Automated Bookkeeping – Is it Really Possible?

We've been hearing about the ‘rise of the machines' and automated bookkeeping technology taking over much of what we do for quite some time. Many of us are listening, and slowly upgrading workflows and systems to add more automation and moving to cloud-based systems. As a result, we have improved speed and flexibility in the services we are providing our clients.

But bigger changes are afoot, and the pace and momentum is increasing. Fully automated bookkeeping is within sight, as the machines are getting smarter. Are we keeping up?

Yes, we're going (more) paperless and using more virtual systems. Yes, many of us are at least realizing that charging by the hour just doesn't work when you reap the efficiencies of more automated systems. So we're slowly switching to packaged services with flat fees and / or value-based pricing. This is all positive and good, even if we get a few bumps and bruises in the process.

We've certainly had a lot to learn, but it seems, this is only the beginning.

In fact, it has become rather overwhelming, hasn't it? New apps are multiplying faster than bunnies! Trusted cloud-based solutions are changing constantly. It's a blur and becoming nearly impossible to easily know which solution will solve specific workflow scenarios. Instead, hours of research and testing are needed. And the core software we depend upon, along with the “rules of the game” that we've come to rely on while restructuring how we run our practices are making major shifts too.

Some of the Changes We've Seen in Recent Months

Hubdoc, a key app in the QuickBooks Online ecosystem, has been acquired by key competitor Xero

Intuit and the QuickBooks ProAdvisor Program is going through significant changes, one right after another…

  • Wholesale pricing via QuickBooks Online Accountant only applies to new QuickBooks Online clients you take on board beginning, November 1, 2018. If clients already have a QBO account, you get the same price they do. (No benefit to including their subscription into your packaged services)
  • The QuickBooks Advanced Certification for desktop is being discontinued December 31, 2018 (with existing Advanced Certified ProAdvisor credentials expiring in 3 years)
  • Brad Smith will be stepping down as CEO at the end of December 2018

There are others, but you get the picture.

In fact, I suspect that there will be additional significant announcements from Intuit at QuickBooks Connect next week.

The Times, They Are A-Changing

Of course, you've heard this from me before. I've written in recent times and even hosted an experts-in-the-trenches discussion on the changes we are seeing as our profession is disrupted. As we feel the landscape changing beneath our feet, though we've been fairly warned, some distinctions are emerging that are quite frankly disturbing.

1. The software companies are now in control of the direction of our profession. We are dependent on them, but they are less so on us. Not good.

2. The perception of the value we bring to our clients is diminishing and causing significant downward price pressure (especially as the marketing promises of the software companies regarding faster and cheaper automated bookkeeping solutions influence our clients' decisions)

How Will You Weather the Future?

I see four different paths we can take. I used to think there would be somewhat of an even distribution among them, but I was wrong. Based on what I'm seeing now with fellow accountants and bookkeepers in response to these changing tides, it's going to be a rather lop-sided future. I'm not so sure many of us will be sticking around.

In fact, I very much agree with what Barry Melancon, President and CEO of the AICPA said in 2017:

“We won't recognize the vast majority of CPA firms in five or 10 years”

I think there's even less time for bookkeeping firms. The four most likely paths that I see right now are…

1. Ignore the changes and watch your practice slowly die If you're very close to retirement, this may be an option. But it's sad because it also means that you really only just created a job for yourself and not a business after all.

2. Embrace automation and scale using volume. This means that you will need to focus your efforts on building your automated bookkeeping machine, keeping it running smoothly amid constantly changing technology. You'll need to market the living daylights out of your commodity “fast and affordable” services as well.

For most of us, there's a huge learning curve to marketing, so that may need to be outsourced (which is another set of challenges). With this path, your clients will likely consist primarily of micro businesses who are always looking for the most bang for their buck; loyalty doesn't factor much into the equation with them. This model will work for awhile, but over time, it is a commodity game and a race to the bottom on pricing. The larger, online SaaS-like service providers will win. So prepare to reinvent your business when competition starts to get too tough. It won't be a level playing field.

