It’s a thought we have all had, and it’s an argument that our media outlets make often. Will machines replace people? And now with an overwhelming amount of cloud accounting software, our finance industry is asking, “What is happening to the role of the bookkeeper? Will cloud accounting automated systems make bookkeepers obsolete?”
No. But what it will do is force bookkeepers to evolve and catch up with the growing world around us, or risk extinction.
In the good ole days, the traditional role of a bookkeeper went something like this: a client gives you a stack of receipts and printed off paper bank statements at some point after the close of the month and/or after you have hounded them mercilessly for the documentation that was needed. On a good day, this would be about two weeks after the close of the period. Fun times.
After this, all the information all had to be keyed into the accounting software. Depending on the volume of activity and the bookkeeper’s schedule, this could take another couple of weeks, so by the time the information was returned to the business owner, the financial information was, at best, already a month out of date. Uh oh.
Now that people are used to real-time information anytime and anywhere with technology, business owners’ expectations have shifted, and if bookkeepers don’t adapt their strategies and tools, they might soon find themselves with a much smaller client list.
In today’s world, financial information is provided real-time through automatic bank feeds and simply by logging into a variety of financial accountability websites. It’s not unrealistic to have the information necessary to keep most accounts reconciled on a daily basis and have the books closed within a couple days after the close of the month, with all the information at our finger tips.
All of the improvements everyone is seeing in efficiency and being able to provide real-time information is just the beginning! I would argue that the role of a bookkeeper is changing even more than that. Traditional bookkeepers as we’ve known them, will soon be going away completely.
It used to be that a good bookkeeper had solid accounting knowledge combined with quick data entry skills, and the best were additionally very knowledgeable about accounting software as well.
In 2016, a cloud bookkeeper must be knowledgeable not only about accounting software but also about all of the other add-on tools that could connect with that accounting software to improve productivity, make data entry insignificant, and provide good results for the clients. They need to know how to evaluate them, use them, and train their clients on the software and tools as well. They need to provide more customer support for their clients and be able to oversee the process of data flow. They need such a strong fundamental understanding of both accounting and technology that when exceptions do arise, they need to know how to deal with them and fix the system going forward. It’s a totally different ball game for bookkeepers today!
After all this, when all the information is into the system and clean and reconciled, the bookkeeper needs to be able to interpret the information for the client. Long gone are the days when the business owner would receive a set of financial statements as proof of a job well done even though they couldn’t understand the information themselves. More and more, business owners expect to understand what their numbers are telling them about their business. And if you can’t do that as a bookkeeper in today’s age, someone else will.
If you’re a bookkeeper who wants to remain relevant as the cloud accounting world expands, what are some things you can do to stay on top of your game?
- Make sure you have a solid understanding of accounting. Know your debits from your credits. It’s not enough to just know QuickBooks. You actually need to understand how income differs from liabilities so that if something gets imported or coded incorrectly, you’ll recognize it and be able to fix it.
- Develop a solid understanding of how businesses fundamentally work. Learn what accounts payable and accounts receivable actually are and in what ways they are important to the client. Know what purchase orders are and why companies issue them. Learn about different entity types and why one is more appropriate for a particular client than another. Learn the difference between cash and accrual bookkeeping.
- Develop a solid understanding of how your clients’ businesses fundamentally work. Follow how documents move within the company from the beginning to the end of their accounting process. This, more than anything, will help tell you what needs to be optimized and what can and needs to be automated.
- Evaluate the available cloud accounting tools. Start by finding a solid general ledger. Then work on solving one problem at a time by researching add ons and developing your arsenal of tools. For payroll we use Full Service Payroll, and so on. Make sure they integrate well with your general ledger! Talk to peers to find out what they’re using and what they like and dislike about them. Set up demos of products that you think might be a good fit for your clients, ask lots of questions, and take any and all training on the products until you are a rock star.
- Pick your niche and stick to it. If you focus on a niche, you can use five to ten core best of breed products for all of your clients so you can better standardize your process and don’t have to become an expert on 30 different add-ons.
- Get involved in the accounting technology community. Research and find groups in your community or online to get involved in and grow and learn together!
See? It’s not that bookkeepers are becoming obsolete, it’s just that bookkeepers are becoming smarter and more up to date with technology and software so that they stay relevant! As long as we stay on top of the growing could bases accounting world, there is nothing that can replace a bookkeeper. We are irreplaceable and an asset in the finance world. So learn on bookkeepers! And don’t forgot to contact us for assistance with your bookkeeping needs.