Automation in Accounting – Main Challenges and How to Overcome Them

From time to time, it's wise to map out all the processes within a company and analyze which of them are necessary for business operations or compliance functions, and if relevant perhaps could be automated. For example automation solutions can be beneficial in managing a company's accounting, from interfaces with banks and government agencies to complex consolidation processes.

Like any other change, the automation of processes has its challenges, starting with identifying the activities that need and make sense to automate, to a lack of expertise or other resources within the company to implement the change.

We asked accountants what the main obstacles are in automating accounting processes. According to the literature, one reason for resistance to automation is the fear of job loss. Somewhat expectedly, accountants do not often cite this reason as a barrier to automation. However, the role of accountant has evolved over time from data entry to analyst, and with the advent of artificial intelligence, it is increasingly moving towards advisory services. Recognizing this new role can help accountants view automation more positively.

The main obstacle seen by accountants in automating various work processes is the lack of awareness about the available options and their compatibility/integration with the accounting software in use. However, the situation today is better than a few years ago, and accounting software service providers themselves are offering different options and introducing tools that would work with their software. By creating added value for their customers in terms of raising awareness and simplifying work, which in turn is their competitive advantage.

Another significant deterrent is the need to change habits and work processes. Accountants and other administrative staff involved in accounting have established certain work processes and methods, and changing these habits always requires effort. Automation does not necessarily mean a reduction in workload right away, but rather an improvement in processes. New processes, including control mechanisms, need to be developed and implemented, and, if necessary, updated regularly. Therefore, the process does not end with the implementation of an automation solution but is just getting started.

Introducing automation solutions initially requires some effort. For example, setting up reporting in an accounting program requires knowledge, time, and willingness to engage with it. It's easier to do things the old way, and the benefits of automation may not be immediately apparent. The workload of an accountant may not always allow for such additional tasks, which can delay the implementation of solutions. In such cases, engaging an external consultant who can help implement the necessary solutions and guide accountants in using them can be helpful.

Resistance to automation and changes by accountants is one side of the problem. Often, they are not the decision-makers in companies, and other parties, including managers, may be reluctant to embrace changes or fear additional expenditures. However, it's important to remember that the cost of implementation is a one-time expense, and the maintenance of new solutions is offset by the time saved from streamlining the old process.

Technical automation has also raised issues regarding data privacy. Questions about how and where data is stored, used, and secured, such as whether a third-party service provider allows for two-factor authentication upon login and the location of the company's servers, are significant. At first glance, an excellent tool may be set aside due to security concerns. However, there are enough solutions on the market for everyone to find the most suitable

one. As market participants become more aware of the importance of privacy, accounting software and their interfaces are being developed to be more compliant with security-related requirements.

In summary:

• Resistance to change is normal and human; take time to communicate with people and include the benefits of automation in the schedule.
• Automation must go hand in hand with change management, where employees recognize their new role and the need to keep up with changing times.
• Where possible, highlight the immediate benefits for the user – such as time saved, faster data movement, fewer human errors, avoiding delays due to an absent employee, etc.
• Implementing automation solutions requires clear support from management and readiness to change processes and, if necessary, bear additional costs at the beginning.
• During the implementation phase of automation solutions, accountants should be given time for other tasks, or an external partner should be found who could temporarily take over the accountant's duties or help implement and operationalize automation solutions.

If you or your accountants are short on time, you can always turn to BDO specialists.