. In fact come to think of it, Automation and Accounting go hand in hand, supplementing each other and ultimately giving rise to what I would like to call a perfect ‘Double A’ combination.
Marketing and Financial Analyst at Amplify Solutions Inc.