From XU Magazine, 
Issue 22

Pacioli and Penny: The end of accounting and bookkeeping as we know it?

Five hundred years after his death, Luca Pacioli is ironically still known first as the friend of Leonardo da Vinci rather than the founder of bookkeeping as we know it.
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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Much like a portrait, the principles of modern bookkeeping have changed little but for the occasional modification of fame. Indeed, the industry has survived four industrial revolutions with just a shake of dust here and there. Until now.

When I left my role at Just Eat, I didn’t foresee two things. One was that within a year, I’d be sitting under Pacioli’s watchful eyes, at the heart of the profession he founded. The second was that I’d have the numbers of 45 accountants and bookkeepers on my personal mobile. Pacioli built a way of working that was strong enough to survive the modern era - one that over half a millennium later is just making the digital leap. And one of those bookkeepers - Penny Rowden - is leading the way.

Penny is a shining example of a bookkeeper. She runs a small practice with her husband in Chichester, UK, knows the first names of each of her 200 clients and could deliver a college lecture on cloud accounting without notes. Some might say that accountants and bookkeepers like Penny face an existential threat from technological change. But Penny is not just the exception. She is rapidly becoming the rule.

Over a quarter (25.98) of chartered accountants are reportedly at risk of losing their jobs because of automation. Some even suggest that those in the profession should try something new rather than risk competition with software. These statistics paint a one-sided picture.

The truth is that we should never underestimate how much a business-owner needs their accountant or bookkeeper. And Penny would be the first to admit her work can be automated. One in three British businesses (33.87%) “share their physical financial documents by post or dropping them off to their accountant”. A quarter of UK SMBs (27.78%) are still using “a physical book to record their business finances. Shoeboxes are still appearing at the office doors of accountants and bookkeepers days before a tax deadline.

When Penny took the leap into cloud accounting, she saved an hour’s work on each client, each week. No more chasing paperwork, no more late nights deciphering whether an O is a 0 by lamp light. Penny turned technology to her advantage and made more of the one commodity businesses crave but cannot create: time.

There are millions of businesses up and down the country with their own Penny. Like Felicity, a nail salon owner from Newport. When Felicity’s marriage broke down, saddled with business debt she took the brave step of calling a bookkeeper named Ivy. The next day the two met in a coffee shop to work through Felicity’s business finances in person. They’ve been working together ever since.

Open Banking changing the frame

For Pacioli and Penny, open banking tied with cloud developments is changing the frame of the future.

Neobanks - digital-only banks such as Monzo, Starling, Revolut, Tide and Atom - are seeing incredible growth. While open banking is in its infancy, the changing marketplace is likely to force significant changes in the way businesses access their data.

Having data at your fingertips gives you the information you need to truly become a trusted advisor. It’s moving beyond the world of costs into revenue, payroll and bank data.

The trust, understanding and personal connections that accountants and bookkeepers like Penny bring are irreplaceable. An accountant or bookkeeper that, to quote another business owner, “makes me feel safe” cannot be automated or bolted onto a software package.

If we are truly to make technology built around people rather than process or profit, it has to be the connective tissue that brings businesses and their advisors together.

And if we do that, automation will serve and not replace that special connection. Because a future without Penny is not one I’d like to be part of. And - I am sure - neither would Luca Pacioli.

Receipt Bank takes paperwork from all places, digitises it and makes it ready for reconciliation - from supplier portals and utility providers to receipts stuffed in glove compartments.

Why leave it there?

Find out how real-time data just got real

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