By David S. Burnett | November 7, 2018
Years ago, an executive of a small investment company told me, “It’s just accounting. Put a bunch of chimpanzees in the room and they can do it.” I was in public accounting and this was back in the day when we used 13-column ledger paper and the latest technology was a ten-key calculator that could subtotal.
Today we have astonishing technology that promises to systematize bookkeeping and accounting. Since accounting is perceived as tedious, manual, and repetitive data entry, it’s often identified as the perfect candidate for automation. Unfortunately, most attempts at accurately automating accounting related data entry fail. Why? The old GIGO principle (Garbage In, Garbage Out).
Automation works best when the data fed into the system is relatively clean. That typically requires more work on the front end to tidy up data that is extracted from other systems. Let’s face it - most small and
midsize businesses that experience bookkeeping challenges are similarly not in a position to manage the data. They need help – and help like that doesn’t come from a robot.
In a small business, accounting and finance is paramount. Accounting is the language of business, and contrary to popular belief, it is not easy. Ask any entrepreneur who has faced a mystery pile of receipts. A
skilled accountant can pick something up, figure it out, and accurately enter it in the accounting system.
Here are three common myths about small business accounting:
1. Accounting only deals with the past – While it is true the focus of financial reporting is telling you what happened, these reports should form the basis for all of your important business decisions. Accounting is the closest thing to objective real-time feedback that you can get. This is why it is important that it receives the resources and attention necessary to produce timely reports.
2. Accountants waste their time on immaterial things - There is a reason people get frustrated when their accountant asks them questions about details, sometimes down to the penny. It is not because its tedious and repetitive work – it only looks that way. It is actually detailed and demanding work – hardly repetitive as no two months ever seem to look the same. Accountants have high standards and are not
comfortable producing accurate data if they are always asked to just round it off.
3. Accountants always say no – When I was a CFO and suffered periods of very tight cash flow, I was known as “Dr. No”. You can’t spend money you don’t have. Yes, your pet project is not that expensive, until you add it up with everyone else’s priorities. Accountants don’t say no because they are mean spirited – they say no because they can see the big picture.
Technology is great. So are chimpanzees. Technology alone is no substitute for a good accountant. Automation
can supplement, and helps tremendously, but it is just a tool in the toolbox. You can’t build a masterpiece with tools alone – you still need a skilled carpenter.
David S. Burnett, CPA | email@example.com