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Why accounting automation needs data standardisation

Why accounting automation needs data standardisation

How accounting firms and their clients benefit from compliance and reporting automation, and the business opportunities it presents for accountants.

Across almost every industry, automation is driving radical change in the workplace. And accounting is certainly no exception. The McKinsey Global Institute estimates that around 50% of accounting tasks can be automated using existing technology.

But what is it about automation that is so appealing to business leaders? And what are the consequences of automated tasks for both accountants and their clients?

Let’s look at four key questions to better understand what automation means, and how to get there:

  • What are the benefits for accounting firms?
  • How does this affect accountants?
  • What’s in it for their clients?
  • How can firms start their journey to automation with confidence?

People sat around a table in a meeting

Why firms want automation

Our own research shows that there is certainly a great desire for accounting firms to successfully automate workflows and reporting, such as accounts production, working papers, audit and tax. And the indications are that firms are progressing well in their initiatives, with 64% telling us that they have already automated key accounting workflows and processes.

The clear benefit to automation is time. According to findings from Accenture, automation can reduce the time it takes to perform tasks by up to 90%. With standard compliance and financial reporting increasingly seen as a low-value service by clients, reporting needs to be completed as quickly and as accurately as possible.

Instead of undertaking time-consuming and error-prone manual calculations, automation allows accountants to run essential but lower-value activities with the click of a button.

Automation can then enable firms to produce accurate and consistent reporting outputs across the firm, no matter which accountant is working on which client file. Accounting automation will benefit accounts production, tax, audit and even outsourcing or virtual financial controller or director services. Our research shows that 70% of firms have a standardised way of working across the firm for key accounting workflows, which makes the firm’s operations far more efficient and cost-effective. In this way automation is about control as much as speed.

Changing role of accountants

So how does this increased reliance on technology affect accountants? While the McKinsey report might say that 50% of accounting tasks can be automated, only 10% of them can be automated to over 90%. In other words, humans will still need to be involved in the process in some way and 67% of accountants now believe that cloud technology can make their roles easier.

Doughnut chart showing 67% of accountants now believe that cloud technology can make their roles easier - Source: FinancesOnline

The nature of this change is likely to be dramatic in both scope and nature. An estimated 375 million workers globally will need to upgrade their skills significantly to work in tandem with machine learning and automation.

However, this area of technology or digital transformation is exactly where the opportunities are for forward-thinking accounting firms. The impact of technology on redefining and repositioning the role of the accountant shouldn’t be a cause for concern. It’s a chance to enable accountants to undertake higher-value tasks, such as analysing and interrogating financial data to identify trends and business opportunities for clients. Automation gives accountants the time and the tools to transform from reactive reporter to proactive business partner and trusted advisor.

Increased value for clients

So what benefits does automation in accounting bring clients? Forbes reports that automation enables over 40% of finance efforts to align with more value-driven activities. It allows accountants to dive into granular detail and deliver financial reporting that contains crucial insights into a client’s business operations.

For example, our state-of-the-industry research revealed that:

  • 58% of firms can develop their own workflows, reports and services using their technology platform
  • 49% can create all their reports in real-time using live data

Clients benefit from real-time data that tells them what’s happening here and now, not just what occurred in the last financial year. They get bespoke reporting, giving them information that’s important to their business and helps them make better strategic decisions to improve business performance. It allows firms to go beyond top-level compliance, and deliver insights that make a tangible difference.

Woman at a desk working with a pen and paper in her hand, unlock hindsight with Silverfin

How to make accounting automation happen

This move from low-value reporting to high-value advisory services is the mid-to long-term aim of many accounting firms. However, our research revealed that only 22% of firms can create automated alerts or reports from client data to help give proactive advice to clients. While the intent is there, it’s not yet a practical reality for the majority.

Workflow automation for accountants relies on data standardisation. And that can only be achieved when you have a data platform that sits in the middle, standardising financial data from all manner of bookkeeping and other financial sources.

Downloading into Excel or via a reconciliation sheet means that data is not connected and doesn’t flow through in real-time. As a result, the risk of error is dramatically increased and data can’t be relied on for reporting activities.

When you can import and consolidate data from multiple sources, standardise data, and successfully automate key reporting workflows, you’ve achieved what we call Hindsight. This gives you full visibility of all financial data so that reporting is fast, accurate, and consistent.

Silverfin has the data hub and best practice template workflows to make accounting automation possible.

And with Hindsight unlocked, you can continue on your journey to becoming a Connected Accountant, acting as your client’s most trusted and valued business advisor.

Download our eGuide to learn more about accounting automation, how to achieve critical Hindsight, and how SIlverfin can help you move from top-level compliance to bespoke, real-time reporting.