Continuous Accounting: The Small Business Highway into the World of Artificial Intelligence
With the mix of continuous accounting and the use of automated systems, the small business world can become smarter, quicker, and more practical.
The majority of small businesses run a monthly hard close accounting system and then race to submit their reporting to the customer in a timely manner. Usually, it is about 15–20 business days until the customer gets their month end report. About one half, to two thirds of the way through the next one. This process works, it provides a complete synopsis that is easy to understand for the customer and provides every expense, acquisition, and process that occurs over the month. This allows for the business owner to take the necessary step. Whether that be changes in budgeting, salaries, or expenses, the numbers are laid out in front of them.
But what if we changed the name of the game.
Continuous accounting is a relatively new trend that is becoming popular amongst large companies to provide the ability to see into these accounting processes on a real-time basis. It does not change the need for a monthly close at the end of the month. Automated systems provide visibility into daily insight or trends. Trends both good and bad, all should be known to business owners before the final close at the end of the month. It is not predicting future activity for the rest of the period, but showing constant updates. This eliminates the need to process all financial information at the end of the period. Thus, business decisions can made sooner and potentially create a short or even long-term benefit that would not otherwise be available.
So, if this works for larger companies, can smaller ones do the same?
Some would say yes and some would say no. First, there is the risk aspect. Anytime there is change, there is associated risk. Namely, with your employees. The prospect of artificial intelligence scares the heck out of anyone who values their job. There is a stigma in the business world that once robots “takeover”, people whose jobs revolve around computers (accountants), will become jobless. Incorporating this use of continuous reporting will run the risk of employees getting cold feet in the office. This hurts an employees ability to focus, adding external stress, and running the chance of them jumping ship to another company. This is problematic despite the process being automated.
Another hardship is incorporating new technology into your workflow. Changing the way in which you operate can feel similar to starting all over again. Likely effects include: a series of trial and error, potential grievance from employees, and a new operating cycle despite the initial process remaining effective.
However, with automated systems comes rewards. This process is meant to ease the workload of a month end close because by the time you pull your clients financial statements, the automated system has already run the reports multiple times to find any alarming trends in the weeks before the close. Therefore, the idea that accountants are being replaced is far from true, rather they are being assisted with up to date information constantly being given to them. This would allow them more time to focus on other advisory topics.
Despite this claim, amongst big businesses who have adopted this continuous accounting style, there is data showing job loss amongst accountants. This is forcing them to use their education to execute other opportunities.
The bottom line is that automation is a nightmare to accountants, and poses a threat to the well being of their careers.
There is a reason that continuous accounting has yet to encapsulate the small business world. People add value to small businesses in ways that are irreplaceable.
