Are Accountants Better than Accounting Software?

Are Accountants Better than Accounting Software

Continuing our series on the relevance of accounting professionals for small and emerging businesses, we wish to shed more light at the trends impacting the overall community of ‘financial pillars’ of the Indian economy.

Not so long ago, very few, on-premise, legacy software were available for companies to facilitate complex accounting practices. Today, there is an endless list of accounting software for companies of all sizes and even individuals to use as per their convenience. A short after the demonetization our country, the government was alerted by the severe shortage of accountants and accounting jobs. With the onslaught of accounting software, it did seem that, very soon autobots or even Siri or Alexa may be readily dispensing investment suggestions over digital devices.

But does this mean an end for professionals like CPAs, CAs or accountants?

The answer is simply, no!

Despite tech evangelists propagating the idea technology replacing human labour, professionals especially, the accountants continue to play an exemplary role in the management of financial and other operations. The new age, superior technology break-through software like, ERP systems, cloud and analytics based accounting tools and even AI would be useful if employed by accounting professionals for better accuracy, reliability and visibility in accounting tasks.
These software help automate repetitive, mundane tasks like bookkeeping and reporting but, the responsibility of ‘critical decision making’ and giving advisory suggestions vests completely in the hands of accounting professionals.

Below are the few critical areas where businesses and startups would find accountants absolutely more useful than a software platform:

•  Tax Planning: The frequent changes in the regulatory laws and tax practices can complicate planning and preparation for any individual or business. CPAs, CAs and auditors enable businesses to proactively plan their tax payment and filing returns procedures by giving a detailed report on asset valuation, investment reports, deductions, expenses, etc. In addition, the accounting department maintains up-to-date records and documents that are required for auditing and furnishing necessary financial information for taxation purposes.

Auditing: Auditing software no doubt provide error-free reports and make complex calculation on the go but, it is the job of an auditor to ensure the financial auditing processes are in accordance to the existing financial and regulatory laws. Besides, an auditor helps a firm to maintain internal control over the financial processes and ensure their documentation meet compliance standards. Most importantly, accountants help validate financial practices of businesses and individuals. As per the quote from the Prime Minister, Narendra Modi, “ A CA’S signature is more powerful than PM’s and the government will believe the accounts signed by them.”

Advisory Services: An accounting tools built on strong algorithm-based platforms that makes use of standardized data sets, may pull out reports on financial performance and risk assessments that simplify investment and financial decisions. But, an accountant can provide tangible insights on ways to improve or optimize on financial goals and address issues by providing advisory and consultation services. In most cases, people prefer a word of advice from an individual with industry experience and expertise rather than relying on software-generated reports.

Manage payment and Other Financial Operations: Indian markets have seen an onslaught of applications and software to track and monitor payments, receivables and receipts. But the actual job of approving tasks like billing, managing unpaid invoices, making payments, receiving loans, credits and actual financial transactions has to be carried out by an individual accountant. An accounting executive can either perform these day-to-day operations or even outsource it other departments to ensure it is done. Whilst a software that tracks these payments and financial operations need prompting and actual human intervention to carry out its tasks.

Bootstrapping Businesses and Startups: From company registration to summoning required financial capital, approaching banks or investor and making forecasts on revenue, an accountant dons multiple hats to get the business up and running. So far, there are no software available in the market that seamlessly carry out the inception activities.

Set Financial and Business Goals: Once the business is registered, accountants are needed to set a future goal in terms of profits, revenue, strategic relations and collaborations. In fact the accountants also breathe life into the organization’s accounting tools by setting up dash boards, customizing tools and KPI based on financial activities and even run tests and measure business performance.

Manage Cash Flows: Accounting software solutions enable revenue and resource management and planning. However, they do not perform the physical task of speeding up the payment process or balancing cash flows based on income and expenditure. These tasks require insights from actual accountant.

Building Refinance Strategies: In case, a business runs out of sufficient funds or need to expand their operations, accountants can advise the firm to raise additional capital and even approach banks, financial institutions, shareholder or even creditors on behalf of the company. This cannot be performed by an enterprise accounting software.

Train and Equip Human Talent: Accountants add immense value to a business by training and strengthening new or existing accounting, auditing and payroll staff to carry out complex procedures. In fact the accounting department even train and deliver a thorough chalk-talk on usage of relevant tools and software for accounting-related activities.

A couple of years ago at an annual lecture, the discussion among the ICAEW faculty allegedly led to thought-provoking hypothesis that ‘accountants have been responsible for the dotcom bubble and burst’! The experts argued that the lack of IT know-how among accountants prevented companies in making decisions to take make use of technological that may helped them overcome the dotcom saga.

Thankfully, today the tables have turned! As the accountants have become the active contributors in a company’s decision on the investment of technology that help facilitate processes for increased productivity and profitability. Accountants and accounting software go hand in hand as they unlock the true potential of software to keep cost and complexities at bay.

What are your insights? Let us know.

For more details on the certified accounting courses and accounting services, contact us at Munimji.

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Financial Management