Small-business owners who learn which accounting tasks are best suited to machines will save up to 167 hours of productivity per employee per year. With so much time for small businesses to gain, Gartner research (available to clients) says that some AI companies targeting this market use automated accounting as their hook.
Accounting automation provides two big benefits for small and midsize businesses (SMBs): time reduction and cost optimization. Since accounting has many rules-based, repetitive tasks that you can teach an algorithm, it makes sense that accounting roles are more likely to be automated than those in retail or technical writing.
Successful automation involves using a high volume of quality data to train an algorithm. If that sounds simple, it’s anything but: Since algorithms need positive and negative examples of classes in a dataset, larger datasets have an advantage. If the quality of data used to train an algorithm is poor, its results will be equally lackluster.
Before accountants can reap automation’s benefits, they’ll need to know how to use big data effectively. Recent research from GetApp found a few blind spots.
Respondents who work in accounting/finance:
- Have the highest rate of reporting having too much data, although an equal percentage of accounting respondents say they don’t have enough.
- Report the highest levels of trouble with identifying insights.
- Are most likely to use Excel.
Are you using Excel or cloud accounting software to balance your books? You won’t have to ditch them to reap BI’s benefits. If Excel and accounting tools answer the “What?” and “When?” in your small business story, then BI software helps you answer the “Why?”
Strong BI software pulls data from diverse sources for a wide range of users. Here’s how you can gain the most from it.
3 ways to maximize BI software
1. Use BI to explain the ‘Why?’
Excel’s popularity hasn’t dimmed with age. GetApp’s research found that 30% of small- and midsize-business leaders use it to collect data, while 45% use it to analyze data.
That said, Excel helps only so much. It might help you learn that your revenue is down, but it doesn’t have the power to tell you why. It’s also not built to handle huge amounts of data, which is one of BI software’s big benefits.
If you’re using Excel for accounting, you don’t have to quit cold turkey. However, you should confirm which insights you’re missing and use BI to dig deeper.
2. Reassess your KPIs
One of BI’s advantages is its ability to get granular details about your work. For example, BI software can tell you how many clients paid their invoices last quarter. But it can also go one step further by showing you how long it takes certain clients to pay their invoices. Then, you can offer discounts to the clients that pay early while tailoring penalties to those who keep paying late.
Before your accounting team dives into data, review your key performance indicators (KPIs). You won’t gain the most value using BI software if you don’t know which metrics matter most. Although such software can do a lot for business, it can’t set strategy for you.
Since AI will automate accounting roles, perhaps you should track the time your team members spend on financial consulting versus bookkeeping tasks. While you should have robust invoice amounts, the time-to-paid aspect (i.e., the number of clients who pay on time) might be more important. When you review KPIs, consider which actions have an outsize impact on your business.
3. Give your team autonomy over financial data
Accounting isn’t typically a job that’s shared among colleagues. There’s a reason why it falls to professionals or (in businesses strapped for cash) their founders: Balancing books is no easy task, and despite what some software vendors say, software can’t fully replace people.
Along with handling large amounts of data, BI software serves teams with more people. This gives business owners the chance to share BI software’s benefits—such as dashboards, visualizations, and personal reports—with your larger team.
To increase BI software’s benefits, give your team leads access and training to the tool you choose for your business. Give managers in functional roles (such as sales and customer success) the ability to run their own financial reports to report on their departments’ performance. Once they’re familiar with the BI tool you’ve chosen, they can turn that data into visualizations and share the results with your broader team.
As Ed Gromman of Accounting Today says, business intelligence itself isn’t new. What is new is BI software’s chance to democratize fiscal literacy.
It’s true that accounting is a specialized role that isn’t suited to just anyone. Still, training your team leads to report on their respective fiscal data fosters trust and boosts collaboration. By training all your team leads to see how their budgets impact the bigger picture, you’ll hopefully empower them to do better work.
In April 2019, GetApp used Amazon Mechanical Turk to survey 488 business leaders. We required respondents to live in North America and be self-employed, employed part-time, or employed full-time to take the survey. Respondents also had to work in a business with 500 or fewer employees. They worked in one of five verticals: Accounting/finance, healthcare/medical professional, IT/tech, marketing, or sales. Of the 488 qualified responses, 114 worked in accounting/finance.