Behind many shifting trends in small business (SMB) financial services — the rise of FinTech service providers, the emergence of artificial intelligence (AI), even regulatory efforts to promote bank switching — is a growing realization for the industry: Business owners don’t just want number crunchers and money holders; they want advisory services and guidance to help grow their firms.
One way this shift has materialized is in how small businesses seek and hire financial professionals to join their companies. In a 2017 report from job hunting site Indeed, researchers found that “small business accountant” was nowhere to be found in the top-10 job positions sought after by most small business employers. Instead, small businesses searched for “business development manager,” “data analyst” and “business analyst,” to name a few.
“It is interesting that we are seeing business analysts rise to the top of the list, as small businesses have traditionally relied on accountants in their growth phase,” said Indeed’s Senior Vice President of Human Resources Paul Wolfe in a statement at the time. “The healthy economy brings a need for companies to know where their business is thriving financially (or not), to help make decisions for the future.”
Separate reports from The Wall Street Journal (WSJ), published last April, also demonstrated the changing nature of corporate finance: While the Big Four accounting firms’ advisory and consulting revenue jumped by a combined 44 percent since 2012, revenue from straightforward auditing for the firms rose just 3 percent in that time.
These reports reflect the changing role of the human financial professional. Rather than crunching numbers, human talent has the potential to provide the advisory services SMBs demand, while automated technologies take care of the bare-bones calculations.
Enrico Palmerino, CEO of automated bookkeeping company botkeeper, explained in a recent PYMNTS interview that behind this change is the industry’s effort to tackle long-standing points of friction in the small business bookkeeping market — and to replace that friction with technology driven efficiencies.
“Bookkeeping is the low-value work performed by accounting firms,” he said. “It’s manual-intensive, error-prone, and hard to hire and train for.”
Traditional bookkeeping also prevents financial professionals from using their time wisely, forced to aggregate and crunch financial data rather than analyze it. It’s perhaps unsurprising, then, that small business accounting remains a top target of automation technologies, particularly as innovations like AI and robotics process automation (RPA) seep deeper into the field.
These technologies have also heightened anxieties about the potential for technology to replace human talent outright. McKinsey research, released in 2017, pegged the number of jobs worldwide that could be lost to automation by 2030 at 800 million. Yet, botkeeper’s Palmerino said automation in small business bookkeeping and accounting doesn’t have to mean that financial experts no longer have a place within small business back offices.
“Human accountants certainly still have a role with small business,” he said. “Human bookkeepers, on the other hand, will need to evolve into accountants and advisors.”
Today, he added, technology is “better than humans” at accurately and securely managing and categorizing financial data.
“However, software cannot do critical thinking or take insights and translate them into value, or make a recommendation based on those insights,” continued Palmerino. “This is what accountants are really good at, and [they] will need to continue providing value.”
It’s also important to note that, while technology like AI can guide businesses toward valuable financial insights, human intervention remains a key component in areas like tax compliance (in cases like interpreting tax law) and financial forecasting, he said. Those areas probably won’t be first in line to see robots replacing human talent.
Beyond basic, repetitive number crunching, what may be next in line is the ability for AI to go a step further, providing alerts and insights to guide professionals through key decision-making. While technology can automatically generate a financial report, what small business owners need, said Palmerino, is to be told — with clarity — what information in that report they need to pay attention to, and how any changes in finances would impact their businesses down the line.
“Margins slipping 2 percent will result in one month less of runway,” he offered as an example.
At present, the emergence of tools like AI signals the need for financial executives to adjust their strategic roles in their companies, and to provide value-added services in harmony with automated technologies in place.
In November, botkeeper announced an $18 million Series A funding round, as well as the launch of a partner program that aims to help financial professionals find their footing in this new landscape.
While accountants and bookkeepers must be agile in today’s ecosystem, Palmerino acknowledged that much remains unknown about exactly how tech like AI, machine learning (ML) or RPA will change the small business accounting space moving forward. In the more immediate future, he predicted that the most “boring, tedious and time-consuming” tasks will be automated by the end of the decade. Beyond that, small business accounting’s future remains largely unwritten.
“AI and ML are still the Wild West, and are constantly changing and evolving,” he said, adding that, today, AI is even better than people at building other AI tools. “It will be really interesting to see how the industry shapes up, and whether AI automates itself out of business.”