By Ernie Villany, CPA.
There’s no getting around the changes that inevitably come with technological advances, and the accounting industry isn’t immune to the coming transformations. We need to address what’s happening with the emergence of Artificial Intelligence in the accounting profession, the repercussions, and how firms are adapting.
AI’s Influence on the Profession
We’ve come a long way from the antisocial CPA stereotype, behind a desk stacked high with documents and dusty coffee-stained ledgers. But shiny new calculators and a new wave of automated systems are taking over. The stack of documents is replaced with zip files transferred electronically and the general ledger is maintained and updated using electronic data extraction tools.
With the implementation of AI, time spent number crunching is all but over for most accountants. Intuit QuickBooks, Xero, and other automation tools are eliminating repetitive tasks and routine decisions. Technology has advanced to the point where software can process almost 100% of the tax return before a CPA even lays eyes on it. AI has its grip on the industry, and its influence will continue to grow.
Pros and Cons
With change to any industry comes new opportunities and threats. How you and your firm navigate the pros and cons of innovation will ultimately determine your success:
PROS
Most accountants agree they’d rather spend time elsewhere when it comes to the more mundane tasks of the job. Thanks to AI, we can now dedicate time to more meaningful work. The commoditization of compliance work will give CPAs time to dig deeper in understanding a particular clients’ needs, communicate more effectively, and deliver information that helps them grow their business. With bookkeeping managed by automated systems, there’s now room to provide higher-value services and increased opportunities for professionals who possess soft skills, such as strong communication. Those who have these skills can use it to their advantage, translating the complex areas of a clients’ return into something digestible that can be used proactively to create actionable items and achievable goals.
CONS
The thought of losing your job to automation is a frightening one, but there’s no immediate threat to those who choose to adapt early. Your risk will be determined by your response to change.
With new technology making certain job functions obsolete, some job loss is a given. Junior-level staff are particularly at risk, as platforms like Quickbooks eliminate basic bookkeeping and accounting needs. This shift has created a strong demand for qualified candidates who fit the new requirements. In an already challenging recruiting environment, identifying candidates who can adapt to change, embrace AI, and provide advisory level services has become increasingly difficult. And the elimination of basic bookkeeping skills has shrunk revenue from services that were once considered accounting’s bread and butter. To compensate, accountants now have to focus more time and energy on selling their services as advisors and experts in tax strategies.
The flip side of lost revenue from shrinking services is decreased costs, especially labor, but the high demand for qualified CPAs has also significantly increased salary levels. Many firms are now leveraging third-party solutions to quickly and cost-effectively process large amounts of tedious technical data—creating pathways and efficiencies that didn’t exist before. AI is not only helping to save time and money, but it’s also instrumental in aiding business owners to gather data and analytics, creating efficiencies such as:
- improved customer satisfaction
- a reduction in collection times
- increasing cash flow
- operational process improvement
- cost cutting
In short, AI is optimizing the use of capital, assessing, and providing insights that slash debt, build cash reserves, and make smart decisions about investments in technology and people.
If AI and automation are the fuel used to drive the revolution, cloud technology (CT) is the rocket ship. CT is giving CPAs unprecedented opportunities to increase speed, access, and integration. Software such as CCH Axcess offers seamless integration of CRM, time and billing, document management, tax preparation, accounting, fixed asset management, workflow, and communication.
How Will AI Affect the Future of Your Firm?
There’s no need to change your profession overnight and the robots aren’t coming to take your job. However, you may need to prepare yourself to move your firm in a new direction.
Take advantage of the opportunities AI presents, beginning with time saved by automation. Utilize the surplus by highlighting tax planning and strategic services for your clients. AI isn’t capable of giving comprehensive feedback, and your clients need direction that a software system simply cannot provide. Tax planning is the jumping-off point for value-based services that could potentially save your clients big money in the long run. Shifting the focus presents the opportunity to re-evaluate your pricing structure, optimally towards value-based service and away from hourly rates. Consider adopting a tiered pricing structure, incentivizing clients to choose a higher tier with more value.
The ultimate change will come in the way clients choose their CPAs/advisors, as they’ll be looking for firms with specific core competencies and an ability to understand their unique set of needs. The new bread and butter for CPAs will be substantive connections, as we shift from number-crunchers to strategy and planning experts.
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Ernie Villany, CPA is the founder and president of Boulder Valley CPA (BVCPA), a Colorado-based CPA/advisory firm representing clients in 30 states. Ernie has over 20 years of experience in public accounting, helping small to medium-size businesses around the world plan and manage their financial growth, while mitigating tax liabilities.
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