The Future of Accounting Automation in the Insurance Industry

Attention accountants. Just because you have an affinity towards numbers, you breezed through all your accounting classes and your books are always perfectly balanced, does not mean that your days of learning and adapting are over. In fact, for accountants to succeed currently, they are going to need to bring a bit more to the table than just an appetite.

In a recent eBook by Flexi Software on accounting automation in the insurance industry, the desire to hire more well-rounded and future-ready accountants appears to be on everyone’s radar to a certain extent. This does not necessarily mean automating everything and doing away with accountants or hiring fewer accountants. What it does mean is hiring accountants who are armed with more than just an ability to maintain the books. Accounting and finance leaders now need an accountancy that is fluid in nature, robust in skillsets and agile enough to scale

With no thanks to the pandemic, but certainly acknowledging its impact, we all have been forced to adapt to new ways of working, learning, and living. In turn, this historic and catastrophic event has also propelled the accounting profession towards unprecedented opportunities for accountants to becoming more of a valued change agent and strategic consultant and less of the antiquated notion of what an accountant “used” to be. Let’s be clear though – the accounting profession was already undergoing a digital transformation. The pandemic merely accelerated the timeline.  

However, with these opportunities come some unique and very real challenges; some of which have been swirling around the profession for decades, while others have only just recently bubbled up to the surface. Case in point: accounting automation. The reality is that technology is undoubtedly driving change in accountancy practices, and accounting automation is leading the charge. For example, consider Robotic Process Automation, or RPA. According to research firm Gartner, RPA could save finance teams 25,000 hours of avoidable rework from human errors, at a cost savings of $878,000.

 

The challenges for those at the forefront, though, are numerous and, in some cases steep, if not daunting.

As the Flexi eBook revealed, the increased productivity, as well as the time-saving aspect of automation, are just two of the main benefits of adopting some type of automation into the accounting mix. However, getting “there” still appears to be a primary challenge for a lot of organizations, particularly in the insurance industry. From deciding what accounting software should be employed, to determining what manual processes need to be, or can be, automated, none of these decisions happens in a vacuum. In fact, a 2020 global survey of business leaders from a fairly wide swath of industries conducted by McKinsey found that nearly 66% of respondents were piloting solutions to automate at least one business process, which was up nearly 10% from two years earlier. The bottom line was more companies were pursuing automation initiatives year over year.

However, there are still quite a few companies who are currently struggling with not only the destination aspect of automation, but also the journey itself. A lot of companies know exactly what they want to automate but finding the right technology partner who understands exactly what is needed for their organization can be somewhat challenging. Conversely, a lot of companies are ripe for automation but have no idea how to begin, and therefore will just continue to put it off until sometime in the future when the “timing is right.” Thus, the percentage of companies that have fully automated at least one function from the McKinsey survey is not as great as one might assume. It has grown more modestly, from 29% in 2018 to 31% in 2020.

In addition, a lack of accounting automation is now also impacting a company’s ability to attract and retain talent. As such, finance and accounting leaders, particularly in the insurance industry, are not only stuck with a current workforce who are fearful of losing their jobs to automation, but also challenged with hiring a future workforce that expects to have certain aspects of their job automated. A Catch-22 for sure. Factor in the desire to hire people who have more of a diverse skillset that is geared more towards an analytical and forward thinking nature, and not just bookkeeping, and the challenge becomes more real and pressing by the day.

The new world reality is this: tech-comfortable accountants that are capable of confidently making strategic decisions that can make or save a company a lot of money can now pick and choose where and who they want to work for.

As all the participants in the Flexi eBook have revealed to various degrees, prioritizing automation offers many different shades of the same color, and yet it is no less important for all of them in terms of working towards the same goal of enabling and achieving success, as hiring top-flight talent. If anything, successful organizations in the insurance space continue to focus on training-up current accounting staffs, as well as trying to hire the best and the brightest. In addition, the focus on newer technologies is not abating anytime soon either. Introducing new ways of empowering and leveraging those staffs to work alongside new technologies is critical to current and future success as well.

In closing, a common thread across all respondents in the Flexi eBook was that accounting automation was indeed a strategic priority. However, the renewed focus on hiring and developing people that can bring a diverse set of skills to the accounting function appears to be just as critical to the success of the organization, as does technologies such as AI, machine learning and, of course, automation. If companies can factor in developing an operating model that enables scaling, along with balancing the intense pressure to meet stakeholder expectations, enjoying a competitive advantage for years to come will no longer be a pipedream.

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. Have a good one and good luck in 2021.

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. 

Why is Innovation in Accounting So Slow?

