The Future of Bookkeeping

A blog by Abigail Moye MAAT

Introduction of Automation:

It can be strongly foreseen that the future of bookkeeping will lie in automation. Automation is the use of technology which reduces the need for human intervention.  It has been estimated that automation may replace up to 97% of bookkeeping services within the next 5 years. However, this does not mean that bookkeepers will no longer be necessary. Instead, it free’s more time up for analysing and adding value to your business.

Becoming computerised will not only aid in the production of you accounts but also in retaining your company records. As a general rule, companies must keep their records for 6 years and so through becoming computerised another copy will be retained online. This will be very useful if you should ever receive a VAT investigation.

This will also give you the option to scan your information across to your accountant rather than manually dropping your books off!

The Future of Bookkeeping

The Positives

There are many positives to automation. One of the main benefits is that it is time saving as transactions can be brought into your software will no human affirmation. This enables you to see a real-time update of your cashflow as well as your accounts and tax position.

Another benefit of automation is that is cost effective. Although accountancy software’s can be costly, you will no longer be paying your bookkeeper for data input. Instead, automation would allow for your bookkeeper to spend more time on adding value to your business.

More Positives

Having information in real-time will enable you as well as your accountant to plan ahead. For example, it would prevent the risk of VAT thresholds being unknowingly breached as your accountant will be able to advise you as you approach the threshold and help you plan for this well in advance and subsequently reducing the chances of penalties.

Another positive to automation is that it is free from human error. This will improve the accuracy of your accounts and VAT position.

The Downside

Even though automation has many benefits, computer systems can still make mistakes. This is where it is vital that bookkeepers still analyse your books to ensure no miscalculations are being made. If there has been one mistake in the software, chances are, there are many more.

Another negative of automation is the risk of job loss. Even though bookkeepers will still be vital in overlooking the automation process to ensure it is working effectively and completing analysis to aid in the production of accounts, there will be no more need for data input. This could result in a lot of bookkeepers losing their jobs.

There are of course a lot of potential risks with automation especially if systems are set up by untrained staff, there is still a human element required and checks to ensure processes work. There are also some business that still work with cash and cheques which potentially wouldn’t suit automated systems.

Overall, the positives of automation outweigh the negatives.

The Steps You Can Take To Become Automated

Currently, the most efficient way to complete your bookkeeping is a mixture of automation and manual input. There are many steps which you can take now to become more automated. One of the main steps you can take is by linking your bank account to your accountancy software. Bank feeds can pull financial data into an accounting system within minutes.

There is also an option to create ‘rules’ within your bank feed. For example, if you have a recurring transaction to Vodafone, you can create a rule that all expenses to ‘Vodafone’ are allocated to ‘Telephone’ with ‘20% VAT’. This will mean that all expenses which appear through your bank feed to ‘Vodafone’ are automatically allocated without any human confirmation.

Using Software

There are also many software’s which can input your financial data through scanning receipts. A great example of this is ‘Dext’. Dext can automatically send data to your chosen accountancy software (i.e., QuickBooks, Xero, etc) through uploading pictures/scans of invoices/receipts. This is an easy and quick process and the only thing left for you to do is categorise your transaction. This can also become fully automated within Dext through setting rules similarly to above.

So What’s Next?

I fully believe this is only the start of how AI and software is changing the face of bookkeeping and accountancy and it’s a very exciting time to involved in the finance sector. At Gascoynes we pride ourselves on constantly evolving and searching for the latest software’s that can create efficiencies for our clients.

If you have any questions in regard to becoming automated, please feel free to get in touch and we will be happy to help!