Why Is Accounting Still Working Like It Is 1999?

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To say that the robots are coming and that digitalization and automation will remove all humans from Accounting feels a bit like crying wolf. We have been saying this for two decades, yet Accounting continues to work like it is 1999. Manual processes are abundant, and papers are flowing all over the place. The department is ripe for disruption!

That is why I am talking to start-up founders in the AccountTech space. We talk about entrepreneurship, their business(es), and why they are in Accounting. This week I am talking to Werner Valeur aka “the entrepreneur formerly known as Toke Kruse”.

“I solve problems and I see a lot in Accounting” 

If you look at Werner’s background up until 2009, you probably would not have guessed that he would end up in Accounting. He does not look like your typical accountant either, but with a father that is a former Head of Finance, it is not too farfetched either. It is probably also fair to say that he is an entrepreneur first and then coincidentally landed himself in Accounting. When asked what drives him, Werner said. 

“I am driven to solve problems and it can be simple everyday things that I encounter or issues I face when I work as an entrepreneur” 

Besides the drive to solve problems, he became an entrepreneur because it gives him much more freedom and enables him to work with what he thinks is fun. 

Speaking of problems, he encountered problems in Accounting early on in his entrepreneurial career when he experienced how circumstantial and complex it was to do bookkeeping in the systems that were available. He instinctively thought that this could be done better and it was going to provide the fuel for the business idea that led to the forming of Billy, a SaaS cloud-based accounting system for small and mid-sized enterprises. 

“I was brainstorming with a fellow entrepreneur about how we could build a subscription business and we quickly found that an accounting system would be the obvious choice” 

Just like that Werner had become an AccountTech entrepreneur even his drive to solve problems could have led him anywhere else. That is probably also a telling sign that we have a lot of problems in Accounting! 

The average company lifespan is shortening to below ten years 

Companies do not stay around for as long as they used to. The average life span is now below ten years. That makes it head-scratching that we continue to work in decade-old ways in Accounting. According to Werner, this is not likely change in a big bang anytime soon though. 

“In most of the big audit firms, you see senior partners that are five-ten years away from retirement and they have absolutely no incentive to change the ways of working in Accounting” 

The case for disrupting Accounting grows even bigger and Werner sees a huge potential in reducing errors, saving time, and not least saving money! That is the essence of all the companies that he is currently involved in. 

“We dare to challenge existing processes even if it rubs some accountants the wrong way. We must arm ourselves with a lot of patience though because it takes a long time to enter the Accounting department – they are somewhat conservative in their approach after all” 

It is almost a paradox that it takes longer to convince a company’s accountant that s/he must change the ways of working and update the system than the company will be in existence. Perhaps the current crisis can help push Accounting in the right direction. At least according to Werner, it did highlight a few things. 

“The current crisis has underlined the need for digital processes and put on display just how powerful it could be to have automated bookkeeping and accounting” 

Companies are surely ready to help with everything from bookkeeping, paper flows, salary solutions, and more. 

Will the future just be more of the same? 

Werner has been a trendsetter within the future of Accounting. However, this also happened a bit by coincidence. He was preparing to launch a new company (Bilagscan, now re-named to Paperflow). Rather than just putting out a press release he created an event called “The Future of Accounting”. 

“We expected something like 50 people to show up. We were blown away by surprise though when we saw 800 people attending the day!” 

The interest is there from the profession. Likely because we have been telling accountants for years that digitalization is coming but still, they are not fast to jump on changes. What is worse is that they do not get how fast a start-up can make changes and corrections to a product that might not work perfectly in the beginning. 

“One time we had a conversation with an accountant whom we were trying to convince that he should change to Billy. He was firm though in saying that he had tried our product two years ago and it did not work. So, he did not see any reason to change despite we had corrected those issues and more shortly after they were detected” 

While things may not change in a big bang it is inevitable that we will see more digitalization of Accounting. According to Werner, there is one thing that will change the game completely. Payments, so he co-founded Moneyflow.io with Kim Rehfeldt, too! 

“Digital payment solutions are the key to full digitalization of Accounting. Today, payments still need to be authorized in a manual transaction and that is putting a stumbling block on the whole process. However, with PSD2 the route to the touchless accounting department has been drawn up – once payments can be authorized automatically everything else will fall in line” 

It does not mean that digitalization will come to a hard stop. There are always more things to digitalize, even in Accounting. That leads to Werner’s top three steps for Accounting to take to create the accounting department of the future. 

1. Map all manual processes to detect where is the biggest potential for automation
2. Be open about digitalization and automation – it is not going to take away the role of the accountant but simply change it.
3. Rethink the role of Accounting in the company – maybe you need to become knowledgeable about technology than accounting itself. 

Accounting must rethink its role in the company and focus more on how to apply technology to reduce errors and save time and money. 

What about the future of the accountant then? 

Touchless transactions pave the way for accountants to move up the value chain and help translate the digital output into better decision-making. That and the need for creating a sound digital control environment. 

“The control function of Accounting becomes even more important in a digital environment so accountants need to design control mechanisms to set limits on what type of payments and the amounts that can be processed automatically – that and analyzing what is processed automatically to detect any potential fraud happening below the limits” 

According to Werner, you should not be concerned about if there are any people left in the accounting department once he and others are done with it. The role will just change into controlling and decision-support. 

“We need people to perform controlling and it becomes even more important than in a manual world. Each accountant must continue to develop capabilities that can meet these changing demands” 

Werner believes so strongly in the need for controlling that he is a bit concerned that it might even be underemphasized in our digitalization efforts. Still, his advice to accountants wanting to futureproof themselves is simple. 

“Find all manual processes and figure out how to automate them – you might not be able to do it yourself but then find someone who can because I can assure you that they are out there!” 

They are indeed out there and I can only encourage all accountants to become what I call “techknows” i.e. knowing what technology is available, how to apply it to remove manual processes, and what companies to turn to for implementation. 

How can accountants become involved in AccountTech? 

According to Werner, there are not many accountants and controllers that are also entrepreneurs. However, that does not mean you should not consider a career as an entrepreneur. Your starting point might just be in a different place. 

“Instead of going on your own right away try to find a team that has already started a company. There are not many accountants in the start-up environment, but their capabilities are in-demand” 

Werner thinks that accountants would be good at putting part of how a start-up is run into a systematic way of working and documenting processes. That is NOT what entrepreneurs want to spend their time on! 

Let us revolutionize our ways of working 

There is really no point of working like it is 1999 anymore. The technology is available, business leaders are craving for it, and there is still work for accountants even we automate all transactional work. Werner has given some hints on how to get started both if you are a leader in Accounting or an individual contributor. Take a proactive approach and know that it is better that you automate your own job than someone else doing it for you!

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This was the second article in the series about Danish start-up founders in AccountTech. You can read previous articles below.

Meet The People Who Are Disrupting Accounting

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Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 8,500 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 45.000+ followers.