The Merriam Webster word of 2023 was “authentic” - reflecting a quality that people had been looking up, and perhaps looking for, during the year that’s ending. At Aiwyn we’ve done something more daring. Rather than looking backwards, we have a word that we think will define accounting as a profession in the year that’s ahead. The word is “efficiency.”
The Implications of Efficiency
Why is Aiwyn so into efficiency this year? Because it touches so much of what is key to success for every accountancy firm, and even for individual accounting professionals. This is such a fundamental point that it’s worth spelling out a few of the advantages, because taking it for granted can mean that its importance is underestimated. Companies that are more efficient:
- Can get more work done, in less time
- Increase their revenues, because they are able to do more
- Are likely to have better, richer, more streamlined relationships with clients
- Have more satisfied employees, who feel that they are using their time well
- Are less likely to lose employees to frustration over feeling their time is being wasted
- Can grow their business as a result of all these things and more
Traditionally, accounting has been highly reliant on manual processes, which are inefficient, do not scale well, and risk having mistakes creep in due to human error - which in turn requires further effort to fix, further decreasing efficiency. The increased extent to which automation is entering accountancy is changing this dynamic.
Efficiency is highly desirable, and accountants know it and are willing to take steps to achieve it. Increasingly, they feel able to do so. In 2023, accountants reported that they expected to spend an average of $15,800 on technology improvements and upgrades. There’s a clear reason driving this: The number one benefit of technology, according to the accountants surveyed, is that it’s helping to boost revenue due to efficiency gains.
Technology isn’t just a natural way to improve efficiency. Technological innovations are changing the kind of efficiency that is possible in accounting.
Implementing Efficiency
Efficiency is our word of 2024 not just because it has such a wide-ranging impact for accounting firms and accounting professionals, but also because in 2024 the tools that make greater efficiency possible with ease are now widely available. Moreover, there is a new awareness of how to use them, and why doing so is worthwhile. In other words in 2024 two vital things combine: we know why efficiency is important, and we know how to achieve it.
According to Markets and Markets research, AI in accounting market size is expected to reach $4.791 billion, growing at a CAGR of 48.4% in 2024. Even more interesting is the analysis behind these figures: “The solutions segment is estimated to hold a larger market size, driven by the ease of integrating pre-built solutions with existing accounting infrastructure. The growing number of innovations and partnerships in the accounting sector and the focus on automating repetitive accounting processes to enhance efficiency, are also the factors contributing to the adoption.”
So a number of factors within the industry - technological development in the form of pre-built solutions that integrate easily with existing infrastructure; partnerships; the desire to replace repetitive actions with automation - empower accounting firms to feel that they can become more efficient, productive and successful.
Efficiency Expands Accounting as a Profession
Quoting again from Markets and Markets, “The growing need to automate accounting processes, and support data-based advisory and decision making are major factors driving the growth of the AI in accounting market.”
We have already explored the need to automate accounting processes, and why this is worthwhile. Supporting data-based advisory work and decision making efforts, however, fall into a different category, which is worth diving into a little more.
While accountancy has always had a deep tradition of providing advice to clients in the role of trusted advisor, this has typically been limited by the time available, since a lot of effort was required for repetitive but essential work. If 55% of CPA time is spent on administrative non-client task work, there’s simply a limit to how much time and effort can be spent on client advice.
The increase in efficiency in 2024, driven by both the desire to streamline and by the automation that makes it possible, means that accounting professionals will have far greater capacity to focus on diverse client needs and giving relevant advice.
Accounting will expand to include greater depth and greater breadth. In terms of depth, accountants will be able to spend more time investigating data trends in order to give data-based advice. They’ll also be able to draw more deeply on more data as part of this process, since the user-friendly interfaces that are part of recent technological advances make this far easier and faster.
Accountants will also be able to offer a wider variety of services, from financial modeling to consumer loss mitigation, asset liability management and financial compliance. Some upskilling is required for these specializations, something else which makes the most of human resources, now that artificial intelligence can be used to take on repetitive tasks.
The Impact on Day-to-Day Accounting
We started this blog post by noting that the Merriam Webster word of 2023 was “authentic.” Authenticity is something that people are increasingly in search of, as polished images and narratives and artificiality seem to become more common. There’s an interesting way in which we think that this trend also will play into efficiency in 2024.
As Aiwyn’s COO Ellen Choi says, “In 2024, AI will let accountants live more thriving, flourishing lives that enable them to achieve better work/life balance, combat burnout, and spend more time doing what they love doing - serving their clients and becoming their trusted advisors. Ironically, by introducing more of the "artificial" into their lives, accountants will become more human, authentic, and "real" versions of themselves. At Aiwyn, we are excited to be serving our profession in accelerating this progress.”
Efficiency has widespread implications for many aspects of accounting as a profession. But it is no less important to appreciate the positive impact that it can also have on the daily life and work of accounting professionals.
Efficiency & Other Trends
Efficiency is Aiwyn’s word of 2024, and we’ll be tracking the progress of this key theme as the year progresses. At the same time, there are also other trends that accounting professionals need to be aware of as we head into the new year, to ensure that their firms are ready to value and leverage the advantages of the changes as they come.
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