Ep. 233: Jesse Rubenfeld - Automation Unleashed: Reshaping the World of Accounting

August 28, 2023 | 20 Minutes

The future of accounting is here, and it's automated! In the latest episode of Count Me In, we unravel the world of accounting automation, AI, and the exciting changes that technology is bringing to the industry. From enhanced efficiency and productivity to the ethics and potential challenges of integrating artificial intelligence, this episode covers it all. Our expert guest, Jesse Rubenfeld, CEO and Founder of FinOptimal, will discuss the way accounting is being transformed, the new skills professionals need to master, and the fascinating possibilities that full automation offers. Tune in, level up, and discover what the future of accounting holds!

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Full Episode Transcript:
Adam:            Welcome, listeners, to Count Me In. Your go-to destination for insights into the future of finance and accounting. Today, we have a special guest with us, Jesse Rubenfeld, CEO and founder of FinOptimal. He is an expert in accounting automation and AI. We delve into a conversation that may redefine how you perceive your profession. How is automation shaping the accounting landscape? What are the new skills that financial professionals must adopt? And what does the full automation mean for traditional jobs in the field? Sit back and join us in this exciting journey, as we explore the transformation of accounting in the age of automation.
Well, Jesse, we're really excited to have you on the Count Me In podcast, and today we're going to be talking about automation and accounting. And to start off, maybe, at a high level, we can talk a little bit about how has automation really impacted the accounting and finance industry, and what benefits has it really brought to it?
Jesse:              Well, I think it's really been a benefit to the profession, that's the headline. It's taken it from a place where there was a lot of manual block and tackle. To an elevated role where the accountant, the finance professional, can be a thought partner and spend most of their time analyzing and adding value to the message that they provide to management, to the CFO, to investors, to whoever it is. Because they're spending less time managing spreadsheets, or uploading things, or doing data entry, and more time being smart.
Adam:            Yes, they have more time to focus on other things. Maybe we can talk about what are the specific kinds of automation, that are really impacting those operations. You mentioned some things that are taking us off of spreadsheets. But are there other things that are really impacting it?
Jesse:              Well, in this situation I like to differentiate between accounting practice automation and accounting automation. Accounting practice automation involves task management workflow. Facilitating review and approval of work papers, tracking time spent on clients. It benefits the accounting firms, but it doesn't, drastically, increase capacity. And it's only beneficial for internal accounting teams, at a certain size.
Now contrast that with accounting automation, which involves calculating and recording journal entries, reconciling transactions, generating reporting. This benefits accounting firms and their clients directly. It increases capacity for firms, and it increases speed and accuracy so the clients aren't sitting around waiting for answers. 
Internal accounting teams can benefit from this early on. One person can benefit from this. One person can do the job of five, whereas it's unlikely they'd use accounting practice automation in a one-person finance team. We also like to distinguish between automation and automation assisted. Automation assisted means it's faster than fully manual, but it's still manual at lots of parts. Whereas automated means one event triggers all of the subsequent actions, automatically. And I like to illustrate this with a side-by-side example.
Okay, let's say you're using HubSpot, the CRM, and QuickBooks Online. You close a sale, you have to invoice for the deal and then you have to account for it correctly. And deals, sometimes, have different payment terms. "I'm going to pay all up front, I'm going to pay monthly." And they have different agreement lengths; annual, quarterly, month to month.
An automation-assisted process looks like this; a deal is marked closed, one. Accounting gets an email, they fill out the details in a spreadsheet that contains a revenue waterfall schedule. They make sure the formulas are correct and then they copy down through all of the columns, et cetera. And then once a month they go book an entry in QBO.
Whereas automated, fully automated, means the deal is marked closed, one, in HubSpot. Data flows from the CRM to QBO automatically. The invoice is sent, automatically, and the invoice is coded in a way that the revenue can, automatically, be recognized in the appropriate periods. That's what we're doing for our clients, full automation. Does that make sense?
Adam:            Yes, that makes a lot of sense. And, so, as you're describing those two things, the full automation is almost eliminating traditional jobs that have been in the finance function. So when you were talking about this full automation. There are new skill sets that are involved that are needed for it, and you've seen lots of articles. But maybe we can talk a little bit about that. What are some new skills that accountants are going to need, going into the future? Because full automation is on its way, in a lot of the functions.
Jesse:              Totally. Again, the headline here is it's elevating the high performers of yesterday. So that today they can do more, better what they're already doing. In terms of new skills, it comes down to more systems and data analysis. SQL, for example, in our case, Python, if you really want to go crazy. I long ago went crazy. But I think that in the past, somebody who could do the higher level work of managing, of communicating financial pictures to important stakeholders like the CFO, the CEO, investors, they would do that, but they'd spend a lot of time preparing for those things.
It would be a major event to get ready for a board meeting. And the amount of time that it took to do that right, was a barrier to entry of competitors for their job. Whereas now they don't have to spend that time preparing for it. Meaning they can use automation to do a much better job, of keeping things ready for the board meeting in real time, all the time.
