Technology and Tools for Accounting Professionals
There was a time not so long ago when accounting professionals focused more on tabulation and summarizing of information than on analysis. Accounting for businesses, in particular, required collecting myriad papers and receipts and other transaction documents, summarizing the information, translating it into journal entries, and finally posting those numbers to the big bound book which represented the business general ledger. With the work required to gather and enter all of the information, professionals necessarily focused their efforts on making the process as efficient as possible by attempting to structure the workflow and manage the paper.
When those efforts are compared to today’s approach which involves digital documents, intelligent data collection tools, automated workflow solutions, online accounting and data analysis, it is clear that the processes for accounting for business activities have not really become simpler. In fact, much of the enabling technology has served to complicate certain processes, which drives users to find even more “solutions” to address these new problems. It (IT) is a bit like the Wonka Everlasting Gobstopper, which never gets finished and never gets smaller. IT simply changes things – regularly and often.
Back then – before the Internet and digital imaging, or even Personal Computers – high technology wasn’t the focus because it didn’t exist in the realm of business in general. I suppose you could call business solutions at that time “low” technology, where mainly mechanical solutions were introduced to address various business problems.
As an example, prior to the advent of digital imaging and electronic documents, one of the primary requirements of the business was to organize and store paper documents. Over time, a wide variety of filing, foldering and labeling solutions have been developed, all oriented towards making the storage and later retrieval of paper documents easier. For some businesses, letting go of the paper is a hard thing to do. Years and years of training in keeping paper files has left many business owners and managers wary of working without physical paper documents. Investments in office space, filing cabinets, storage folders and personnel to organize, file and retrieve all of the documents is only a partial measurement of the cost of managing paper, and large numbers of businesses continue to operate in this manner.
The technology applied to processing the work has also changed, in many ways even more dramatically than the technology applied to collecting and storing the information. Take the simple processes of tabulation (to arrange in tabular form; condense and list) and summing (adding up) information, for example. Previous generations didn’t have computers and spreadsheet software to perform the work. Rather, individuals would painstakingly handwrite each transaction entry into a ledger or on a columnar worksheet, and would then have to manually add each column and then cross check footer totals to ensure accuracy. Back then, the machines used to perform the addition/subtraction were mechanical devices and could not perform multiplication or division. These adding machines were first hand-cranked devices, later replaced with shiny new electrical ones (weighing approximately 20 lbs each).
Even voice communications have changed dramatically over the years. Many people don’t remember a time when having multiple phone lines in the business meant having multiple telephones, and the concept of a PBX (Private Branch eXchange) didn’t exist. Every phone would be hard-wired to an incoming line; if you wanted to answer a call, you had to use the right phone. This became difficult in an office with many people, so solutions such as the “fabulous extendo-phone” was invented to allow anyone in the office to access the phone from their desk.
The technology available to businesses today is astounding, and offers amazing potential and benefit. On the other hand, technology rarely (truly) makes things simple or easy – it more frequently serves to shelter certain users from the complexity while delivering new workloads and concerns to others. It’s rather like energy – it isn’t created or destroyed, it just changes form [law of conservation of energy]. Business is like that, particularly where information technology is involved. The underlying requirement doesn’t go away, just like a business’s requirement to account for financial transactions and activities, and the need for the business to capture and retain documents isn’t changed. How the process is managed, and which tools or mechanisms are applied to the task is what changes.
- Read about how accountants need to help their small manufacturing clients get in front of the ball
- Read more about how accountants need business intelligence, too
- Read more about how there’s no fear and loathing in accounting
- Read more about the pressure on accountants to deliver more value and intelligence to their clients
- Read more about Data Warriors: accounting in the cloud