What is Accounting Automation?

Flexi Education Series

What is Accounting Automation? An interview with Spencer Kuo

In our inaugural post for our Flexi Education Series. We sat down with Spencer Kuo. Spencer is Vice President of Solution Consulting at Flexi Software. Recently, we had the pleasure of talking with Spencer about accounting automation and what the future holds for accountants and the accounting practice.

Marc Meyer: Thanks for taking the time to do this Spencer. Let’s jump right into it. What is Accounting Automation?

Spencer Kuo: Accounting automation is a broad category but it’s pretty much the same as any other “type” of automation. We simply want to reduce or replace manual processes that may take an accountant several steps with something that is more a computer can do for them, ultimately benefiting accountants by giving them back more time.  Accounting automation is something that continuously evolves over time, largely based on technology. In its most advanced form today, technologies like Artificial Intelligence are being deployed to help accountants make decisions and automate some of the data/and data analysis.

MM; It’s my understanding that accounting automation has evolved because you had certain processes that were repetitive, and so automating them was a natural progression (and easy transition) to automate them. Is that right?

SK: Certainly. Those repetitive tasks were easiest to automate as they are the low hanging fruit of accounting systems. Modern accounting systems can eliminate many of those routine, day-to-day tasks in accounting.

MM: Do you remember when this first happened? How long has accounting automation been “around”?

SK: Well, it’s always been around. There have been accounting automation systems but to different degrees. What automation was available 20 years ago is dwarfed by what was available 10 years ago by what’s available to today, and it’s just going to continue to evolve and improve up to a certain point.

MM: It sounds like the biggest benefit is that you’re reducing manual processes; you’re speeding up certain processes. Am I on the right path?

SK: Yes, there are several major benefits. One benefit is less manual labor so employees can be more productive. The second benefit is a reduction in mistakes or human error as there is less data entry. The system is doing it for me, so you have much more accurate financials.

Why does that matter? It all boils down to better analytics and reporting. So the goal of the accounting function, in terms of bookkeeping, is an effort to provide the data needed to make better decisions that will help the business be more successful, and reports that regulatory bodies need to ensure compliance. By automating the accounting – which ultimately leads to less errors and more accurate data – helps to fulfill these goals.

MM: One question everyone wonders: Are the days of an accountant numbered?

SK: No, on the contrary, it’s just that their roles have shifted from being heads down data entry people to more strategically focused functions that are working towards the strategic goals of the company. They have more time now and better data.

MM: Do you feel like accountants now, rather than just reporting the numbers, have become more like strategists?

SK: Absolutely. Back in the day, accountants were viewed “just” as bookkeepers. They were there to purely record the money and nothing more. The old way of “doing” accounting (and it still exists today) is the concept of what we call ROR or Record to Report: record a bunch of information and create reports. That is what the role of an accountant has been, and often continues to be. The future of accounting automation, though, is less about the recording and more analysis of the information.

We have concrete information to help put accountants at ease. I’ve interviewed some of our Flexi customers informally that have adopted some of our automation technology like Workflow, and I have asked them, “Now that you have implemented Flexi and you have all this automation, what has been the impact on the accounting staff? Were you able to reduce staff?”

The answer was no. Not only had they maintained their existing staff, but they have actually grown. But what has changed is the nature or type of hire that is sought after now versus a decade ago. They used to hire “bean counters” that were lower level data-entry people but now that has changed. So let’s say you had five people. Three would have been data entry, one would have managed them and the other might have been either a controller or a VP of finance. Now, you don’t have data entry people anymore, you have five people who are more data analysts, or business analysts with finance and accounting backgrounds. The number of accountants has not changed, but the skillsets have.

MM: Thus, the reality is that the role or job description of the accountant is pretty far removed from that of the “bean counter”. The core skills needed today are all about the data and being able to analyze that information and make data-based recommendations. Which has me believing that contrary to the fears that accountants’ days are numbered, the accountant is now more valuable than ever.

SK: Exactly. I would say that right now, today, accounting, technology and automation have reached this inflection point in which accounting is automated enough and the analytics and reporting is good enough to enable the accounting department to make that evolutionary shift from being just bean counters to being more of an analytical organization.

MM: Interesting. You mentioned AI earlier. Does automation have AI baked into it? Or is that something that is completely separate from this?

SK: While we’re in the early phases and you can see some of this in Flexi’s accounting software, continued AI advancement is actually the next evolution. Automation has always existed in various forms but AI is just another technology used to accomplish automation. Look to AI being very common as we move towards the next generation of accounting systems.