3. Embrace automation and specialize. This model still leverages technology, but with the intent of going deep on client advisory and support. The gained efficiencies do not mean you compete on price. Instead, you free up time for working with the same number or fewer clients, providing higher-value, higher-involvement services that go far beyond historic record keeping. It's a new level of service. If you want to dig in and partner with your clients to help them reach their goals and grow, then this model is a good one for you. For many of us, it requires stepping up our analytical and business consulting skills, compared to how we've been serving our clients up until now.

4. Go fully into consulting and abandon compliance services altogether. Opportunities are being created for highly focused, financial strategy consulting and technology consulting, to name just a couple areas of need. Again, this works best if you can specialize in a specific, high-value service or industry vertical where there's high demand for expertise. This will pretty much equate to a near career change.

So, we have arrived. As automated bookkeeping and accounting (including tax services) take hold, we need be making choices about our direction now. In fact, just today I was asked to connect with a company dubbed as “The Artificial Intelligence platform for Accounting productivity,” which already integrates with all the key accounting software programs. They claim that their platform “automates tasks performed by humans…has the ability to execute accounting tasks at superhuman speed and accuracy.”

I will be investigating what they have to offer in reality. But there's no question about it. Automated bookkeeping is here now (or at least knocking at our doors)  Are you ready?

By the way, as mentioned above, I'll be attending QuickBooks Connect next week, so you'll definitely be hearing more about what I learn there too.

But also, if you happen to be coming to the conference too, amid all the high tech talk of the future, please consider joining me in a brand new, totally non-automated, very human outreach effort while we're there.

A significant group of us in the accounting & bookkeeping community are participating in a grassroots project. We'll be reaching out to help the homeless in San Jose (it's a big problem there) with simple donations of items that they need most. If you want to pay it forward to those who don't give a lick about automated bookkeeping, but are just trying to find their next meal or a place to sleep – here's how you can help.

The donation drop-off location is Room 112 in the San Jose Convention Center (see the flyer for dates and times).

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About Gabrielle

Freelance bookkeeper, trainer and consultant who works with internet savvy business owners and bookkeeping professionals to maximize cash flow and support true win-win business success.
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13 Responses to Automated Bookkeeping – Is it Really Possible?

  1. Ed Kless says:

    Great piece Gabrielle! This has made the rounds here at Sage.

  2. Hi Gabrielle,

    Thanks for your timely update and word to the wise wake-up post, again. Yes, the technology is already here to take over much (actually all) of our tax and bookkeeping compliance and data entry work. There are even add-on apps which are already able to offer advisory services without us, and do it automated, friendlier, and more client centric (sort of like Alexa), also, if may say so. Sad but good at the same time?

    What I’m also noticing is that the software companies ‘pain-point’ is trying to compromise in not outright offending us bookkeepers and accountants. What do I mean? The software is already able (given the existing technology, etc.) to make us redundant and obsolete; but, the companies are trying to find ways to placate us nicely, continue to appear friendly to us, not out-right turn over the playing field (180 degrees), and prove their ‘self-evident fact’ that they don’t need us anymore – except to help ease their transition and penetration into the marketplace they are obviously and inevitable going.

    Plain and simple (without sugar coating), bookkeeping and tax work as we traditionally do it is relegated and assigned to the history books, and we are redundant (sorry but true): like the token booth clerk, the cashier, the teller, the bookkeeper, the tax preparer, the accountant, etc., etc. They keep us around (like the other examples just mentioned) just to appear politically correct, appease the naysayers and dinosaurs, while they find a nice way to tell us to just go take a hike and find a rock to hibernate under! Shocking and disturbing? Yes! But just the facts folks – just the facts!

    Agree and second your 4 options going forward. Again, thanks for keeping up updated and especially for your continued and much needed value-added training.

    Warmest regards.

    • Gabrielle says:

      Thank you Michael for your thoughtful comments! Yes, we are definitely in at least the beginning stages of disruption. And I think you hit on an important point with our relationship with the software companies. They do still need us because we have the human relationships (trusted?) with our clients, but that is waning, especially with the smaller size business clients.

      This serves as the call to action that we need to start reinventing ourselves and see the opportunities for what the software and automation cannot fully provide – the empathy and human connection, while leveraging it to free us from the mundane that has been our foundation of service. But the rub is that we as a profession aren’t especially good at that human connection stuff.

