The last few decades of the 20th Century promised us automated flying cars, robot house keepers, space travel, cybernetic implants, and artificially intelligent androids. This was supposed to be the future! Yet, we still cannot book a ticket to the moon or download knowledge instantly as Neo did. This future feels suspiciously like we are living in a history book.
To top off feeling homesick for a future that never existed, I spend a majority of my time focused on small business accounting technology. Accounting has never been an industry to embrace the juice of the wave pushing over-the-falls to ride the front of the technology surf. (Well, maybe for a brief moment at the advent of modern information systems, if you want to be pedantic about it.) So, here I am, a giant technology nerd praying to the robot gods to convey life-altering tech that would make me actually believe in a technology deity. Let us journey into the world of near-term tech that I desperately wish we had already.
Robot tax preparers
Now, you may say that the tax process is fully automated, and I would laugh. Even in the best tech-stacks for tax automation (outside of some fancy Big-4 bots that are proprietary), there are significant manual steps. From the starting line of data collection and intelligent data processing, to the final lap of form completion, filing, and information presentation, the process is riddled with humans. In other countries, the entire process is done by a computer! Humans are only there to advise their clients on what to do with the information. We are somehow still form monkeys manually ticking off numbers that tie to source documents. Can we talk about why tax compliance tools are still server based? Why do they not integrate directly into every popular general ledger product? And, please oh please, tell me why we do not have every tax document sent by a client automagically stored, processed, and adjusting the return that they are related to? Why do we have to PDF draft returns to send to the client for review? The technology exists today to fix every complaint I had on that list above. The tax compliance process could be 98% automated. In my estimation there would still be a limited amount of setup work to administer users and assignments and the final time would be considering the tax planning suggestions that the robot produces for discussion with the client.
You know how in the fairytales; the fairies always came in the black of night and left prizes for the good children? Well, I sincerely wish we had fairies to read our contracts while we sleep and account for all types of contracts consistently with GAAP. I do not just want it to highlight and summarize key data. I want it to interpret the data and decide how to book it; and then I want it booked. The fairy would be scanning all documents in a dedicated place. When it recognized a new contract, it would process it and access the general ledger. If an invoice needed to be sent out the fairy would fly over to Accounts Receivable and prepare and send the appropriate invoice. It would then flutter into Revenue Recognition and update the schedules, finally fluting to bed in the House of Contracts. I fundamentally do not understand why the vast majority of corporate accounting departments are not fully automated, never mind the SMB space.
Yes, this one is a real technical term! Do I win a prize?
Data analytics in general has progressed past the tree line compared to the analytical tools available to the CFOs of today. Data scientists are capable of training bots to predict the future to a certain level of statistical relevancy. They are trained with specific data sets and created to predict likely outcomes of scenarios. This technology could change the way small businesses operate. If I had a crystal ball to give my decisions confidence I would fall back in love with my mistress of accounting.
Synthetic Client Videos
Hear me out, it is not technically unethical (although I should discuss data ethics in a follow up article) because you would be approving the messaging and cadence of videos. Synthetic video technologies can computer generate complete hyper-realistic videos of humans speaking. If the robot gods do exist let them grant us this blessing first so we can bask in the sun of Hawaii while our clients believe we are in a suit and tie sending them personalized and detailed reports. And do not forget that the information going into those videos could feed directly into the algorithm responsible for directing the script with the synthetic version of yourself.
Audit Approved Continuous Close
I did stray a bit off track with the last technology prayer, so I will reign this back in to a hot debate in the world of accounting. If we enter the fight club, in Round 1 we have corporate accounting departments fighting for efficiency (this is my story, let me live in a fantasy world) versing off against staff auditors asking for month-end reconciliations. The accounting department takes the first swing punching into the argument that daily accuracy checks eliminate the need for complete month-end close procedures. The audit staff comes back with a wild and risky under leg sweep citing audit standards which require the analysis of the month-end close. The accounting department goes down hard and debates hitting their own head against the ground again in defeat of how inefficient the requirements are.
With technology available yesterday, accounting departments can automate nearly every major accounting cycle in a way the allows for a continuous close. The month-end accrual adjustment is dead – the audit team just keeps pretending it has a pulse.
Quadruple Sided Entries
And here we are again – slightly off course. The last few technologies I was discussing are already available. Yes, in other industries these technologies are in the game, winning records. So, what are some near-future technologies, as I promised? I am glad you asked.
Quadruple sided entries are simply matching both company’s double-sided entry automatically. Blockchain has been talked about for years as the next technology to revolutionize accounting software. Blockchain is a phenomenally interesting technology and will eventually sneak its way into our everyday accounting lives. It is one of a number of technologies that could solve for the age-old problem of source documentation and change accounting foundationally. Imagine, if you knew without a doubt that the two distinct ledgers would always match, would you need to have the underlying source documentation to prove it was a legitimate purchase? The ledger would be two halves a friendship necklace that fit together perfectly. Not only would you be able to see your accounting and bank transactions, you would be able to see the vendor’s (or the customer’s and so on) on the mutual transaction. I am not talking about full access to someone else’s accounting, just alignment of both sides of a transaction you were involved in.
Please google this and click on the website closest in title. You’re welcome. Now, I may not understand why so many tax firms print and collate returns on paper, but I can acknowledge that there are clients that want physical copies. I imagine these clients as whispering about the deepfake videos you sent them and witnessing conspiracies in every shadow. The collation required to please these secretive clients is completed by humans. We have functioning 3-D printers that can print a heart, and we do not have a robot that can print, bind, and properly assemble a tax return for filing? Are you ready for tax return vending machines? Are your clients?
In my first accounting position I was surprised by the lack of use of easily available technology (yes files were still paper based) and I automated a portion of my job. I stayed up for two days straight thriving on caffeine and the adrenaline of promised efficiencies. While I lack the conviction to work through the night on programming projects anymore, I am still passionate about driving technology forward for our brethren. Besides my daily technology invocations, I continue to speak, write, and loudly talk at technology companies in the hopes that as they are ready to hear us, we will advise them what near-term technology we need most. Join me in using our voices to revolutionize the future of accounting.