Looking ahead: challenges faced by accountancy practices
When considering the future of accountancy firms, there are two aspects of the business that Partners think about – service delivery and practice management.
Accountancy practices provide services to multiple clients, and efficient delivery of services is key to their success. They are able to provide their services with a specialist trained workforce and well managed internal processes. One of the challenges faced by them in service delivery, and this is especially true for the small and medium size accountancy firms, is recruiting and retaining the right talent.
It is predicted that by 2025, majority of the global workforce will be comprised of Millennials and Gen Z born between 1983 and 1999. Workplaces of the future will have to be ready to leverage the talent of this highly educated and capable workforce by meeting their expectations of work experience. The 18th century economic theory of division of labour by Adam Smith has been a cornerstone of the industrialised world, as specialisation improves efficiency. However, this theory is not as easily accepted by a generation that is interested in being more than cogs in a machine.Leaders of accountancy practices will find that fewer people from this generation are interested in working on the same clients or doing the same audit procedures and tax return preparation workings, for the long term. Accountancy firms achieve profitability by increasing efficiency. However, if there is a situation in which the same people don’t want to do the same job, then firm management would be at conflict. On the one hand they would be expected to constantly provide change to retain talent and on the other, remain efficient. The end result – the challenge with respect to retaining and recruiting a new generation within the accountancy industry will further increase.
What if firm management had an alternative to employ tireless workers? Willing to work on the same job, 24/7, 365 days of the year, no lunch breaks, no holidays, year on year! Enter – the Digital Workmate. Part of the problem with the kind of work that accountancy firms do is that it is the mundane repetitive work of collating financial information across systems and entities. This is the first and essential step before adding value.
These logic-based, repetitive tasks such as creating worksheets can be easily automated using a Digital Workforce.
For an accountant, it is easier and faster to look at a worksheet with fresh eyes and critique it than to create the worksheet in the first place and cross check it for errors. The maker checker concept is a well-established practice at accountancy firms. Having a Digital Workmate as a co-worker means that, logic based, mundane repetitive job of creating the worksheet can be delegated. The benefit of using a Digital Workmate for these jobs is the opportunity to empower the human mind to do the higher-level tasks that drive strategic outcomes. It’s a way of freeing employees from mundane repetitive work and rewarding initiative with responsibility.
Robotic Process Automation (RPA) may well result in lesser jobs that require logic based repetitive tasks being available in future accountancy practices. However, the human workforce in accountancy practices is crucial for interpreting the data, tax and regulatory law and interpreting and applying accounting and auditing standards.
The world is expanding in terms of GDP as emerging economies are becoming, slowly but surely, developed economies. As this trend continues, business will increase as will the complexity of doing business. Tax laws and accounting standards keep on changing and the workforce of the future will have more interesting and fulfilling challenges to tackle. A Digital Workforce that complements the human employees will not only increase efficiency of business as usual but also support future initiatives.
Like all ‘for-profit’ business, accountancy firms are always striving for operational innovation in practice management to improve their day to day functioning and increase efficiency. While practice management tools are available in the market place, they have an upfront cost and training requirement. The accountancy practice may also have to re-engineer their business processes to accommodate the logic of the new tool or software. These tools may become redundant as the business requirements change or cost more to keep them relevant.
Deploying a Digital Workforce is a more agile option as it can emulate processes developed by human workers to collate information from different management systems. A Digital Workmate mimics activity such as clicking, typing and moving between windows. The experience for the business user in this case would be that of teaching the process to a Digital Workmate co-worker as opposed to learning a software.
Firms have disparate management information systems for their business verticals. They would have separate systems for accounting, time and billing, CRM, scheduling, etc. Most of the time and effort of a business user is spent in navigating between these systems to collate data in a predefined, logical order before action can be taken. Such processes are ideal candidates for passing on to a Digital Workmate.
Cevitr™ has automated a process of invoice preparation for KNAV P.A., international accountancy firm, that has offices across different locations, globally. Managers at these offices typically fill out an invoice requisition form, send it to the billing clerk, based in Mumbai, who then creates the invoices in QuickBooks using this information.
This is a typical data entry task and an ideal candidate for a Digital Workmate as it involves looking at information from one source and feeding it into another form. By freeing up their billing clerk, our client was able to extract more value-added tasks from him such as following up with their clients on timely receipt of payments and monitoring the overall accounting policy and efficiency of the supply chain.