Accountants have been relying on Microsoft Excel since the 1980s, so you could say innovation in accounting is slow going. It turns out, there are several barriers to innovation that are specific to the accounting and financial services industry. What are they, and what can we do to squash them?

Jody Padar writes on AccountingToday that innovation isn’t typically in accounting’s nature. While accountants are good at mimicking innovation, it often doesn’t stick. Here are some of the top barriers that are keeping innovation in accounting slow. 

Organizational barriers. Accountants and accounting departments often trip up here. We get stuck in a routine that works–for a while–until it becomes a rut. Microsoft Excel is a great example of this. Its usefulness has long since expired, yet many of us continue to cling to it, maybe because of familiarity, or maybe “because we always have.”

Cultural barriers. Accountants by trade tend to be risk averse, but many accountants are (incorrectly) touting themselves as innovative. One of the main tenets of a successful accountant is to be able to analyze what has occurred in the past. Predicting the future? Less easy. Being an innovator requires taking risks, which often lead to missteps. A culture where you can make a mistake, pick yourself up, and try again is a necessity.

Regulatory barriers. Being mindful of regulatory measures and compliance means the opportunity to be creative and innovative can sometimes be non-existent. Much of an accountant’s job is spent understanding and working within the constraints of regulatory updates, so how can we find the time to innovate?

Technological barriers. Cloud software is a boon for the industry, yet many accountants are reluctant. Trading in clunky software for something sleek that automates and takes the guesswork out can feel like a threat, or it can feel too good to be true. Embracing advancing technology will keep you relevant in an industry that desperately needs to remain relevant. 

Market barriers. Following the market keeps you safe, not innovative. Again, risk comes into the equation here. Innovating is about advancing beyond the status quo. To be an innovative leader, you need to suss out what’s limping along and then revise it. 

What next?

Updating your software, improving your communication, enhancing your processes, and updating your pricing structure are all necessary to innovate. And, Padar suggests that a willingness to be agile is critical as well. By applying a goal of agility, you’re setting yourself up for consistent improvement, which keeps you relevant. It’s a chain reaction. 

Innovate with Flexi 

To successfully innovate, you first need to update your software. Flexi is an innovative cloud accounting solution that boasts 1,500 customers and 20,000+ users. Submit your information and get a demo of the Flexi suite today. 

 

Accounting Automation Software – Why Our Process Driven Solution Saves You Time

Flexi’s automated accounting solutions save your organization valuable time. Automated software means time added back to your calendar. With user-friendly, accessible software, clean and more accurate data, and simplified, easy-to-use report writers, accounting teams can work on strategizing, advisory, and new revenue streams with all the time they’ve bought back by using Flexi products.

Process-driven solutions

Flexi’s comprehensive financial management software simplifies and automates the entire accounting workflow process, without compromising security. Flexi’s open architecture meets even the most stringent security requirements yet allows data to flow seamlessly with any system, whenever and wherever business needs dictate.

Flexi delivers all the rich features you’d expect in a top tier accounting solution, but without the high cost. With quick implementation that can be deployed on-premises, in the cloud or in a hybrid environment, Flexi will not only simplify your accounting processes today, but also will have you ready to adapt quickly to market or business changes in your future.

Flexi allows you to:

  • Consolidate your company financials in real-time
  • Convert multi-currencies into a common currency
  • Pull data from different GLs into a standard format
  • Generate reports with just a few simple clicks
  • Distribute hundreds or thousands of reports with complete confidence
  • Answer all of your auditor’s questions

Industries

Flexi solutions enable companies in various industries to streamline accounting processes. These industries include:

Flex boasts flexible posting and open architecture, with rules-driven engines, enabling you to manage your accounting processes in a cost-effective and highly efficient manner.

Flexi software provides access to a fully integrated suite of applications, including general ledger, accounts payables, fixed assets, purchasing, and capital projects

As a Flexi user, you can save time with the added ability to analyze financial statements and track performance of your lines of business, profit centers, and locations.

Flexi solutions enable your organization to successfully compete in its dynamic and volatile marketplace. Automate and streamline your financial processes with the tools and controls to support complex regulatory requirements and changing market demands.

How can Flexi work for you?

Flexi may be the biggest, most trusted accounting software company in the industry right now. While Flexi sells directly to customers, Flexi’s software is also private labeled throughout the world by companies such as McKesson, StoneRiver, MajescoMastek, and Molina Healthcare.

To date, Flexi has 20,000+ users. Flexi’s automated software is process-driven and can help you and your business save–and repurpose–your time.

Learn more about Flexi accounting software solutions, or call 800-353-9492 to set up a demo today.