AI, blockchain and predicting the future: why management accountants are getting better at thinking about tomorrow | For the love of numbers

For thousands of years we have relied on accountants to act not just as number crunchers, but as fortune tellers. After all, if you don’t know what is happening to your finances, you don’t know what is happening in your business – and what could happen to it in the future.

“The numbers tell the story of what’s going on in a business,” says Martin Bown, a Huddersfield-based management accountant. By helping companies understand not just where their business is at right now but where it could be going, Bown is, to his clients, a trusted guide to what the future might hold.

“There’s two parts to finance,” says Simon Bittlestone, CEO of the accounting platform Metapraxis, and vice-president of The Chartered Institute of Management Accountants (CIMA). “There’s getting the numbers right, and there’s doing something with them.”

And it is the latter that defines the role of a management accountant: “To support decision making in the business, to help make better decisions, manage performance better and improve results,” says Bittlestone.

As with many professions, the day job is changing, with the proliferation of new automation tools and machine learning technologies. This technological transformation of finance is proving a huge opportunity for management accountants, whose job it is to make forecasts.

“The fundamentals of us preparing a forecast haven’t really changed,” says Bown, founder of My Management Accountants. “The questions that we ask and the data that we need to gather to pull together a forecast remain the same.”

What is different, however, is both how the forecast is put together – and how the future is modelled.

New forecasting tools
Bown uses specialist accounting software to pull together the data he needs, an AI-powered character-recognition tool to automatically process incoming invoices, and a forecasting platform that helps him demonstrate different outcomes.

With AI and other computationally-intensive statistical tools now available to management accountants, complex forecasts become easier to make. And importantly, AI can help management accountants separate the signal from the noise in the data.

“The ability to model your business, incorporate data from many different sources and run far more powerful and complex algorithms across it, could be gamechanging,” says Bittlestone. “The power of analytics from both a data integration and a modelling perspective can hugely improve finance’s ability to add insight.”

He adds: “Where the management accountant can add the most value is to help understand what data matters. That’s got to start with the fundamentals. How does your company create value?”

One system that could influence how the job is carried out is blockchain. “It’s still debatable as to how much of an impact blockchain is going to have on internal company accounts,” says Bittlestone. “It is fundamentally a new governance model so it’s most valuable when there are multiple distrusted parties, for recording transactions between them.” So inside companies, where that trust already exists, recording information on to a blockchain isn’t necessary. But Bittlestone can envisage a future when the technology becomes useful because everyone across a given market is using it.

“[If you] get into a scenario in which the whole market [has] transactions recorded on blockchain, then it potentially makes a lot more sense because you could pass that automation straight through into your own internal bookkeeping.”

The critical factor
Though technology is driving significant changes in the industry, management accountants are still absolutely critical for making sense of what the numbers are telling us.

“The fact that we’ll have algorithms running and automation putting most of the books together in future doesn’t mean you shouldn’t understand why and how you do that, because that helps you make sure it’s correct,” says Bittlestone. “And communication is key. It’s often forgotten about and seen as of secondary value to the core accountancy skill set. If you can’t communicate to the business effectively, you’re going to fail.

“The management accountant’s role isn’t just in doing intelligent things with data. The only way it adds value is if it’s passed to the right people in a format that they understand, and can help them make the right decisions.”

Bown credits studying with CIMA for helping him develop the skills he needs.

“It’s given me the understanding to step outside away from the numbers and not just focus on them,” says Bown of his CIMA CGMA professional qualification. “It made me more commercially focused, so I could step into other roles within a business. Whether you’re going into production or sales or the commercial team within a larger business, it’s a more rounded qualification.”

Ultimately, while it’s critical to learn about new technologies that are changing the profession, the vital skill is not so much in knowing how to operate them as how to apply them.

“Does every management accountant need to know how to use these new technologies? No,” says Bittlestone. “Should every management accountant know where they should be applied? And how to do so most effectively? Definitely.”

Find out more about The Chartered Institute of Management Accountants’ courses and qualifications, and how they can help you transform your career in business and finance at cimaglobal.com