Bookkeeping is Dead — Long Live Accounting
When we shift the emphasis from bookkeeping to accounting, our opportunities are abundant.
Small-business guru Michael Gerber is reported to have told a group of financial planners, “If you could become system thinkers instead of doing, doing, doing; if you could see the whole of it as opposed to just a part of it, something magical would happen. It’s called an epiphany.”
Gerber makes an excellent point. When we shift the emphasis from bookkeeping to accounting, our opportunities are abundant. But that shift requires us to accept the reality of our systems’ abilities and completely release the workarounds we were historically required to perform. So, as Gerber suggests, let’s look at “the whole of it” and let something magical happen.
The bookkeeping function is the process of recording all financial transactions; the accounting function is the process of interpreting and analyzing data. For all practical purposes, bookkeeping for small and medium enterprises is now automated, as Software as a Service (SaaS)-based accounting platforms such as QuickBooks Online, Xero and FreshBooks are systematically processing all financial transactions for us, with a few manual actions required for bookkeeping to be complete.
Over the past couple of years, coopetition products such as HubDocs, Expensify, Plooto and Tsheets have improved on the automated collection of financial transactions and on passing these transactions directly into our trial balances. HubDocs will automatically go out and collect financial documents and invoices from your suppliers. It allows you to take pictures of receipts or forward invoices to HubDocs. It then automates most of the codification of these transactions. Expensify does the same for employee expense reports. Plooto handles your outgoing payments so paper cheques are eliminated. Tsheets tackles all your employee time-sheet collection and codification. In December, a major hurdle to end-to-end bookkeeping automation was removed when Intuit and CIBC announced direct bank feeds into QuickBooks Online (QBO).
How do these systems work? HubDocs collects your monthly mobile phone and internet invoice from Rogers, for example, keeps a copy of it for your records, codes the transactions and passes them into QBO, updating accounts payable and communication expenses. Plooto reads the Rogers accounts payable record in QBO and electronically transfers funds directly to Rogers 30 days later. It also updates QBO accounts payable and the CIBC account. CIBC processes the payment, as per Plooto’s direction, and passes on the transaction to QBO’s CIBC bank account reconciliation records. Transactions are recorded with no human touch points. Scheduled reporting and management dashboards are updated for the accountant to monitor. And how does he or she monitor these transactions? Via voice, of course.
QBO recently announced the first conversational chat experience with the release of QuickBooks Assistant. Human-robot interaction is hitting the market fast and now most of us don’t know or care if we are speaking with a human or a chatbot. QuickBooks Assistant exchanges financial information by combining natural language processing with data-driven observations, AI and deep machine learning. Here’s a sample human-robot exchange:
Accountant: “What was last month’s Rogers charge?”
QB Assistant: “$3,457.89.”
Accountant: “And when was it paid?”
QB Assistant: “It was paid on February 17.”
Due to natural language processing, the chatbot will know that the “it” in “and when was it paid” is a continuation from the last query. You can now have conversations with the accounting system and the client to ensure proper objectives are being met.
An epiphany is a moment when you become aware of something spectacular. Bookkeeping is dead — long live accounting.
This post was originally published in CPA Magazine