MM: Then RPA is just taking those manual accounting processes and letting a bot do them in order to free up an accountant to do more valuable activities right?

SK: Yes. We can think of it like this: more routine, repeatable tasks are for the robots whereas the more cognitive and less repetitive tasks are for the accountant.

MM: Interestingly enough, I’ve probably seen more articles about RPA eliminating accounting jobs more than anything else. I actually think RPA augments the functions of an accountant rather than eliminates them. You’ve been pretty adamant that RPA is not a deal killer for accounting.

SK: True. But I do see a deal killer out there for accountants though.

MM: Oooh, let’s hear it.

SK: I can see a shift towards outsourced accounting. Similar to what we’re seeing with HR. We’ve seen it with IT, we’ve seen it with Legal. So accounting is logically next in terms of back-office functions that companies are going to outsource. Honestly, if you want to achieve 100% automation of your accounting functions, then outsourcing it would be the next logical step. If we have decided that the role of the accountant is strictly as an analyst and less of a data-entry person, then the easiest way to do that, would be to outsource that portion.

MM: What industries does accounting automation fit best?

SK: It’s industry agnostic. Every industry needs it but those that are more regulated are the ones that would be most impacted. Anytime there are regulations that create complexity in accounting, then automation can have the biggest return. Financial Services comes to mind based on the amount of regulations.

MM: Insurance?

SK: Yes, banking, insurance, and financial services are pretty notable.

MM: There’s always a contrarian point of view. What do you see as the downside to accounting automation?

SK: Generally speaking there’s usually a trade-off between automation and flexibility. The more automated you make things, the less flexible they can be.

MM: What does that mean exactly?

SK; it just means that automation needs to be applied in the right places rather than trying to automate everything. You have to be judicious in where you’re applying the automation.

MM: We’re almost done here and you’ve already mentioned what you can see happening in the industry but automation aside, where do you see accounting in five years?

SK: I think you’ll see artificial intelligence being applied to accounting to help with decision support. Automation today is essentially rules based. Functionally speaking, AI will help in picking up processes that automation simply can’t do. So whereas automation follows the rules, AI will help to write the rules.

MM: Wow, so rather than AI making decisions based on the results, AI will create the rules of which the decisions will be made based on the results. That’s fascinating.

SK: That’s right. I’d say today, AI is being used more for suggestions. It’s not writing the rules and saying “I think this is what the rules should be but you tell me which way you want to go,” but eventually it will interpreting patterns and behaviors enough to figure it out and write the rules.

MM: Just to tie this conversation into a neat bow, Flexi is probably positioned really well in anticipating what’s coming next in terms of automation or AI, right?

SK: Absolutely. When Flexi was first developed, the technology was client-server, we were the first to do it, we were the first to foresee the need for multi-tenancy. We developed a Workflow solution way ahead of its time. Same with the rules-engine which was also way ahead of its time.

In fact some of the things that Flexi has developed were too far ahead of its time. The ideas were way forward thinking but the technology wasn’t widely available yet and the users weren’t ready for it. We’ve always been looking at what the next trend is and right now we’re looking at AI pretty hard.

MM: Spencer, unfortunately we’re at the top of the hour. I want to thank you for your time, this was really interesting and we probably could have gone longer, easily. Maybe next time we will. 

 

For more information on how Flexi software can help your company power through your accounting challenges, reach out to us 24/7. In the meantime, be on the lookout for our next installment of the Flexi Education Series. 

New Mexico Mutual Customer Showcase

Recently, Flexi Software hosted its 30th Anniversary User Conference online. The customer showcase sessions were particularly keen in that it allowed for valuable insights to be gleaned from peers as featured customers shared their experiences and best practices for using Flexi software.

One of those customer showcases featured New Mexico Mutual‘s Michelle Lucero as she talked about how they use Flexi Analysis to improve their accounting efficiency.

Hochheim Prairie Insurance Customer Showcase

During last month’s 30th Anniversary User Conference, several of Flexi’s preeminent customers were featured so as to present the myriad ways that they have used and currently use Flexi’s products. One of those companies was Hochheim Prairie Insurance. 

In this relatively short video, sit back, listen and learn as Flexi’s Director of Business Development, Spencer Kuo, talks with Hochheim Prairie Insurance’s Kim Taylor on how and why they chose FlexiCloud when they decided to migrate their company information to the Cloud.

