10 Reasons Why Accounting Will Be Automated: Part 1 - Boost Efficiency and Cut Costs

Automation is not just a trend; it is a transformative force reshaping industries worldwide, and accounting is no exception.

Imagine reducing your operating costs by up to 30% while boosting productivity by 35%. These are the tangible benefits 80% of companies have experienced through Business Process Automation (BPA), a testament to its effectiveness and longevity.

As automation continues to revolutionise accounting, now is the perfect time to explore its impact on efficiency and cost savings. With 20% of accounting professionals already utilising automation and another 43% planning to do so soon, the shift is undeniable.

Is your practice ready to embrace this change? Or, will it lag behind, burdened by outdated methods and soaring expenses?

In this blog, we delve into the automation technologies poised to transform accounting practices.

From Robotic Process Automation (RPA) to the game-changing role of Artificial Intelligence (AI), discover how these tools enhance key internal metrics, streamline operations, and future-proof your practice against rising costs. Join us as we uncover the potential of automation to redefine accounting.

Robotic Process Automation (RPA)

Robotic Process Automation is revolutionising how we handle routine processes, leading to remarkable cost savings and efficiency gains. Don’t let the term “robot” mislead you — in this context, it refers to software agents that mimic human actions, not physical robots.

The financial benefits of RPA in accounting are impressive. According to a study by Lab Consulting, labor costs for creating accounts payable dropped by 80%, and invoice processing times were cut by 60%.

By automating repetitive tasks like data entry, coding, and bank reconciliation, you can achieve similar results.

Implementing RPA

While RPA is perhaps the fastest path to improved efficiency, its implementation requires time and staff engagement.

For example, we worked on a project to streamline data collection for Health Visitors in the NHS. We faced challenges in understanding the unique processes each professional used, and encouraging them to embrace change was no small feat. Mandates from management have limited reach when staff shortages and contract terms require voluntary buy-in.

Even simple automations can take weeks to months to develop, implement, test, and deploy. In accounting, where precision is crucial, a thorough testing phase is essential to ensure accuracy and gain buy-in from both staff and clients.

To make the most of automation, start by identifying where it will have the greatest impact on your practice and progress at a measured pace.

Activity-Based Costing (ABC)

Activity-Based Costing has been around for over 35 years, but its complexity and cost have diminished its appeal. However, AI and automation may breathe new life into ABC, making it more viable by simplifying processes and increasing productivity.

In our automation projects, we’ve adopted probabilistic approaches to problem-solving, acknowledging that while errors may occur, the productivity gains often outweigh them. It’s crucial to design solutions that “fail gracefully” and accept that humans make mistakes too and our errors are unpredictable, whereas automated systems tend to fail in more predictable ways, making them easier to detect and address.

By conducting a time and scope-limited ABC exercise, you can:

• Gain a thorough understanding of the process to be automated,

• Determine the true cost of each process and its components,

• Calculate potential savings, and

• Measure savings achieved after automation is in place.

AI to Automate Accounting

Artificial Intelligence (AI) has been at the forefront of innovation discussions. Beyond the hype, AI’s adaptability and probabilistic reasoning make it perfect for handling complex calculations with exceptional efficiency.

A remarkable example is AI’s application in biology. For years, scientists struggled to simulate the folding of complex molecules. In 2022, Google’s AlphaFold reduced this process from decades to mere hours, achieving unprecedented accuracy.

Imagine applying AI to complex accounting challenges. The impact would be profound.

Today, AI is already delivering dramatic results in accounting:

• A 50% reduction in labor costs for some tasks,

• 95% accuracy in bank reconciliations (compared to 70% for humans),

• 99.7% accuracy in categorising/ coding procurement invoices, and

• 92% accuracy in detecting fraudulent transactions.

Accounting firms using AI see:

• A 53% reduction in accounting staff costs,

• 40% greater output per accountant, and

• 65% improvement in the accuracy of financial statements and analyses.

With such significant gains in productivity and accuracy, accounting firms not adopting automation and AI risk being outpriced by their competition.

Conclusion

Automation is reshaping the accounting industry, offering undeniable benefits such as reduced costs, increased productivity, and improved accuracy.

With tools like Robotic Process Automation and Artificial Intelligence, accounting practices must streamline operations to stay competitive.

Now is the time to embrace these technologies. Don't let outdated processes hold your practice back.

Contact us today to explore how we can tailor automation solutions to your needs and help you lead in the evolving accounting landscape.

Let's transform your practice together.

By Eric Feltin

Patent holder, multi-startup founder, and non-executive director (NED), Eric loves building things. His current passion is automation in the accounting industry. He is founder of Claridian, a company transforming small accounting firms with tailored automation. Boosting productivity. Increasing accuracy and consistency. Freeing up time to focus on strategic client work.