Accounting automation would save hundreds of work years

Even small companies can save half a working day each month by switching to e-accounting. In Finland, more than three and a half million VAT reports alone are filed each year – half a million in paper format. Recent calculations indicate that the full automation of VAT reporting would annually save 250–300 person-years of work.

​The Federation of Finnish Financial Services, the Association of Finnish Accounting Firms, and the authorised accounting firm Leppävaaran Laskenta have together made a Commitment to Sustainable Development.

According to development manager Pirjo Ilola from the FFI and Vuokko Mäkinen, chair of the Association of Finnish Accounting Firms, purpose of the project is to promote measures that could improve the quality and efficiency of accounting, while also reducing its climate impact.

The project was assisted by the sustainability consultancy Natural Interest Ltd. The calculations in the study show that automating accounting processes will significantly reduce a company’s climate impact.

“In a one person enterprise, paper-based accounting takes five working hours per month. Were the process automated, it would take only one and a half hours. The benefits increase with the size of the company, and a slightly larger company can already save 20 hours of working time per month”, Vuokko Mäkinen says.

E-invoice enables structured data format

A growing number of companies have taken up e-invoicing, and already nearly 100 million e-invoices are sent through banks each year. The data of an e-invoice is presented in a structured format, which means that all the invoice details – such as dates, itemisations, and taxes – are located in their own specific fields. Because the machine-readable account statements that companies use are also in structured format, transactions can be posted automatically. Structured data can be transferred from one system to another without manual work.

“If accounting firms have software that can utilise structured data, the processing of machine-readable account statements and e-invoices can be directly automated. A considerable amount of working hours and detrimental effects on the environment can be saved by automating these processes”, says Pirjo Ilola.

Card receipts should also be digitised

The automation of card receipt processing would bring further, substantial improvements. Although card payments are processed electronically, the receipt data from card payments is currently only available in paper or PDF formats, which means that accounting needs to process the information manually.

There are no statistics on company card purchases, but government agencies alone manually process 600,000 purchase receipts each year. The full automation of these receipts would mean 200,000 kg less CO2e emissions per year.

“Structured data in card receipts would revolutionise daily accounting work in companies. The results would be significant even if micro and small enterprises alone automated their processing. Applied to the entire country, the results would be massive”, Pirjo Ilola adds.

The tools and software used in accounting and reporting are the main causes of accounting challenges.

“The lack of real-time structured data causes delays in accounting information and reports, which can be even 1.5 months old. This kind of data cannot be used to provide support for the daily management of a company”, says Tuomas Tahvanainen from the accounting firm Leppävaaran Laskenta.

According to Tahvanainen, the production of accounting data still requires a lot of manual work on current systems. Because there is no common standard, the transfer of data from one system to another is challenging. The manual processing of information siphons the time available to customer consultation and advising.

The progress of the commitment will be monitored through several indicators for the next three years.

The Finnish National Commission on Sustainable Development is responsible for adapting sustainable development goals into Finland’s national policies. The society’s commitment means that public administration, companies, organisations and private citizens all make a commitment to promoting sustainable development in their own work. The Finnish Innovation Fund Sitra hosts an expert panel which provides scientific support to the Commission.

Read more: The Climate Impact of Accounting Automation (2015)