Glacier Bank Customer Showcase

Last month, Flexi hosted its 30th Anniversary User Conference online. During this impactful and memorable event, a number of happy Flexi customers were featured and highlighted for their extended and devoted usage of certain Flexi products. One of those institutions/ happy customers was Stephanie Lanegan of Glacier Bank. In this quick 13 minute video, see what Glacier Bank is doing in regards to Accounts Payable Automation and why FlexiWorkflow was the perfect solution for their organization.

Flexi 30th Anniversary Virtual User Conference

On October 29th, 2020, Flexi Software will be hosting its 30th Anniversary User Conference for its customers. Unlike previous conferences, this edition will be completely virtual but will be no less impactful.

For Flexi and its customers this is a mutually beneficial opportunity to meld power users and product experts together in one place (virtually of course)—In addition, this is sure to be a flawless recipe for innovation and knowledge-sharing that can’t be missed by current Flexi customers.The Flexi User Conferences is an unbeatable opportunity to learn from you, our best customers. Our goal? To listen and collect and exchange honest feedback from the people that know our product inside and out.

In this 3 1/2 hour session, forget the questions and comments section of the website or emails, now Flexi users can get answers to their questions and address concerns about current, future and past software releases in real time.From our user roundtable sessions and customer showcases to the best practices session and new release announcements, Flexi software users will be dialed in to the innovators and developers who will listen to customer feedback and take their suggestions to heart.

Even in today’s uncertain world, no one can deny the power of a handshake and face-to-face interaction. The Flexi User Conference is our way of building a rapport and a pathway—towards our customers so they can understand the people behind the product, and so we can help get to know the people in front of it. So save the date. October 29th from 12:30 to 4:00 PM EST.  Click here to register for The 2020 Flexi 30th Anniversary User Conference.  Note: This user conference is only open to current Flexi customers.

Form 1099-NEC Makes a Comeback

In 1982, singer Steve Miller had a chart-topping song called Abracadabra.  The last time Form 1099-NEC saw the light of day? It was as well, 1982. Can you guess which one of these two things is making a comeback? Luckily, it’s not the song, it was pretty bad. However, for Form 1099-NEC it is making its return in the 2020 tax year.

For the last few decades, business owners have been responsible for using Form 1099-MISC to report nonemployee compensation. But with Form 1099-NEC, employers can say hello to a revamped form and goodbye to reporting nonemployee compensation on Form 1099-MISC.

Form 1099-NEC, which stands for Nonemployee Compensation, is a form that solely reports, wait for it… nonemployee compensation. Form 1099-NEC however, is NOT a replacement for Form 1099-MISC. Form 1099-NEC is only replacing the use of Form 1099-MISC for reporting independent contractor payments.

What does this mean?

Form 1099-MISC, Miscellaneous Income, is an information return that businesses use to report payment types, such as payments made to independent contractors. You can also use Form 1099-MISC to report other payments, like royalties and rents. Form 1099-MISC is like Form W-2 but for independent contractors and thus independent contractors use Form 1099-MISC to make tax payments based on what businesses paid them during the year.

Why are they bringing this form back?

Before the Protecting Americans from Tax Hikes Act (PATH Act), taxpayers could file one Form 1099-MISC to report nonemployee compensation and miscellaneous income items by February 28 each year. In 2015, the PATH Act changed the Form 1099-MISC due date to January 31 for reporting nonemployee compensation.

Because of the due date change for nonemployee compensation, taxpayers had to begin separating nonemployee compensation using two Forms 1099. This change not only caused a lot of confusion for employers and taxpayers, but it also caused the IRS to mistakenly treat forms received after the January 31 deadline as late returns. The IRS has brought back Form 1099-NEC to separate nonemployee expenses and clear up the confusion.

A couple of caveats

It is important to note that the 2020 Form 1099-MISC and the 2020 Form 1099-NEC are to be used for reporting payments made in 2020 during the 2021 tax season. Do not use these forms for reporting 2019 payments during the 2020 tax season. In addition, do not use Form 1099-NEC to report personal payments. It is only to be used for payments if you are in a trade or business for profit. Form 1099-NEC must be given to nonemployees by January 31, the year after the reporting year. For example, you must give 2020 forms by Feb. 1, 2021 (because Jan. 31, 2021, is a Sunday). The forms must be filed with the IRS before Feb. 1, 2021.

The bottom line is this: Fill out Form 1099-NEC if you have any workers you paid $600 or more to in nonemployee compensation and if you’re going to listen to anything from 1982, you can’t go wrong with maybe some Eddie Money or Stevie Wonder.

For more information on how Flexi software can help your company power through your accounting challenges, reach out to us 24/7 because as you know accounting never sleeps! Happy Filing.

