The 21st century bookkeeper – Accounting Today

Do you consider yourself “just a bookkeeper?” If so, it’s time to stop. The role of today’s bookkeeper often extends well beyond simply managing a business’s books. In fact, as one practitioner of the art put it, the bookkeeper of the 21st century is more akin to a conductor.

“I use analogies a lot, and so I use the analogy of an orchestra director more than somebody who is actually playing the instruments. The reason I say that is that we are really coordinating the information, and integrating systems, and discussing processes more than we’re actually doing what traditionally we’ve heard of with bookkeeping, which is a lot more of the data entry side of things,” said Carla Caldwell, founder and CEO of Canton, Georgia-based Caldwell Consulting & Training, which provides accounting services to small businesses and nonprofits.

The reality is that bookkeeping has historically been viewed as a commodity or a low-value service. However, advancements in technology and shifts in client demand are bringing about change for modern-day bookkeepers, and forward-looking firms are increasingly eyeing new ways to expand their service offerings and better meet evolving client demands.

“We know that advisory is not the future of the accounting profession, but the present. Now more than ever, bookkeepers are taking on expanded roles, including acting as strategic advisors and even therapists to their small-business clients, helping them to get through this extremely challenging time,” said Amy Murphy, group marketing manager at Intuit.

Karine Woodman, founder and CEO of Hibbing, Minnesota-based 24hr Bookkeeper, agreed. The virtual firm specializes in serving clients within the construction industry. “We are so much more than doing bookkeeping. We are truly a resource for our clients. … We deal with the everyday problems, or phone calls, or situations that they are dealing with and that is the value I would say we bring on as a service,” she said. “I also tell clients that it’s not butterflies and rainbows, as they might think it is. And we also don’t want to be a service where they feel they just literally throw information at us and it’s our job to record it, because we don’t work with clients like that. It is definitely a mutual relationship where we work as a team and our goal is to, obviously No. 1 [ensure compliance], but to help them grow their business.”

Woodman said the firm is providing clients more value-added services like consulting and key performance indicators. And as many businesses today look for ways to increase cash flow, especially in light of COVID-19, the firm is now proactively promoting ways it can help clients better manage growth.

“Cash flow management is a big thing, or managing profit margins, which are kind of the basic things related to business. We try to do it client by client, but I think now we’re going to really open up our service offerings to say, ‘Here are some additional things we can do for you that maybe we didn’t state before,’ for some clients or new clients coming in,” Woodman said.

Echoing the sentiment, Cindy Schroeder, owner of Winter Garden, Florida-based Bright Bookkeeping, said, “For us, [technology] has allowed us to take on additional clients. I think that with COVID, and especially with all of the stuff that is happening with the [Paycheck Protection Program], it really brought to light to a lot of businesses who maybe weren’t doing anything with their accounting and bookkeeping how important it is to have that information available. … It seems like the whole pandemic has opened the eyes of a lot of small-business owners.”

Michael Jones, senior account manager for Xero, said that a “well-executed investment in technology” not only enables firms to drive greater efficiencies and revenues, but also helps reshape client relationships.

“An example that I have been a part of, was using accounting technology to determine the profitability of every sales employee and help that business make better decisions about their sales compensation structure,” said Jones. “Technology is adding tremendous efficiency to the role of bookkeeping and has opened possibilities of what services firms can now add on to their core bookkeeping services. At a minimum, a traditional bookkeeping firm can leverage technology to expand their offerings and provide enhanced financial reporting, as well as consulting on technology stacks for businesses.”

For Jeff Wilson, principal of The W2 Group, a virtual firm in Upper Marlboro, Maryland, it’s not just about telling clients the numbers. “The one thing that computers, that technology, can’t really do as well is communicate a story. I would tell bookkeepers to really understand their clients’ industries and their clients’ financials in order to tell their clients a story, a story about themselves and about their [business operations]. We have to get better at telling our clients their story,” he said.

Said Lindsay Pinkos, senior product marketing manager at AbacusNext, “When I think of the progression of the overall profession and the role of the bookkeeper, what really comes to mind is their role in how their clients view them and how their clients aren’t looking to them for just kind of keeping their books. They’re really going to start to look to them for real advice. What are the numbers saying?”

Must-have technologies

Technology is transforming the playing field in many industries, and bookkeeping is no exception. It is not only reshaping the role that today’s bookkeepers can play, but is also changing the way in which they work with their business clients and gather client information.

To remain competitive and efficient in today’s environment, leveraging cloud-based solutions, advanced technologies, and reaping the benefits of automation and secure collaboration tools are must-haves for today’s bookkeepers. Underscoring this notion is theAccounting Today“State of Bookkeeping” survey conducted in 2019, which found “getting work done efficiently (on time and accurately)” was the biggest issue facing two-thirds of bookkeepers (63 percent). By leveraging the right tools and resources, bookkeepers can better serve clients and, ultimately, drive greater profitability.

“To envision the bookkeeper of the 21st century, I think you have to take a step back. … Before in the U.S., the client would give you a paper bank statement, you’d type in all of the transactions at the end of month, reconcile the books, get the checkbook and all of the voided checks. Now, we’re to the point where disruption has come and now all of the transactions are automatically downloaded into the accounting system,” said W2 Group’s Wilson.

