From the CEO: Technology Alone Won’t Get You There. Why You Need People Behind The Tools.

I had an argument with a competitor recently. We were talking about outsourcing parts of a bookkeeping business--specifically, data entry. He said that outsourcing is okay because, when pressed, customers are willing to accept overseas data entry if it means less money on their bill.

I disagreed--not that there are customers who choose the lower price. I’m sure there are. But I disagreed with his premise that it doesn’t really matter, that data entry is data entry, whether it happens here or in a country far away.

Data entry might be the first thing that pops into your mind when you think bookkeeping. But for many of us, technological advances mean that bookkeeping is a lot less data entry and a lot more financial expertise. With cloud-based systems like QuickBooks Online, Receipt Bank, and making our data management significantly more efficient, there’s simply less need for manual entry of numbers.

So, why not just outsource it? In fact, why do we need people at all if the software systems can enter the information for us?

Those are good questions, and they’re at the heart of the way I run my business.

Let’s start with the second question first: Why do we need people at all, especially in the bookkeeping and accounting industry where software programs are uploading all that information into the cloud?

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As good as software programs are, we still need people to manage them.

Artificial intelligence and OCR (optical character recognition) technology are great, but they aren’t perfect. The systems sometimes make mistakes. And they’re being used to capture information from other, older systems--the ones your bank and your credit card companies are using. At some banks, when a check clears, the information sent to QuickBooks Online says simply “CHECK.” That’s it.

A person still needs to be there to figure out what was involved in that mysterious check transaction, to make sure items are categorized correctly, and to look out for discrepancies.

Cloud-based programs are allowing an unprecedented level of innovation, collaboration, and autonomy in the workplace, but cloud technology at the small business level is still in the adolescent stage. It doesn't yet have all the robust features that desktop software has. And so far, there isn’t a single platform that can do everything. A human being needs to be there to sync and make sure the various platforms are interacting effectively.

But even if all the systems were operating perfectly, we would need people behind the technology.

The best accounting system out there still isn’t explaining to an entrepreneur how to interpret their financial statement or why a particular trend is showing up on their balance sheet. A skilled bookkeeper has basic accounting knowledge that entrepreneurs on the whole simply don’t have. Even with all the open data we have about accounting and financials online, entrepreneurs lack financial education. It’s the best time to learn everything, but most people don’t have time to digest all that information. They want--and need--to have an expert available.

We’ve chosen best-in-class cloud-based systems to provide a streamlined experience, not to take the place of the guidance that can only come from having a dedicated bookkeeper focused on your books.

And that brings me to that second question: What’s wrong with outsourcing the data management part of bookkeeping?

When I started Reconciled It, I knew that I would only be hiring US-based bookkeepers. In other industries, people can certainly make a case for the value of outsourcing. But when you’re dealing with a business’s financial information, I just don’t think it’s worth the risk.

I can’t sue the call center employee overseas who steals your information. I can’t take them to any legal court because they’re not a US-based employee. Here, a client could hold my firm and our employees responsible for any wrongdoing and be compensated for their troubles because we’re subject to the US court system.

But even if an overseas employee never does anything wrong, they’re still not the same as a dedicated bookkeeper that understands US accounting standards, sees all your data, and knows your books. When you have a question about how the technology works, whether you’re in compliance with withholding requirements, or why the numbers are showing up the way they are, you want to talk to a person who has the answer.

As technology improves, there’s no doubt that we will have more options for services based completely in the cloud. For certain industries, that’s probably a great system. I may not need access to a specific person when I do something like set up a basic website (though there will probably always be a market for custom designs) or manage my activity levels through a watch.  

But when we’re talking about the financial security and viability of a business?

Human beings are still necessary.