The age of automation, one of the greatest technological shifts ever, is here. We have already entered it and now are trying to keep up with it. Agree or not, artificial intelligence, machine learning is the mainstream now and makes a huge difference in almost all businesses. Accounting and bookkeeping is one such business where AI already has a huge impact.
AI has already made a lot of bookkeeping tasks easy. But does this mean that AI will replace bookkeepers? According to global research conducted by Sage, 96% of accountants are sure that they won’t lose their jobs because of AI; however, 68% of them think there will be a role change due to emerging AI trends in the accounting field.
Read our guide to understanding the : difference between bookkeeping and accounting.
Now, let us know more about bookkeepers and how they can keep up with the latest AI technology.
What is a bookkeeper?
A bookkeeper is that person who will keep track of all the transactions that happen daily in your business. They manage the documentation, and bookkeeping is one of the oldest professions to exist.
What is bookkeeping?
Bookkeeping is the art of recording financial data so that it’s easy to know how much money you’re spending and how much money is coming in.
What happens to that record? After a bookkeeper has made the record, it’s passed onto an accountant to prepare VAT returns, financial accounts, tax returns and then file the financial reports required by HMRC and other government agencies for tax returns and VAT.
Management accounts are also dependent upon bookkeeping.
To make the business successful, you should balance the books at a fixed frequency, like weekly, fortnightly or monthly; else, you might struggle with paying for supplies, stocks, and your taxes.
It’s the best habit you want to get into from the beginning of running your own business.
The double-entry system in bookkeeping has made a lot of difference. The double entry system bookkeeping suggests that every transaction has two aspects, affecting two general ledger accounts.
Each transaction involves a debit entry in one account and a credit entry in another account. The sum of debits should always be equal. So, if at any point, the sum of debits is not equal to the corresponding sum of credits, it means there is an error.
Thankfully, cloud-based accounting systems like Xero makes this process much more comfortable.
Why is bookkeeping important?
You cannot run your business for very long without sound knowledge of your finances.
Here are the seven reasons why bookkeeping is essential for your business.
|Performance tracking||Timely and accurate bookkeeping helps monitor business performance. Compare actual numbers against the budgets and analyse resulting variances.|
|Accurate taxes||There are numerous taxes small businesses pay throughout the year, and bookkeeping means you can correctly calculate how much is due. VAT is the best example of such taxes.|
|Credit control||Accurate bookkeeping tells you which of your customers have paid, which haven’t.|
|Supplier payments||It also tells you which of your suppliers you owe money to and which you already paid. Which will help you determine your business’s cash cycle and better manage cash flow.|
|Management accounts||Accurate and timely bookkeeping is the foundation of a quality set of management accounts.|
Management accounts provide financial intelligence needed to make critical business decisions like which product is selling more, selling fast, which one you are running low on stock, which product or service trades seasonally.
|Forward looking||Bookkeeping helps you prepare for the financial year ahead and allow you to think about your next move, whether that’s about setting up a limited company or growing your business.|
|Investor reporting||It’s worth keeping in mind that if you dream of expanding your small business, you must prove its profitability to investors, new partners, and banks.|
Good bookkeeping practices can help you with that.
|Tax returns||Anyone who is a self-employed or a limited company director is required to file a Self-Assessment tax return each year. This is used to declare the earnings from your employment and other income to HMRC and calculate how much you will need to pay in NICs and income tax.|
Bookkeeping must be organised to do this efficiently, and for things like filing your tax return early.
Even if you have an accountant, they will still need you to keep on top of bookkeeping, including recording your expenses, getting your invoices. An accountant can’t do their job without knowing your business’s incomings and outgoings.
Know more about : Outsourcing Accounting and Bookkeeping services.
Now that you know everything about bookkeeping and its importance let’s delve deeper.
In a technologically driven world, everyone needs to keep up with the trends. This can be applied to the bookkeepers out there too. Developing a new skill set is the need of the hour, and once you do it, there is no going back from it.
Let us see the important skills you as a bookkeeper must develop to keep up with AI.
Skills to acquire as a bookkeeper in the age of AI
AI is here to automate many things, which will remove the boring, mundane tasks off your list. You will have more time to improve the way you think. You must start focusing on improving efficiency and revenue-building activities that will come in handy for your organisation.
Start improvising your client relationship and deliver value to the organisation/clients. AI will give you all the data you need; it’s time for you to read and understand the information critically and strategically. With various insights and data provided by AI, it becomes easy to understand the patterns and trends that can change your entire business.
This critical and strategical thinking will go a long way once you start practising it.
AI is here to stay whether you like it or not. Adapting to technology, learning how it works and understanding how it can be helpful for you will change everything.
Bookkeeping software can automate various repetitive tasks giving you more free time on your hands. Once you start learning the working of this software, you can take advantage of it to the fullest. No matter what your age is or your bookkeeping experience is, being a tech enthusiast can take a 360-degree shift in your career.
Anticipating the needs
Critical thinking can help you in anticipating various needs around your business. With all the data that AI gives you, you will get various questions in your mind once you start a deep analysis. Solving these questions with creativity and innovation will come in handy in the end.
Once you get into the critical analysis, you can start understanding other aspects such as adaptive thinking, critical problem solving, future forecasting, etc.
AI is going to make a bookkeeper role more creative and strategic. This will lead to cross-functional collaboration. This is time for the finance professionals to work with different fields together, starting from the head of the departments to the support team.
Collaboration is going to play a key role here, and it is time to adapt to it.
With various technologies evolving and becoming a part of the finance field, one must upskill themselves and gain the required knowledge. Gain expertise in using this technology and improvising yourself to stay with trends in the market.
It has always been the most important aspect. However, now it is time to communicate effectively using the technology. From communicating with your team to other departments, everything can be done on bookkeeping software itself, which you must learn.
You should ask appropriate questions, listen to different viewpoints and make decisions with proper analytics.
When you introduce new technology into the team, some can get adopted to it while others struggle. This is where you have to become the leader and make your team walk through the software. Help them understand how it works, and also, even if someone is unable to keep up with it, you should be there to be supportive.
You can either be expertise in bookkeeping or a novice; you should learn all of these skills to ensure that you are in sync with the technology. Having an open mind and developing critical and analytical thinking skills will surely provide you with enough job security despite AI.
In the finance profession, reskilling means delving even deeper into the subject and understanding it. I know there are so many finance professionals who don’t understand a thing about technology. However, it is time for everyone out there to adopt it.
Technology eases up many things and makes your work better, so improvising all the skills mentioned above will keep you a step ahead as a bookkeeper. These new skills can unlock doors to new and exciting opportunities in your profession.