Are automated systems going to put bookkeepers out of business?

In a word: No!

I will start with why cloud-based systems are becoming far more common, the level of automation systems can offer (in relation to bookkeeping), and the different systems available.

If you want a bit more general information on bookkeeping (and how bookkeepers compare to accountants), I’d suggest first reading my article titled “Accountant or bookkeeper?  What’s the difference?”

If you have just come from there… Hello, again!

Why do I keep seeing TV adverts for accounting systems?

You have most likely seen adverts for Quickbooks and XERO on the TV.  Whilst these companies will of course naturally advertise, 2016 and 2019 (respectively) marked the first years these worldwide providers put up UK television ads to market their systems.  This was partly due to governmental changes, such as the following.

In 2013 the government program ‘RTI’ (Real Time Information) was introduced to improve how submissions were made in relation to PAYE.  This meant that businesses who had staff on their payroll now had to make monthly submissions on-or-before the date they paid their employees.  Previously, this only had to be done annually.

On 1^st April 2019 HMRC introduced the first phase of its new digital initiative, Making Tax Digital (MTD).  The overall goal of this initiative is to, in time, make all tax administration digital, enabled by the use of accounting software.  At the time of writing, the only businesses affected are those registered for VAT.

For those that met certain requirements, this meant they had to start using MTD-compliant software to prepare and submit their VAT Returns to HMRC.  From 1 April 2022 all VAT registered businesses must sign up for MTD and begin using compliant software.

All of the above already shows a clear movement towards a more digital future, however the pandemic of 2020 could be a catalyst for these changes to be implemented sooner.  Many businesses may in turn decide to invest in a system earlier to ensure they are best prepared for the future.

Will bookkeeping be automated?

In an age where technology has advanced exponentially the idea of outsourcing a business’s finance department is becoming more prevalent.  This essentially means that more business owners are choosing to have a third party do their books off-site rather than employ full time staff, saving money and office space.

It is now commonplace for both bookkeepers and accountants to offer remote bookkeeping to clients and if 2020 has shown the world anything in relation to remote working, it’s that it’s entirely possible, and possibly preferable, for certain roles such as finance.

To enable bookkeepers and accountants to work remotely, there are software’s available, each of which have automation features to improve efficiency.

Features of automated systems

The system providers have introduced handy automated features such as:

• Bank feeds, so bank transactions pull directly into the system every day
• Functionality that allows purchase invoices and receipts to be emailed/dropped directly into the system, and often it will even pre-fill a record by “reading” the attached receipt to determine what it is
• Memorisation features.  Say, for example, youpost bank payments going out to “Tesco Petrol”, to the expense code “Travel” a few times in a row.  The system will suggest this posting moving forward, rather than you re-do the same work over and over.
• There are also rules that can be set by the user themselves in some systems, which act similarly to above. You would create a rule that states, “If bank payment description has the words ‘Tesco Petrol’ then post this to ‘Travel’.  Then all you would have to do is click a button to apply the rule you have created every time Tesco Petrol appears on the bank.

These features are without a doubt time-saving and excellent.  But with them, comes another level of understanding that the average business owner might not be interested in or have the time to learn.  All reputable accountants and bookkeepers will know and use the latest systems and will be able to step in to help if needed.

So, to answer the title of this section directly – yes, bookkeeping will be automated.  Systems are already widely used that have automated features.  But it is not likely any time soon, if ever, that the skills and expertise that bookkeepers and accountants bring will become redundant.

A more interesting discussion in the same vein may be had in relation to blockchain and cryptocurrency, a topic I cover in my “Blockchain basics – is blockchain the future of business?“ post!

Which accounting software is the best?

The phrase “which accounting software” is currently one of the most searched online, and it shows that many of those that do not currently use such systems are starting to look, but aren’t sure which one to go for.

Some of the largest software providers in the world are Quickbooks (a.k.a. Intuit), XERO and Sage.  Unsurprisingly, each of these have software that is already MTD compliant, and cloud based.

As and when new forms of digital record keeping and submission methods are announced, providers such as these will work on getting compliant as quickly as possible for their users.

Providers such as XERO are tailored more towards business owners rather than accountants.  This means they can look after their books themselves, if they so choose.  A stark contrast to the past where accounting software would be complex and not particularly user-friendly.  Which, truth be told, is exactly how accountants liked it!

Despite the newer options being more accessible and more streamlined with apps, this does not change the expertise, patience or time available of the user. Bookkeepers/accountants will still be required for the foreseeable future to ensure books are accurately recorded and taxes correctly reported.

What software do you use?

If you have come to this article looking for my specific software recommendation, then I will say a few things:

• I manage my own books on XERO (‘standard’ plan).  I am a sole trade business that offers services.  I have used XERO for many years so I already knew it was best suited for me.
• According to Investopedia, Quickbooks Online is the most used software for small business bookkeeping.  I know from experience that QB is also a great system, with many options.
• When I worked in industry for companies that turned over £m’s, I worked on various versions of Sage. I found Sage to be more suited to the businesses and their size. Many businesses sell products rather than services, and with this comes further system requirements.  Such as, for ordering, dispatch notes, stock management etc. I personally find these features much easier on Sage compared to the others.

Chances are that if you are reading this article, you are a small business owner and all 3 of the above providers have numerous and great options available.

If you are not sure what system is best for you and your business, then I would recommend getting in touch with your bookkeeper / accountant to discuss!

Author: Justin Davidson CIMA Dip MA (Davidson Services)

Justin is an authorised advisor in all the major software providers (XERO, Intuit Quickbooks, Sage). He has experience implementing many types of system, from accounting systems to complex stock systems that use barcoding and serialisation.