      We shall see where it all lands, but I sincerely hope that more of us will choose to step up and recognize the true value we can provide our clients and be willing to stretch our comfort zones to learn some new skills. Thanks again for your candid perspective, since it is very helpful to the discussion!

  3. Joanne Diepenheim says:

    This is a sobering blog post. Thanks Gabrielle.

    I have a question relating to Option #3-Embrace Automation and Specialize. You said, “For many of us, it requires stepping up our analytical and business consulting skills.” Do you have any thoughts on how or which analytical and business consulting skills to step up? I find the choices overwhelming: Profit First, Value Builder, Budget Management, Tax Planning, Business Valuations, etc.

    Kind regards,
    Joanne

    • Gabrielle says:

      Great question, Joanne! Thank you for asking it!

      Yes, we have many choices because there are so many areas that clients can truly benefit from our support. The specialize piece helps narrow it down, but I know many struggle with finding a niche to focus on. So even prior to settling on a specific niche, we can sharpen our skills on the basics, especially so for bookkeepers. Just helping clients to understand the meaning of their financial reports and looking for trends that the clients may be unaware of is a good start. Many bookkeepers (and accountants) are focused only on balancing the books or producing accurate tax returns. The clients are not aware of how this benefits them, but is only a necessary evil. That’s our fault. The true value is by helping the clients understand the value of having accurate records and guiding them to see how the numbers can help them reach their goals.

      Where to start? Start where you are with your clients. Are you helping them get the value of the work you are doing for them right now? Do you review their financials and look for how you can make suggestions to improve their profitability or save taxes or increase cash flow? Simple suggestions can mean a lot. As for using a specific system to move toward advisory / consultative services, yes, there are many. Profit First is one I’ve long recommended (after you implement it in your own business). But the best answer comes down to answering how can you best benefit your clients, and by extension, serve and attract the type of clients who will benefit most from what you can do for them. As I’ve long taught – play it win-win. What do you need and what do your clients need to grow and reach your goals? Keep it simple and you will find your path.

      With all the ‘systems’ available to us (as rule followers) we need to break out of the box and treat these systems the same way we should be treating the choosing of apps. (1) Decide what results we want for our own practice, (2) recognize where we can provide the best value to our clients, and (3) only then look for ‘systems’ that support achieving those results. Start simple and then move toward the more complex from there.

      Hope that helps.

      • Joanne Diepenheim says:

        Gabrielle,
        When I read your thoughtful and detailed answer to my question, I feel grateful for your time, effort, and willingness to share. My goodness, it’s almost a separate blog post on its own! Thank you.

        What a relief to think about keeping it both proactive and simple! – What do both I and my client need to be successful? The systems will become obvious depending on what my clients need.

  4. Steve Konopka says:

    Thanks for sharing Gabrielle..Wow this is a game changer!

  5. Amie says:

    This is true, but it makes me sad. Compliance is where my heart is at. Advisory is an entirely different field and knowledge base. I’ve always left giving any major financial advice, especially that which will affect taxes, to the accountants. I feel like I need to either go back to school to learn this entire new “field”, or just keep doing my trusty Bookkeeping till it fades away.

    • Gabrielle says:

      You are not alone, Amie. Yes, we need to learn new skills as the landscape changes around us if we want to continue serving clients in a valuable way. The machines will be taking over the vast majority of the compliance work (and then some).

  6. Amber Spells says:

    As much as I see automation and out-of-box software marketing working against us, it’s also working for us. I have seen more than ever, clients leaving and returning *flustered*. These systems are giving clients false confidence that they can do it themselves but the facts our that most clients do not (1) understand accounting and/or (2) understand tax law. Nor do they really want to…So I don’t know. It’s def. an interesting topic and I agree those who are only focused on debits/credits will be the ones out of work…for a short while. After all…US call centers left…and are slowly returning…

    • Gabrielle says:

      Yes, Amber, I agree with you! I see lots of opportunities amid the disruption. The key is the human factor. 🙂 Great observation, btw, regarding call centers!

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