Technology will drive big changes in accounting over the coming years. But accountants still provide something that technology can't yet: peace of mind.
Accounting automation is something that’s fascinated me ever since I qualified in 2011. I’ve seen many doomsday scenarios predicting an end to accounting as we know it. And to an outsider, accounting must be ripe for automation because it’s just a case of adding some stuff up, right?
There is no doubt that technology will drive some massive changes in accounting over the coming years. And overall I think this will be a good thing for customers and accountants.
But through all of this, I’ve realised that there is no way accounting will be automated in the way that outsiders expect it to be.
I’ve spoken to thousands of self-employed people and small business owners and accountants provide something that computers are a long way off from replicating: peace of mind.
Having a human to talk to, someone who understands how you’re feeling, has experience built over many years and professional judgement gives customers ultimate reassurance. Experience lets you navigate complexities that machines just can’t conceive of, no matter how smart.
That’s why accountants are the go-to business adviser.
When we were starting Coconut we asked ourselves: if it’s the business support and guidance that clients crave, how can we do more of it?
What we found is that there’s lots of manual preparation and cleaning up work to do. And this is under attack from the outside because clients don’t see the value. It boils down to:
We looked for ways of solving this problem and decided to start with the data. We identified that transaction metadata holds the key to automation. Metadata is information that describes the transaction in more detail. As traditional banks don’t pass metadata onto the customer, it’s hard to understand the tax context of a transaction automatically.
So the starting point for Coconut was to create a business current account, giving us transaction data from the source, including the rich metadata.
We also realised that a lot of work is created by putting off the bookkeeping until it absolutely has to be done. We wanted to find a way of interacting with the customer when a transaction happens.
This is really hard to do with traditional banking data, but by building on a smart current account we see the data in real-time, making it much easier.
The instant interaction changes bookkeeping from something retrospective into something instant because we can:
To make this happen we have built a proprietary process to understand the tax context of a transaction. We’re finessing this all the time to improve accuracy. And it means within a few seconds the bookkeeping for a transaction is done and stored in a neat system ready to go.
Our aim is to free accountants up to provide more services their clients value. With very little effort both parties can concentrate on the hard stuff, eliminating the mundane and repetitive. The objective is that accountants can provide more of the valuable services or expand their client portfolio.
We’ve engaged closely with customers from the beginning and it’s meant we’ve created a product that they love. In the same way, partnering with the accounting community on our accountant tools is really important.
Elaine Clark, the founder of Cheapaccounting.co.uk, is one of our key advisors. Elaine is supporting with development of tools for independent accountants and networks like hers. We’re also very excited to be working with Tony and the ICPA.
The Coconut product today is a current account for sole traders and limited companies that they can open in just a few minutes from their phone, available on iOS and Android.
Coconut gives self-employed business owners guidance about the tax rules, categorises their income and expenses, and gives (sole traders) a forecast of their tax bill. It also has an invoicing tool, which will match off invoices automatically to the payments into the account.
Alongside our customer accounts, we’ve built the Coconut Accountant Portal. This gives accountants a window into the transactions their clients are making on their Coconut accounts, in real-time. You can see transactions, receipts and notes in a really accessible format. You can also download them easily, and soon you’ll be able to edit them as needed. We also want accountants to be able to communicate with the client through the portal to make the bookkeeping process much more efficient.
Our aim is to develop the next generation of tools that really help accountants service their clients. If you’d like to get involved, have a chat or just want more information, please get in touch by going to getcoconut.com/accountants