A former accountant turned co-founder and CEO, Mike Whitmire is the leader of pre-IPO fintech company FloQast.
When people think of accounting, many picture individuals hunched over computers, crunching numbers and making sure companies are fiscally and financially sound. However, today’s accountants have the potential, tools and resources to make themselves indispensable, contributing to the overall success and growth of a company.
While accountants are still responsible for monthly and yearly closes, external and internal pressures alongside new innovative technologies are changing this focus. Now, they are being given more leadership and responsibility and, in many ways, contributing to the growth and success of companies as much as the c-suite, according to our company’s State of Play in Accounting report.
The role of the CFO has rapidly evolved to include more operations, and with that increased responsibility comes delegation. Controllers are increasingly taking on the workload for operations because they are, to a certain extent, already involved in operations. Accounting works with each department on a regular basis and thus has more insights into companywide operational processes than many other functions.
At FloQast, we call this “operational accounting” and see it as a critical step that can help propel companies forward and drive efficiency and innovation. Since many of us are former accountants, we intimately understand the need for increased operational capabilities.
How Accountants Are Bringing Operations And Accounting Together
When it comes down to it, operations and accounting are actually quite similar—both are a culmination and adherence to process. Operations is the “how”—the ways in which companies determine how they are run, what workflows are in place, when deadlines are and how systems sync together. On the other hand, accounting is more of the “what” and is focused on problem-solving and organization—from bookkeeping and ensuring rules and regulations are followed to keeping the company on financial track, reporting financial results and more.
Today, regulations driven by market pressures have given CFOs and their accounting teams more responsibility for controls and process, ultimately creating a stronger relationship between operations and accounting. This relationship has also grown as accountants have become incredible process machines with substantially better financial literacy. They are able to understand the “how” all the way through to the “what.”
So, it makes sense that accountants would be excellent individuals to bolster operations. In fact, there are three key aspects of accountants that make them prime for the job:
• Accountants have been raised in a regulatory environment—they have spent considerable time dealing with regulations (mainly through audits), Sarbanes-Oxley and tax compliance, turning them into process gurus. The regulatory environment has become the structure of accounting and, as such, their deep knowledge of the regulatory space makes them a key resource for leaders and investors.
• Accountants have their hands in almost every aspect of a business—primarily due to their time in regulations as well as the time they spend translating data. As such, accountants are not only able to see into every department and learn how they operate, but they are also equipped to make changes and improve processes.
• Staffing within the accounting industry has ebbed and flowed. In fact, hiring of accounting grads is down 30% currently and half of companies have reported difficulty recruiting and retaining talent. This dip in staffing has resulted in accountants becoming increasingly resourceful and efficient.
How Companies Can Merge The Two And Boost Business
As businesses look to incorporate more accountants into their operations departments, implementing automation is a critical first step.
Unfortunately, some organizations have yet to implement automation technologies for a variety of reasons. These include resistance to moving off legacy systems, the fear of utilizing a lesser-known, newer solution and the potential for missed deadlines due to lengthy periods of downtime for maintenance and implementation. However, delaying automation could potentially hinder the organization’s growth for years to come. This is because when automation is introduced, accountants are freed from mundane, repetitive manual tasks to instead focus on operations and strategy.
First and foremost, automation allows accountants to close the books faster. A recent study from Ventana Research’s Office of Finance found that among those accounting firms that have substantially implemented automation, 88% tightened up their close process to less than six business days. In comparison, only 59% of organizations that have partially automated the process and 40% of those that haven’t embraced automation at all can claim the same efficient timeline.
Further, when accountants close the books faster, they gain back valuable time that can be used to talk strategy and collaborate with other colleagues, ultimately helping the company approach key operational decisions in a more thoughtful and effective way.
Additionally, automation is easier to integrate than previously thought. In fact, a recent McKinsey report found that, due to increased options that give accountants a variety of AI-powered solutions, it’s already possible to automate 30%-35% of activities.
As the finance and accounting spaces change and develop, operational excellence has become a mandate. Fortunately, we’re seeing more and more companies invest in and implement technology at a much higher rate and, in turn, we’re seeing more and more accountants—driven by CFOs—take on more responsibility around operations and IT.
It’s clear that operational accounting is the future of the industry and now it’s time for businesses to implement automation and free up their employees to contribute to the company’s growth and success.