Dext: Why Neglecting Bookkeeping Automation is Risky image

Dext: Why Neglecting Bookkeeping Automation is Risky

Reluctance to adapt can lead to significant risks, both in the immediate future and over the long term, potentially jeopardising the efficiency and competitiveness of their practices.

onMonday 3 June 2024

Bookkeeping automation has become an integral part of modern financial management, and its adoption is no longer optional. The finance industry is rapidly evolving, with advanced technologies transforming how bookkeeping tasks are handled.

Despite this shift, many have yet to begin their digital transformation, underestimating the crucial importance of embracing these advancements. This reluctance to adapt can lead to significant risks, both in the immediate future and over the long term, potentially jeopardising the efficiency and competitiveness of their practices.

Short-term risks of ignoring bookkeeping automation

1. Inefficiency. You may not be able to complete tasks as quickly or accurately as someone who is using cloud-based technology, which can lead to delays and errors.

2. Difficulty in collaborating with clients. Without the appropriate tools, you can have difficulty collaborating with clients, especially if they’re located in different geographic locations.

3. Lack of scalability. Lack of technology is also limiting. Without it, your practice may struggle to scale its services to meet the needs of growing businesses, risking its own future.

4. Compliance risks. As regulations evolve and change over time, you may struggle to ensure compliance with financial regulations and be able to pivot effectively when needed.

“There are people saying that technology is going to put bookkeepers out of business. My response to that is: no, technology is not going to put you out of business. It’s bookkeepers like me, who are accepting and adopting technology, that will put you out of business.” – Denise Twigger, founder of Bas & Balances

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Long-term risks of neglecting cloud technology in bookkeeping

1. Loss of clients and revenue. As your practice struggles to complete tasks quickly and accurately, it can lose clients to competitors and see a decrease in revenue. Clients will be inclined to look for bookkeepers who are more efficient with compliance and can offer more advanced services.

2. Difficulty in staying competitive. You may struggle to stay competitive in the market as technology and accounting regulations continue to evolve.

3. Difficulty in attracting new talent. If you run a practice, you may struggle to attract new talent in the future, as many professionals are looking for companies that are using the latest technology and software – allowing them to put their knowledge and skills into valuable work rather than tedious manual tasks.

4. Difficulty in providing value-added services. Without accurate data and insights provided by smart bookkeeping tools, your practice may struggle to provide value-added services such as data analysis, tax planning and advisory which are increasingly important.

“Bookkeepers who don’t invest in technology won’t be able to help their clients in the long-term. Your clients will hear about cloud technology, they’ll see the adverts and they will say, ‘Well, why aren’t we using that?’, especially if it can save them time. They’ll expect that.” – Ambrose Gordon, owner of Cloud Bookkeeping East London

The path forward

Bookkeeping automation is a reality and there’s no going back. Bookkeepers who haven’t yet started their digital transformation really need to get moving. Still, many continue to dismiss the importance of embracing technology, ignoring several short- and long-term risks.

Overall, bookkeepers who don’t embrace technology will face a number of risks that can negatively impact their efficiency, revenue and competitiveness. Embracing cloud technology and automation, however, helps you future-proof your business and allows you to grow, if that’s what you want to achieve.

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