 

 

Why Accounting Systems for Credit Unions are More Important Than Ever in a Post-COVID-19 World

When it comes to companies affected by the Pandemic no one was excluded. Including credit unions. We learned a lot during those times, best practices were redefined, and we continue to incorporate those lessons in ways that make our businesses stronger and more resilient.

When talking about accounting software, credit unions have core systems that run their operations, such as deposits and loans, just like other companies, in addition to basic accounting modules that include general ledger, accounts payable and reporting. While these core systems have basic features to complete accounting tasks, it’s often not enough to keep up with industry standards. Members on credit unions operations teams get just as busy with other duties like generating revenue and working with members and thus don’t have time to keep their systems up to date.

In the post-COVID-19 world, more businesses than ever continue to have at least a partial remote workforce. It is important to ensure that your credit union accounting system is flexible and prepared to help the finance team work productively both now and in the future. Below are three reasons why it might be time for credit union’s to take their accounting systems to the next level.

  1. Cloud Based Platform

Because employees are being forced to work remote, it is critical for everyone to have access to the accounting system from anywhere. All users should be able to have access to the numbers and data at home. Additionally, IT may not be around to help with support, so it’s important to work in a platform that’s user friendly and has the capabilities needed. In fact, Flexi is among the most experienced accounting software providers in both the cloud and on-premise markets, which minimizes the risk of dealing with older technology systems. When an employee at a credit union asks for a report, it can take a significant amount of time to gather the data they’re requesting. Wouldn’t it be nice to know the information they’re looking for is ready instantaneously? With our cloud accounting software, Flexicloud, we provide real time visibility into your financial position right in the cloud, making your organization more agile, so that when information is needed, it’s easily accessible, no matter where you’re physically located.

  1. Pricing Flexibility

With the uncertainty that the pandemic is causing for a lot of credit unions, it is important to work with a partner who provides subscription-based pricing that gives you flexibility! The last thing your credit union needs to worry about during this time is dealing with the costs accounting systems bring. Having subscription based pricing, you can prepare for that cost each month, not having surprises or increases in your bill.

  1. Paperless Workflow Automation

The inefficiencies manual processes cause have been exacerbated more than ever due to the increase in remote employees. Paperless workflow automation solves this. Accountants often have stacks of paperwork that show numbers, do calculations in spreadsheets and use various tools to get the numbers they are looking for. Papers and spreadsheets additionally leave room for error, decrease organization and are inefficient. For example, at multi-company or branch accounting outfits, these serve as gaps due to inadequate technology solutions which create an increase in manual work and a heightened risk of mistakes. Flexi has several apps such as eInvoice, eVendor, and eJournal that take paper and spreadsheet processes and convert them to software applications, streamlining the accounting process.

With all the uncertainty in the world currently and not knowing when things might return to normal, it’s important to be certain about one thing, and that is that your accounting system supports your financial needs and your employees. Don’t waste more time working in a system or environment that’s ineffective. Reach out to our team at Flexi, so we can give you the tools and support you need when you upgrade and or migrate to our credit union accounting software.

The 5 Most Important Features to Look for in Financial Management Software

Companies across numerous industries – healthcare, banking, investment, and others – rely heavily on their financial management software to streamline their operations. With so many options from which to choose, it can be difficult to know which software is right for your company. Below, you can learn more about the five most important features of the best financial management software platforms. 

#1 – Cloud-Based Technology

Of all the features that you should look for in your financial management software, this is one of the most important. Cloud-based platforms are critical because they allow for collaboration across departments, they make it easy for individuals to access information from anywhere, and they make it simple to deploy software anywhere it is needed – even on the go. It ensures that everyone has access to the exact same data at the same time, too, which goes a long way toward preventing misunderstandings and the mistakes that can arise from them. 

#2 – Workflow Automation

Your financial management software should be able to carry out many of your accounting processes automatically, as well. This saves you and your finance team a great deal of time and effort by reducing the number of repetitive tasks. What’s more, when you can automate based on your own rules, it also reduces the likelihood of mistakes that can lead to serious issues. 

#3 – Ledger Consolidation

If your company consists of several branches, locations, or franchises, then it’s important to choose a platform that makes it easy to manage your finances across all entities with ease. In fact, look for an option that allows you to simplify these complexities and create reports based on any data you choose almost instantly. Consolidating ledgers across multiple entities should never be complicated, even when you are dealing with different current currencies. 