Increasing the efficiency of managing information across systems provides a better handle to firm management in managing the organic growth of the practice. However, when it comes to accountancy practices, growth is quite often, inorganic. Firms acquire other firms and inherit and accumulate disparate information systems. In this scenario, the Digital Workforce can be a game changer. Work doesn’t need to slow down or stop while the firms that have been acquired or merged try to get onto the same platform. The Digital Workforce provides an alternative that transcends systems and allow separate offices and separate business units to function with legacy processes, and still get all the information that is needed at the management level on a firm wide basis.
A reality of doing business is that the time cycle for financial processes is predetermined and fixed for individuals and companies. Financial statements have to be submitted to regulators based on the financial year and deadlines of the country in which taxes are filed. Teams carrying out financial processes feel the pressure of the calendar, with tight timeframes to compile and process information. This pressure is felt more acutely by accountancy firms, be it in audit, tax or consulting. Automation technology can relieve this pressure as well as improve data quality to assure compliance and speedy delivery to meet crucial deadlines.
Due dates for returns and financial statements are fixed. As these dates approach, accountancy firms are inundated with information from their clients. Historically, seasonal workers are added to the payroll to manage the load during these peak seasons. It is a challenge to get seasonal workers as there is high demand and competition as the whole industry is also in the market, looking for them. Digital Workmates will be an alternative which will be seriously considered in lieu of, or in addition to, seasonal workers.
Many of these processes are linear and move ahead only by completing steps in a pre-defined order. If some of these steps are automated with a Digital Worker that can complete them faster, then the entire process can be sped up. Another advantage of the Digital Workmate is that the processes can keep running during out of office hours so that the next step that needs to be picked up by the human worker is ready and waiting. The labor of a Digital Workmate can supplement and augment the human workforce. By deploying a Digital Workmate as a co-worker, accountancy firms can effectively increase their production capacity.
Using a Digital Workmate to support the workload during peak seasons for accountancy firms also alleviates the stress and cost of recruitment and training temporary workers. Once a Digital Workmate has been trained, it can carry out the task with minimal retraining every year and their availability, cost and quality of work is assured.
Where can the Digital Workmate be used in accounting activities?
RPA can be used for service delivery to automate tasks that involve tax form filling, audit procedures, transfer pricing financial analysis, etc. The role of a Digital Workmate in tax compliance could be for processes such as monthly VAT or sales tax returns that are filed by collecting information and prepared by populating standardized forms.
Numerous audit procedures involve verifying existence and completeness of data. Reperformance is another audit procedure that is extensively used by auditors. All these tasks are typically done by a business user by extracting the information from the accounting system. They would then reformat the data in Excel so that it is easier to understand. These processes are fairly standard keystroke processes with no decision making involved. This is potentially a process that can be automated using a Digital Workmate.
The decision to deploy RPA will depend on the volume of processes available for automation in order for the exercise to be financially viable.
Logically, larger the firm, the more it will be able to use RPA. However, this is not a constraint for our clients because of Cevitr’s™ subscription based Digital Workmates that provide on demand service. Cevitr’s™ disruptive model has created a paradigm shift in the RPA delivery model that makes it possible for small and medium sized accountancy firms to benefit from this game changing technology and become future ready. RPA is no longer something that only the Big 4 can benefit from.
Accountancy practices thinking about deploying a Digital Workforce should consider the following:
- Identify processes which are simple, repetitive and easy to emulate. These are ideal candidate processes for automation with a Digital Workmate.
- Talk to the business users who will be affected by the introduction of the Digital Workmate so that any apprehensions they may have are discussed and addressed.
- Management time is always involved in undertaking any new project. Accountancy firms are typically driven by consensus and not all the partners may be keen on investing in new technology. Service delivery is a priority so discussions about new technology can happen when they are free.
It is important to become early adopters of Digital Workmates to
achieve competitive differentiation in the sector. Our client – Atul
Deshmukh, Partner, KNAV P.A., advises accountancy practices
that are thinking about deploying a Digital Workforce to open their
mind and try it out!
DEPLOYING A DIGITAL WORKMATE IS A MORE AGILE OPTION
It can emulate processes developed by human workers to collate information from different management systems. A Digital Workmate mimics activity such as clicking, typing and moving between windows.
THE DIGITAL WORKFORCE PROVIDES AN ALTERNATIVE THAT TRANSCENDS SYSTEMS
It allows separate offices and separate business units to function with legacy processes and still get all the information that is needed at the management level on a firm wide basis.