Cloud-Based Bookkeeping Automation: Are Bookkeepers Becoming Obsolete?

bookkeeping automationAs more and more online bookkeeping automation is being introduced to small businesses, it seems the question is being asked by both small business owners and forward-thinking bookkeepers alike… are bookkeepers being phased out in favor of technology?

It is an attractive idea to most business owners, and there’s proof of the economic benefits. Not long ago the Wall Street Journal published an article that included a case study, with the headline: “The New Bookkeeper Is a Robot

Of course, it’s easy to understand why most small business owners would love the idea of having the bookkeeping handled automatically without the need to pay a bookkeeper. But even beyond the expense savings, from the client’s standpoint, it also removes (theoretically at least) what they really hate.

What’s that?

Tracking down missing receipts, finding bank statements, keeping track of vendor bills, and answering what seem like unimportant, detailed questions on transactions from one, two or more months ago. Along with this, a major complaint the vast majority of small business owners have against accounting professionals is that we are slow to respond or offer assistance as needed. (By the way, I find it rather amusing that this sounds a lot like the complaints most bookkeepers have about getting info out of their clients! Maybe it IS a human thing?)

Enter automated bookkeeping which promises to provide real time financial information anytime, anywhere. Business owners are usually moving quickly with too much to get done in a day. So the idea of getting what they want quickly and with little effort is appealing. Technology can (mostly) deliver on that promise now.

Threat or Opportunity?

So where does that leave us? Should we be shaking in our boots? Is the bookkeeping profession going to disappear?

Not quite yet, but if you’re running a traditional bookkeeping practice where you’re doing the bookkeeping on-site, or picking up the paperwork from your clients, entering it into the books each month, and charging by the hour, the news is not good. That is, if you want to keep running your business the same way you’ve been running it.

We’re going to have to change our role and what we offer to our clients if we want to survive (and thrive). If we don’t, we’ll definitely see fees spiral downward and become obsolete. That will be especially so with the young tech-savvy entrepreneurs coming up. But stick with me here, there’s some good news in this too.

Lessons From The Past

As a lesson to be learned, think about what has happened to bank tellers. When ATMs (Automatic Teller Machines) first came out, they were a great invention of convenience (and new revenue for banks). But tellers weren’t yet fully replaceable. But as a career choice, it would’ve been wise to learn additional skills, since the position would only contract as technology advanced.

Fast forward to today when most banks offer mobile deposits and online banking in addition to standard issue ATMs. How many times do you need to go to your bank and talk to a live teller? Yeah, I barely ever have to go to the bank anymore either. And when I do, there’s usually only one teller on duty… where there used to be four or five in times past.

If we don’t want our bookkeeping business to go the way of the bank teller, we need to change our approach to how we run our business. Technology is moving faster than ever, so I doubt we have as much time as tellers did to refocus.

The good news is, we can embrace the technology and even leverage it to our advantage. In fact, there are some HUGE opportunities that are now open specifically to bookkeepers… if we’re willing to seize them. These will actually grow your practice exponentially and create far greater win-win solutions for your clients than ever before!

Prepare Now to Thrive

Now is the opportune time, while small businesses are moving toward total automated bookkeeping. I can see at least two main areas on which we should focus our attention. You can choose one or both of them, but your bookkeeping business will definitely prosper either way if you’ll invest the time and resources to transition into them now:

  • Leverage Technology as a Service
    • First, use the technology available now to streamline your internal bookkeeping workflow to get more done in less time
    • Second, switch to flat fees or value pricing (so you don’t get killed by your efficiency charging by the hour)
    • Third, offer technology consulting to your clients to design their internal financial workflow. Many are overwhelmed by the app choices and desperately want a trusted guide to do the nitty-gritty research and detailed integration for them.

If this option appeals to you, then you’ll love the March TFB Premium lesson: Next Level Virtual Bookkeeping Workflow for Attaining Zero Data Entry where we tackle streamlining your own internal system.

