The accounting landscape has undergone rapid transformation in the last decade, especially with the rise of cloud computing and the proliferation of “apps” designed to simplify and integrate financial processes for business owners and their bookkeepers. The unexpectedly rapid advancement of artificial intelligence accelerated that transformation even further over the last year. Capabilities that were expected to take several more years to develop fully suddenly appear to be right around the corner, and we can expect an explosion of new software and tools coming to market over the following months and years that will significantly increase the capability of the bookkeeping profession, as well as the value it provides.
Let’s look at three key changes in particular that should come to fruition sooner than later and the impact they will have on financial process outsourcing.
Robotic Process Automation (RPA) and Cognitive Automation
Robotic Process Automation (RPA) technology automates manual, rule-based, and repetitive tasks. Using the most common definition, RPA doesn’t involve any form of machine learning or decision-making; it is simply programmed to do specific functions following scripts or rule sets.
Over the last decade, RPA capabilities have evolved significantly and can effectively mimic many human/digital interactions. These “bots” can handle high volumes of data with speed and accuracy that far surpasses human capability. They can input data, validate transactions, and reconcile accounts without the risk of human error, increasing overall efficiency and accuracy in these processes.
Before the most recent advances in artificial intelligence, RPA was already being gradually supplemented with AI technology, which was sometimes referred to as IPA (Intelligent Process Automation), but with the sudden leaps made over the last year, another technology called “Cognitive Automation” may soon be widely available. Where RPA manages defined, rule-based tasks, Cognitive Automation will be able to take on much more complex tasks with much less human input.
For example, where RPA could only analyze structured data (i.e., already in a database), Cognitive Automation can process large sets of unstructured data such as receipts and invoices, emails, tax documents, and even handwritten transaction descriptions. It will also be able to make decisions with that data, identify patterns and anomalies that might indicate opportunities or errors, as well as predict future financial trends to aid strategic financial planning and decision-making.
“Zero Day” Reporting
Traditionally, bookkeeping involved periodic reporting – typically on a monthly, quarterly, or annual basis – due to the time-consuming and labor-intensive nature of manual bookkeeping and data entry. With the advent of computers and accounting software, this process became progressively quicker and easier, but there is still usually some delay between the occurrence of a financial transaction and its reflection in a company’s books, and any time lag can limit the ability of businesses to respond promptly to financial developments and make timely, strategic decisions.
Several recent technological developments have made “zero-day” reporting – where financial transactions are reflected in a company’s books immediately as they occur – a real possibility and one that businesses will likely have access to in the very near future. The advent of cloud computing and cloud-based software means that vast amounts of data can be managed in real-time, while advances in AI will make it possible to both process transactions and update related records instantaneously.
Changes in accounting protocols are also pushing towards zero-day reporting. With increasing regulatory demands for transparency and timely financial disclosures, many companies are already investing in technologies and systems that support real-time financial reporting, anticipating regulators may require them soon.
Data Visualization and Analytics
Data visualization and analytics technologies continue to change how financial data is interpreted and used for decision-making. Traditional financial reports are often laden with numbers that can be challenging to interpret. Data visualization transforms these numbers into graphical formats, making it easier for stakeholders to understand financial trends, compare metrics, and identify anomalies. This improved clarity facilitates quicker, more informed business decisions in several ways:
- Simplifying Complex Data: Data visualization tools condense large datasets into easily digestible visuals, making complex data more accessible. This simplification helps decision-makers understand the data, leading to quicker and more effective decisions.
- Revealing Trends and Patterns: Visualization helps to identify patterns, trends, and correlations in the data that might not be evident in raw, tabular data. These insights can inform strategic decision-making and prediction models.
- Supporting Storytelling with Data: Data visualization can turn numbers into compelling narratives. This is particularly useful in business settings where complex data needs to be presented to stakeholders in a memorable, understandable way.
- Enabling Real-time Decision Making: Advanced data visualization tools offer real-time data tracking and visualization, often as part of a “dashboard.” This technology allows decision-makers to monitor situations in real-time and make prompt, data-driven decisions.
With the recent leaps forward in AI technology, we can only expect these tools to become more powerful: larger, more complex datasets will be processed in real-time; machine learning will be able to test and determine the “best” visualizations; and the software itself will be able to choose the most valuable data to present and even suggest or make decisions itself to speed up and improve the analytic process.
As bookkeeping software continues to evolve, now augmented by the rapid growth of AI, the role of the professional bookkeeper is set to play an even more instrumental role in business operations. Whether outsourced or in-house, bookkeepers will be called upon to harness these technologies to bring richer insights, accuracy, and speed to financial reporting and decision-making processes. They will help business owners and managers derive meaningful conclusions from complex data, identify trends, spot anomalies, and predict future financial outcomes. And businesses that anticipate coming technological changes and adopt them promptly will likely gain a strategic advantage over their competitors.