Is online accounting the beginning of the end for bookkeepers?
The Cloud has become an increasing part of our everyday lives both socially and professionally. The accountancy industry is no exception.
With a wide range of online accounting software solutions on the market and the relatively recent developments from packages such as Xero and QuickBooks, the move by small business owners from manual bookkeeping or a traditional desktop solution to a cloud-based version is inevitable, if it has not been made already.
What does this mean for bookkeepers or in-house finance teams?
The answer I think we can all agree on is CHANGE.
One of the major advantages of using an online accounting solution is automation. Traditionally small businesses have either used a bookkeeper to manually keep their books and records or employed their own internal finance team to manage their day to day accounting.
However, the development of online accounting software has enabled the processing element of bookkeeping to be largely automated:
- Invoices can be scanned and uploaded automatically to the online accounting software rather than entered manually
- Employees can scan copies of their expenses and upload these automatically into the online accounting software thus removing the need for manual posting
- Bank feeds can be set up allowing payments and receipts to be pulled through automatically to the online accounting software directly from the bank rather than manually entered and reconciled
- Online accounting software can be linked to a business’s other cloud-based systems (e.g. EPOS system) allowing transactions to be uploaded automatically
- Relevant reports and dashboards can be set up quickly and easily and are accessible at the touch of a button rather than being prepared manually as part of a traditional management accounts pack
Therefore with financial processing and data entry becoming more and more automated, does this mean the bookkeeper or in-house finance team become redundant?
The answer is probably, no. Online accounting software should be seen as an advantage alongside an existing finance team or bookkeeper/accountant. The automation element should certainly result in major efficiencies as the time spent on bookkeeping and data entry will be significantly reduced.
This should not be considered bad news for accountants/bookkeepers but an opportunity. Despite the ever-increasing intuition of accounting software, there will no doubt still be a requirement for some manual reconciliation and review. The invoices or bank transactions may be brought into the software automatically but can you rely on them being allocated to the correct expense or correct supplier invoice every time?
The online software may be able to generate financial reports and cash flow projections at the touch of a button but what do these reports mean? They will inevitably require some context and explanation to management at board meetings.
Therefore the traditional role of a bookkeeper/accountant has changed. Historically the management accounting would include a large element of data inputting and processing of invoices and bank statements.
With the age of online accounting, we move more and more in the direction of near zero data entry and the services provided will now have a more business advisory and strategy focus. The processing can be performed automatically so whilst the manual element of a traditional bookkeeper/accountant is being done more quickly and efficiently, small businesses will require strategic advice and ongoing support rather than simply entering financial transactions and producing management reports.
Accountants will need to ‘add value’ to small businesses. This will require a degree of specialisation and a detailed knowledge of the industry the business is in. This goes beyond understanding accounting principles and being able to prepare a set of management accounts.
This means greater interaction and collaboration between the business and its bookkeeper/accountant is a must.
The traditional role of a bookkeeper/accountant has changed from manual data entry to a business advisory offering. Businesses may no longer require a bookkeeper to manually enter transactions when it is faster and more efficient to do this automatically via an online accounting software solution.
Directors and owners should increasingly expect from their accountant industry relevant and strategic advice with analysis and recommendations based on the financial data which will enable them to manage and grow their business effectively.
We have a wealth of experience in mentoring and supporting clients and assisting them in running and growing their businesses, if you would like to know more please feel to contact me here.
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