  • High Value Business Advisory Consulting
    • First, recognize the specific ways that you can provide high-value advice to your clients that they will immediately recognize as a core need for their business success (services that enhance their profit and cash flow)
    • Second, differentiate your services from the competition and position your practice for premium level fees

If you love the idea of rolling up your sleeves and being a proactive team player in your clients’ business success, then you’ll want to join me on the free LIVE webinar I’m hosting this Thursday, March 17th with author and multi-million dollar entrepreneur Mike Michalowicz: From Traditional Bookkeeper to Trusted Advisor. We’ll cover the 5-step process that bridges the gap from compliance-only services to becoming your clients’ trusted advisor.

Even if you can’t join us on the webinar live (it is tax season after all), you’ll want to register for this event, since we will be providing a replay, but only to those who register for the live event.

 

Have you already started moving toward automated bookkeeping and/or advisory services?  What’s your take on where we are headed?

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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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11 Responses to Cloud-Based Bookkeeping Automation: Are Bookkeepers Becoming Obsolete?

  1. Man, that bank teller analogy is spot on Gabrielle! I have never thought of that before but it is very true.

    More and more I can feel clients trying to pull that data entry work away (they don’t know what to do themselves), but they almost feel guilty paying someone to do it now. Technology has made them believe everything is “do it yourself”.

    Great article and sounds like a great class!

  2. Gabrielle says:

    You are spot on, too, Chris with your insight on how clients are taking hold of that belief that technology makes everything “do it yourself”… when you think about it, that is how QuickBooks became the #1 accounting software and disrupted the industry oh so many years ago now. I expect nothing less with the latest online software promotions too.

    Yes, we plan to make the webinar as useful as possible… and with Mike Michalowicz, it’s certainly never boring! 🙂

  3. Ron Wells says:

    Hi Gabrielle;

    I rarely visit my clients who are now totally paperless. It requires some diligence but all incoming bills are ‘read’ by OCR and coded directly into QBO. From here the ‘payable bills are passed to another app that only requires that the signing authority tick a box after viewing the image. Essentially I am delivering professional Controller services to businesses at a cost lower than a bookkeeper (fixed price by the way).

    This puts bookkeepers on the endangered list. My next step is to hire overseas accountants at a fraction of the cost. Unfortunately this is the direction the cloud is bringing us.

  4. Gabrielle says:

    Thanks for the validation in what you’re seeing… and DOING with your practice, Ron! Kudos to you for embracing it and using it to scale your business in a win-win way for clients who want primarily compliance services done for them!

  5. Gabrielle,

    As you frequently remind us in your articles here and in the lessons in your TFB Premium program, our mindset is critical to understanding new ideas that are presented to us, especially where technology is concerned.

    Jamie Shulman told an interesting story in a post on his blog this week about how a change in mindset allowed an accountant to significantly improve her practice and fuel her growth—after following up on a suggestion from one of the bookkeepers on her staff. YAY!

    It’s a quick read that I think the folks here would enjoy.

    http://content.hubdoc.com/h/i/225171303-accounting-apps-are-revenue-generators

  6. Gabrielle says:

    Thanks for sharing this Sheryl. Interesting article (and I love Jamie S. and Hubdoc), but that article would have been much more helpful if (1) it had been told via an interview with “Susan” and (2) he had more clearly explained how it caused her revenues to increase with each client. That part was a bit vague (and if she had been charging by the hour, her top line would have actually decreased, unless they were adding new services to existing client).

    I only say this to be careful about hearing only half of the story. Clearly I’m onboard with the streamlining of workflow, but the rest of the business model needs to be updated for it to mean business growth…i.e., pricing model and additional (consultative) services offered.

  7. Really exciting and important changes happening… I hope more people embrace them than don’t 🙂

    • Gabrielle says:

      I’m with you Stephanie, but I suspect, as Mike mentioned in the webinar, many, if not the majority, will resist it and dig in their heels… to their own demise. The good news is that those of us who are willing to stretch ourselves will become very valuable to our clients for a big win-win result.

  8. Eric Zhu says:

    Don’t use an oversea’s bookkeeper/accountant even if they are really really cheap. They may good in their country but will never understand rules/regulation in your country.

    • Gabrielle says:

      Eric – I generally recommend that bookkeepers only seek clients in their own country for those very reasons. And clients who ONLY want the cheapest solution possible will ultimately go with total automation.

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