Continued Wilson, “Computers can do [the basic bookkeeping] for a lot of companies. Computers can do most of the bookkeeping or it can be programmed. With QuickBooks Online or something like that, you can program rules and basically the accounting does itself. I consider that to be artificial intelligence and robots. You can pretty much tell the robot what to do and they’ll go do it for you. That’s bookkeeping as of today, and I think it only gets more interesting. … There’s so many other things that the client needs that bookkeeping has now become not only a commodity but is a given. … The client asks us constantly, ‘What else can you do for me?’”

Wilson believes that, in order to remain competitive going forward, bookkeepers must sharpen their business acumen to truly understand a client’s industry, and not overlook the importance of advanced technologies like AI.

“You’re going to have to figure out how you can invest in AI to stay competitive. The second thing is … some things that can be done by apps probably cut some of the value people see in bookkeeping, so it probably cuts a little bit of the margins. So … there are other areas that need people’s financial acumen,” Wilson said.

Also highlighting the importance of advanced technologies like artificial intelligence is Xero’s Jones: “We constantly see how the industry continues to be dominated by technology and the opportunities presented by AI and machine learning. The Xero platform uses data and machine learning to streamline processes and deliver the right nuggets of financial insight on demand, giving time back to bookkeepers. With cloud-based accounting software, workflows that used to take hours are completed in minutes — smart features like invoice reminders or automatic data extraction from bills and expenses make it faster and easier to collect and transact on information. With access to real-time insights, small businesses can run their business more effectively and efficiently while collaborating with their bookkeeper to make smart business decisions.”

In November, Xero announced the next phase of its integration with Hubdoc, which it acquired in 2018. Xero has integrated Hubdoc machine learning capabilities into its Xero Expenses product so it can automatically extract relevant info from receipts in seconds. Xero has also added a duplicate detection feature to help reduce human error when submitting bills and expenses.

Justin Masonek, principal of JBM Management LLC, recalled the days of sitting at a workstation in a client’s office to manage their books, and how remote capabilities have since transformed the way in which he works with clients.

“I would spend all day going around to my different clients’ offices and maybe hit four or five a day if there wasn’t a tremendous amount to do. Sometimes I’d spent two days at one client’s office. But then we started to get better technology,” said Masonek. “The next step of that was the ability to log into somebody’s computer remotely, and that is still something I do a lot. When I’m doing any sort of training or I want to review something, I take over their screen and we look at it together. That has been incredibly valuable to the remote-working process and, in many ways, it’s more efficient than sitting next to them in their office.”

Many of Masonek’s clients remain in New York, where he was once based. Several years ago, however, he moved west to Portland, Oregon, and now serves them remotely from his home.

Caldwell, whose firm also provides consulting and training services to accounting and bookkeeping firms, stressed the benefits and efficiencies gained through the use of optical character recognition technology.

“Receipt capture — that is a big piece, receipts and invoices and things like that. No longer do we need to be keying in information — the name of the vendor, the amounts, the dates, and which credit card did we use. All of that can be read off of a receipt capture application. So the OCR technology eliminates the data entry, but it allows us to have even more information for the owners,” said Caldwell. “I can sit down and now talk to them and when they say, ‘Well, that doesn’t look right,’ we can pull up the receipts, or the images, invoices or bills right there immediately and answer any questions that are going on, rather than going and digging that up.”

Working together

Implementing collaboration tools to ensure effective communication among both bookkeeping staff and clients is also essential. This includes such tools as video conferencing, messaging platforms, and secure client portals. This was true even prior to COVID-19, but it became especially evident as the pandemic swept the country and stay-at-home orders and government-mandated shutdowns forced many businesses to go virtual essentially overnight.

“We were moving toward this remote collaboration and more [remote] tools and then COVID thrust us into this, ‘You have to do it.’ So, I think for bookkeeping practices, they were moving toward this and now it is just do or die almost,” Pinkos said. “They’ve got to have client portals. They have to have a secure way of transferring information back and forth with clients. And not just a secure way but a seamless, easy-to-use way so their clients adopt it on their own.”

Added Pinkos, “I think the other piece of technology that is important for bookkeepers right now is also a way to keep all of their clients’ information and status of projects in some kind of central practice management solution that allows them to understand what work they’ve done, when things are due, and just really keep a quick eye on everything, especially if it’s a bookkeeping practice that is looking to expand and grow and maybe bring on a staff member or two.”

Given all of the advancements in technology, it can be difficult navigating all of the available solutions and determining which is the best fit for a firm. Pinkos acknowledged the challenges and recommended that firms take a measured approach. “They have to look at their business, their bookkeeping practice, and find out where are those pain areas, where are there inefficiencies, where are there areas that are really causing friction in how they serve their clients. And then start to look for solutions for those particular problems, rather than trying to tackle it all at the same time,” she said.

When implementing a new solution, firms may want to first test the waters with a small group of clients, advised Pinkos, and then apply the lessons learned to their greater client base.

Looking ahead

As the profession heads into the New Year, now is the time to start planning. Now is the time to reflect on technologies, workflow processes, and services provided to remain competitive in the 21st century and beyond.

“This is an important time of year to reflect and make some important resolutions for your business. Set your goals for 2021, and really look at some of the technology out there that can help you reach those goals and to stay competitive,” said Pinkos. “[Staying competitive] is continuing to innovate with your practice and look at technology solutions so that you are more valuable in the market. You’re not just doing bookkeeping, you are becoming a true advisor.”