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How technologies like AI, machine learning, and automation will transform accounting and tax firms.

INCREASE EFFICIENCY 4 mins 08 Sep 2023 by Matt Kanas
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Still clinging to data entry spreadsheets and outdated desktop software? It's high time to modernize how you work and reclaim the profitability you deserve

We're in the middle of an unprecedented digital metamorphosis. The walls between tax, advisory and next-gen technology are crumbling. The future is now, and it's got algorithms.

Accounting in the 21st century isn't just about keeping books balanced. It's about leveraging data analytics and business insights to inform strategic decisions for your clients. This is the heart of how to move to client advisory services (CAS). 

It's about automating repetitive tasks to unleash the full intellectual capacity and revenue potential of your firm. 

And yes, it's about transforming the simple measure of net income into a nuanced understanding of a firm's agility, efficiency, and client value.

Mastering the art of digital Darwinism in accounting and tax

As an accounting and tax firm owner and partner, if you want to run a more profitable firm, then adapting is non-negotiable. Because regulations are becoming more complex and the velocity of automation is increasing, the need to change is more important than ever. 

Add to that a dwindling pool of qualified accountants, exacerbated by underwhelming salaries and a 17% decline in industry employment in the past two years. 

The call is crystal clear: integrate or risk becoming obsolete.

But this isn't just about numbers, it's about staying relevant in a world that moves at the speed of data

In this full-scale revolution, burgeoning technologies like AI, machine learning, and automation aren't mere bells and whistles, but the foundation of modern accounting excellence. 

Here's how these will transform the work of modern accounting and tax firms:

Narrow AI will save you time and improve accuracy

Narrow, or weak, AI is a specialized form of AI focused on specific tasks. It can significantly enhance the accuracy and speed of certain tasks, such as data entry, document review, and even tax filing. 

It can eliminate human error and significantly reduce the time you spend on mundane tasks. So, you can focus more on delivering strategic value to your clients, and improving your profitability.

Narrow AI might already be a quiet part of your day-to-day, even if you haven’t put a name to the face. If you've ever asked Siri to set a reminder or send a text message, or let Netflix algorithms pick your next series, then you've interacted with this specialized form of AI. 

So, what does this have to do with accounting and tax? 

Imagine harnessing narrow AI to sift through tax legislation changes at hyperspeed or automatically categorize transactions with near-perfect accuracy. That's the promise of narrow AI.

The result isn’t just expedited workflows, but a transformation of what accountants can offer their clients. It's the difference between manual data-entry and real-time insights. It enhances efficiency, but can also significantly contribute to increasing profitability.

Machine learning’s clairvoyance

Dealing with enormous datasets? Machine learning can analyze these to spot financial trends or even irregularities, providing a more comprehensive view of a client's financial landscape. 

Imagine your machine learning algorithm as a sort of financial soothsayer. It can sift through years of expense reports, invoices, and market trends at breakneck speed. 

It identifies seasonality in your clients' businesses, anticipates liquidity needs, and even flags potential fraud risks based on anomalies – all without you needing to ask the question.

Automation, the silent efficiency generator

Automation isn't just a time-saver; it's a value-multiplier. By automating tasks from client payments to invoicing, you’re free to focus on high-value, complex problem-solving, such as proactive tax planning or strategic advisory. 

As a result, you become an invaluable partner in your clients' financial well-being, all while enhancing profitability and client satisfaction.

Strategies for the quantum leap

Numerous technologies are reshaping the accounting industry. But the real game-changer is how you can use these innovations to maximize your firm's profitability.

Selecting the right tech stack can significantly augment your firm's capabilities. 

From automated data entry tools to all-in-one platforms that empower you to get paid faster, and run smarter, choosing tailored solutions can translate to tangible improvements in both efficiency and client satisfaction.

To incorporate technology into your practice:

1. Cultivate the right mindset

Tech adoption isn't plug-and-play. A culture of continuous learning – embracing training sessions and staying ahead of industry trends – ensures the human element in your firm can harness the full power of these new tools.

2. Tailor your offerings

Technological advancements offer not just operational efficiency, but an opportunity to diversify services. From tax strategy advisories to business consulting, consider offering new services to enhance your value proposition.

3. Build a fort with cybersecurity as a pillar

In a digitized setup, cybersecurity isn't optional. It's vital for client trust and a necessity for safeguarding sensitive data. Think of it not just as a cost, but an investment in your firm's integrity and long-term viability.

4. Think about the bottom line

Digital transformation is here to stay. It's not a question of whether you should adapt, but how fast you can change. 

If accounting has always been the language of business, then technology is its new lexicon. Integrating the two is the blueprint for future relevance, sustained growth, and greater profitability.

Next on the dial

Tap into the cultural pulse with Ignition’s self-professed “recovering accountant” and CEO, Guy Pearson. Listen and watch the latest installment of the Reconciling SaaS interview series. 

Guy talks to progressive firm owners and operators who are reshaping the accounting landscape as we know it. From entrepreneurial odysseys to seismic shifts in the ledger landscape, he’s getting the scoop on how the industry's game-changers are rewriting the rulebook. 

Don't miss this deep dive into the tech revolution.

And if you’re interested in finding out more about Ignition, watch our instant demo. See how Ignition automates and optimizes proposals, client agreements, billing and payment collection. 

With Ignition, you can end late payments, unbilled work and mundane repetitive admin for good.  

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Meet the author

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Matt Kanas

Managing Director, AMER  Ignition

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Published 08 Sep 2023 Last updated 19 Mar 2024