#4 – Real-Time Data 

Though historical data certainly plays an important role in making business decisions, access to real-time data takes things even further. Making business decisions can be tough as it is, but with access to real-time data, you can be confident that the decisions you are making are based on the most accurate and up-to-date information available. No matter what the situation or decision, real-time data makes it easier. 

 #5 – Simplified Auditing

Finally, you should choose financial management software that provides you with a complete audit trail for every single transaction your company processes. This should include not only the original transaction, but also the workflow and all the approvals that led up to that transaction. This is a great way to ensure that you are following various guidelines, and it also allows you to produce compliance documentation in mere seconds. 

Your financial management software is an important part of your business. You rely on it to understand how your company is faring at any given time, so the information you access should always be accurate and up-to-date. When choosing financial management software, be sure that it offers you these five features as well as the ability to customize reports and workflow automation to your company’s unique needs. 

Flexi-A Rising Star Among Financial Close Management Software Companies

In its most recent customer success report, Featured Customers, a leading customer reference platform for B2B business software & services, recognized Flexi International Software, aka Flexi, as a “Rising Star” in the Financial close management software space. For the uninitiated, FCM, or Financial close management software, or simply accounting close software, helps companies to complete the financial close process.

A Rising Star, according to the organization, is a vendor on FeaturedCustomers.com that understands where the market is going and has a disruptive technology. Rising Stars have been around long enough to establish momentum, a minimum amount of customer reference content along with a growing social media
presence. This recognition is based on collected data from their customer reference platform, their market presence, their web presence, & social presence as well as additional data aggregated from online sources and media properties.

Flexi is an on-premise as well as a cloud-based accounting solution for the banking, insurance, healthcare and service industries. The Flexi accounting solution features automation of accounting process and completion of audit trails which includes a visual display of the audit workflow process, real-time visibility, analysis of financial reports and more.

Flexi’s software was built to perform, saving finance teams hours and weeks of time. With Flexi’s open architecture the flexibility to choose stand-alone modules as business needs dictate can happen at the drop of a hat. Find out how enterprises can gain the ultimate in speed and power with the entire financial management software platform, which is uniquely designed to allow financial data to flow securely wherever it is needed, with full integration into your other proprietary or third-party systems. Here is a link to the full article/PDF recognizing Flexi.

How Process-Driven Automation is Changing the Game for Executives Around the World

CFOs continue to play important roles within their companies as they provide insight and make decisions that can completely alter the future of their companies. In 2012, the Association of Chartered Certified Accountants put out a report that included predictions about how the roles of CFOs would change in the coming years, and thanks to process-driven automation, their predictions are coming true. 

Big Changes in the Financial Realm

To put it simply, process-driven automation can be described as the use of one or more digital technologies to automatically perform a process designed to accomplish a specific goal. As technology continues to improve – and as computers and their software become more powerful – more and more processes are being automated every single day. Some of the biggest changes that have come as the result of process-driven automation in the financial industry include: 

  • Optimizing credit decisions. Banks and credit unions must assess their risk each time they open a new account or provide a loan. Once upon a time, this involved spending many days or even weeks analyzing the applicant’s credit. Today, thanks to the abundance of data and process automation, decisions can be reached in days – if not hours. 
  • Reducing financial risk. Process-driven automation can also help CFOs and accountants understand financial risk. With the wide variety of reporting options available, it is possible to predict how a business decision will influence revenue with greater accuracy than ever before. 
  • Improving customer service. Process-driven automation even improves customer service by giving customers the ability to review their accounts, apply for services, or gather information automatically, in real time, and without having to wait for assistance. 
  • Ensuring compliance. Larger companies that rely on various departments can also utilize process-driven automation to ensure compliance with safety or security regulations as well as companies’ own policies. 

The Role of the CFO

Not long ago, much of a CFO’s time was spent crunching numbers and comparing data in order to better understand the company’s complex finances. In other words, they spent much of their time reviewing financial data from the past and putting together reports that were easy for others to understand. Today, thanks to process-driven automation, CFOs can simply click a button to generate complex reports. 

In short, the role of the CFO has changed. Whereas they once looked into the past, accounting automation allows them to spend more of their time looking into the future. Because they no longer need to spend countless hours at their desks poring over spreadsheets and compiling months’ worth of data into understandable reports, they can spend more of their time concentrating on the more critical aspects of their jobs – analytics, fraud detection, compliance, and more. 

Finance executives in industries like banking, healthcare, and advising have always worked hard to provide data and insights designed to improve their companies’ revenue and facilitate growth. Process-driven automation has not replaced the CFO; rather, it has given them access to powerful tools that allow them to do their jobs more efficiently and accurately.