But it also means that it's not as hard for someone to come along with the same skills and replace them. Because they no longer have the luxury of designing their own really convoluted, excessively complicated process, that another skilled accountant can't come in and replace. So it's a double-edged sword. But, overall, it's making everybody more productive and therefore is good for business and the accountant.
Adam:            Yes, it is good for business because it helps your bottom line, it helps get things done more efficiently. But I can imagine that changing from no automation or some automation to full automation, probably, has its challenges. And maybe you can talk a little bit about what some of those challenges are, and what are some of the opportunities that come as a result of that.
Jesse:              Sure, first of all, when I talk about automation, in response to your previous question. I think, there's a caveat that you can't hope, even with Chat GPT, in my opinion,
                        and the AI that's out there, to fully automate any given business's accounting. You absolutely need a person in the loop, if nothing else, to review and approve things before money goes out the door. It's about control.
Having said that, you want to automate as much as you can and there are challenges associated with that. At the top of the list is, carefully, considering what you're automating before you do it. This is one of the biggest pitfalls. People just buy some software, and they're knee-deep in the implementation before they realize, "Is this what we want? Is this what we want the process to look like?" 
Sometimes software companies are selling to someone, the decision maker is not the user. And I think the way to avoid that is to consider, at once, the people, the process, and the technology that drive those two together, that work together to get the result. The challenge is about; it's not about, "How do I fully automate this? It's about what do I not automate? Where do the people fit into the process that is optimally automated, and what software products are going to help us get there? And sometimes what services are going to help us get there?" Because we do both for our clients.
Adam:            Yes, so it sounds like when you're implementing something like this. It can't just be the decision makers making the decision. You need a wide range of a team to make sure that you have the people who are going to be doing the work in there. Looking at this thing, saying, "Hey, this is going to help me." Or "No, this is not going to help me." Because, otherwise, you're going to go into that example that you just stated.
Jesse:              Absolutely. When we're pitching our software, or our services, for that matter, we like it, I mean, sometimes we'll get a high-level intro to the CEO. Someone who's definitely not the user and they'll like the idea, but we don't want them to buy it. We want them to have another call with us and their users. If it's an accounting firm, we want the members of their CAS practice, that are actually going to use our software to do their clients books. So that they see what we're doing and say, "Wow, this technology is going to help me improve realization fivefold. 
We want the VP of finance who's actually going to have to use our product or consume our services to understand, "Wow, that's going to save me something, so I want that. How do I get that?" As opposed to selling to the decision maker and hoping it works out down the road? It's almost like we want to start the implementation in the discovery, in the sales process. We want the sales process to inform the user not, necessarily, the decision maker. We want the CAS practice operators to go to the partner and say, "Please buy this."
Adam:            Yes, and it sounds like organizations and companies can make a better decision. The more practitioners, the more people they have in that decision-making process, at least for the review. Obviously, one person has to make the final decision to say yes. But you need more voices in that input.
Jesse:              Of course, you're looking for consensus. You're looking for the users who are going to train other users.
Who are going to advocate for you online, where they hang out and learn about cool products and discuss them. And it's about getting buy-in from the stakeholders that are using your products and services, first.
Adam:            So you mentioned Chap GPT, and you can't talk about automation without talking about artificial intelligence, machine learning, those are huge. It's all over the news, people are talking about it. I just recorded a podcast the other day, talking about it. I'm going to be recording one in a few weeks, talking about the ethics of it. So there are so many things involved in it. What role do you think artificial intelligence, AI and machine learning, are going to play in the automation of accounting and financial operations? And, obviously, there's going to be benefits, but what are those benefits going to be?
Jesse:              I think it's going to be a strong partner. I don't ever see it replacing an accountant, altogether. Meaning we have no person in the accounting function it's entirely an AI because every business is different and it's generative, but it's not creative. And I think it's going to be about I've got a problem that I haven't dealt with before.
                        Where previously I would have to do seven or eight Google searches. Now I can have a conversation with an AI, get an answer that's kind of close but not great and say, "No, that's not what I meant." And it's going to be different and better gathering data from the Internet. But it's the future and therefore hard to predict. It's going to be useful, that's for sure. But I don't think any accountants need to worry about their jobs.
Adam:            Huh, that's good. Obviously you have the science fiction that's out there, that shows the AI is taking over and they're making all the decisions for us. And I hope that we never get to that future, that science fiction has predicted.
But when it comes to things like ethics, and fraud, and stuff like that, obviously, you can put different elements into the AI, and the machine learning, and the automation, to eliminate those steps. But do you think people are going to be able to find ways around that, and find ways to still do fraud in the midst of the automation and the internal controls that are put into place?
Jesse:              I have no doubt. When the cat is away the mice will play.
Adam:            Yes, and it's hard to say how that's going to happen.
Jesse:              I just think it's a cat and mouse game. There are always going to be people who want to operate outside of the law. And the tools to detect it are going to get better, and the tools for perpetrating it are going to get better. Expensive software doesn't solve for bad people and bad processes, though. 
Adam:            That's true. So talking about data, obviously, data is a huge part of this. You mentioned that that's a skill set that people are going to have. And then also, obviously, quality control, you've mentioned there's going to have to be somebody there who's going to have to check things as it goes through. But in the context of automation, and accounting, and the operations, what steps are going to be taken to ensure that there is going to be accurate and reliable results? What steps are we going to have to take to make sure that that happens?
Jesse:              I think you need to implement your system with agility, iteratively. I think the first time you try whatever system you just implemented, it's not going to be exactly right. It should be a big step in the right direction. But you're going to have to do a lot of testing. And you don't want to have the expectation that, "I'm going to implement a really expensive large general ledger. Have some consultants come in for two weeks. They're going to get it right and then they're going to go away, and my life will be better."
I think that's the naive way to do it. It's got to be, "All right, we're going to take a step and then we're going to take another step. We might have to take one step back, after two steps forward." In terms of accounting data, quality control, reconciliations will always be a part of the process. It's just that the time that it takes to do them will shrink.
I think the laborious parts, the real rote elements of accounting work, are going to continue to get smaller, but they'll still need to be done. Otherwise, how can an auditor give an opinion, that statements are materially free of fraud. It doesn't go all the way. 
Adam:            Yes, you have to have those internal controls in place. Outside of the system, you have to have those things in place to make sure everybody stays accountable.
Jesse:              Totally, 100%. 
Adam:            Yes.
Jesse:              And at the end of the day, the people are at the top of those systems. I just don't see us; you can detect abnormalities with systems. You can flag things. But I don't think the IRS ever figures out a way to, automatically, correctly, identify everyone who's cheating on their taxes. It's going to flag some stuff. It's going to get better at flagging some things. But the flagging need to be tuned, so that the people who are making decisions can use that information to make better decisions. The people are always going to be at the top.
Adam:            Yes, so let's say you're somebody in the accounts receivable or accounts payable department, and your job has been to send the invoices out and organize those things. And your company is saying, "Hey, we're bringing in this system that's going to send the invoice, automatically." What would you say to that person who's been sending those invoices out? What would you say to that person, today?
Jesse:              I'm going to save you a ton of time and you can learn how to do payables, and be twice as effective with your time. I think the accountant who fears automation is truly in trouble. They may stave off the automation of that invoice process for now. But eventually someone's going to come along that makes it painfully clear that you should have done this a long time ago, and you're going to get fired.
It's much better to embrace the automation and say, "Wow, I'm buying back half of my week that I can now spend..." in my case, it was learning to code. That's what I love to do. But it could also be learning more about a different area of the finance function than you were exposed to before. People who are ambitious are going to find a way forward.
But automation is not going to replace accountants. Accountants who use automation will replace accountants who don't use automation. So embrace it, learn the new skills, elevate your game.
Adam:            So it's almost like if you're sitting in there and you're listening to this podcast, and you're like, "Hey, my company doesn't do that." You can be the one to bring the idea say, "Hey, I have this new idea to save us a bunch of time and we can do this X, Y and Z." You can bring that idea forward and help elevate your company, and then it'll elevate you probably in your organization.
Jesse:              Yes, and I think what you just said is a role now in companies called finance transformation. And, by the way, if you think that you're good at that, please look me up because we want you to join us.
Adam:            Definitely. Well, look in the show notes, today, and we'll have a way to contact Jesse either through LinkedIn or some other way. So look at those show notes for today's episode. So we've covered a lot of great things during this conversation, and if you're a finance and accounting professional listening to this conversation.
What ways do you recommend that they can stay up-to-date to the latest technologies, the tools? What resources are out there that they can help them stay on top of this? Because, obviously, like you said, the accountant who understands and knows how to work automation is, probably, going to replace the accountant who does not embrace that. So how can accountants stay up to date and then start embracing it, themselves?
Jesse:              I mean, first and foremost, if you're an accountant and you want to keep your job, for God's sake, listen to Count Me In, it's an obvious win. There are a lot of podcasts that touch on automation and I think it's to, a large extent, about keeping your ear to the ground and finding out about new things. But there's also Slack channels like Off the Ledger, join CFO groups, follow people on LinkedIn. Follow me, Jesse Rubenfeld and you'll hear about a lot of exciting stuff. 
Adam:            That's great. Well, and, obviously, there are magazines out there. Don't sit there and sit in the dark and think that if you sit in the dark nothing's going to happen. But keep your ears to the ground and pay attention because, otherwise, it's just going to pass you by. You need to jump on the train and don't let the train pass you.
Jesse:              And, hopefully, it's something that's exciting. Wow, we can prepare these invoices, automatically, and send them out. So many cool things are happening in the industry. So many cool software companies are coming up with new things that are making your lives better, as accountants. Elevating the profession, giving you back time to take your career in the direction you want to take it in. And the more you can embrace that energy, the more it gives you optimism rather than fear of, "I'm going to be replaced."
Adam:            I agree, 100%. Well, Jesse, thank you so much for coming on the podcast. It's been an absolute pleasure talking with you, and I think the information that you provided will really help our audience to really look forward to the future and be better.
Jesse:              Thank you so much.
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