The payoffs of RPA for one accounting firm

Robotic process automation, or RPA, has been a buzzword in the accounting profession for several years. Despite that, many practitioners don’t have a great grasp of what RPA is and what it can do for accountants.

Wesley Hartman has spent much of the past eight years developing RPA solutions for midsize firm Kirsch Kohn & Bridge, where he is director of technology. In this episode of the JofA podcast, produced in partnership with the Small Firm Philosophy podcast, Hartman shares how he has used RPA, how RPA can help accounting firms address key pain points, and why he and his firm are so bullish on the technology that they have launched an RPA startup. 

Resources mentioned in the conversation:

AICPA & CIMA ENGAGE conference

What you’ll learn from this episode:

• What RPA is and what kinds of tasks it can perform.
• The biggest accounting firm pain point that RPA can help address.
• What to consider when evaluating whether RPA is right for a particular project.
• Descriptions of RPA projects Hartman has completed and how they have helped his firm.
• The biggest benefit of RPA.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: Welcome to a special edition of the Journal of Accountancy podcast. I am your host, Neil Amato. This episode marks the second in a partnership between the Journal of Accountancy and the Small Firm Philosophy podcast, which is produced by the AICPA’s firm practice management team, also known as the Private Companies Practice Section, or PCPS. Today’s episode features former JofA podcast host and technology editor Jeff Drew discussing the ins and outs of robotic process automation with Wesley Hartman, director of technology at a midsize firm in the Los Angeles area, where he has emerged as one of the leaders of using RPA in the accounting space. You’ll hear that conversation right after this word from our sponsor.

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Jeff Drew: Welcome to the Small Firm Philosophy podcast produced by the AICPA’s Private Companies Practice Section. I’m your host, Jeff Drew, a manager with PCPS, and I’m very happy that this marks the second of hopefully many episodes developed and distributed in partnership with the Journal of Accountancy. August is technology month on the PCPS editorial calendar, and I am thrilled to be joined today by one of the sharpest tech experts I know in the accounting space.

Wesley Hartman is director of technology for Kirsch Kohn & Bridge, a midsize firm based in the Los Angeles area. He is also the founder, in partnership with his firm, of Automata Practice Development, which Wesley describes as an RPA-managed service provider for accountants. Wesley, thank you for joining us today.

Wesley Hartman: Happy to be here.

Drew: Now, I’m sure we have listeners wondering what the heck an RPA-managed service provider is. We’re going to get to that, I promise, but I think it would be a good idea to start with the basics, and I guess the first one for me is, can you briefly explain what RPA is?

Hartman: RPA stands for robotic process automation. We all remember making Word macros or Excel macros to do some shortcuts for us, whether it’s adding some bolds or some other formatting, or even if you dived a little deeper, you could do some addition and subtraction in those macros. RPA, I consider it a desktop-level macro. So it can click on icons. It can interact with different softwares.

But it’s even stronger than that because it can interact with databases or interact on back ends of systems as well as what you would click on. Starting from the top level, it’s what you can click on, you can record what you’re clicking on, and the RPA system will record that, and we’ll be able to reproduce it for you.

Drew: Basically, you’re taking tasks that are repetitive, some might say monotonous, and automating those. Is that an accurate description?

Hartman: Yes, that is an accurate description. Data entry is a great example. No one became a CPA or an accountant because data entry was the most exciting thing they wanted to do. We build RPAs that will do the data entry for you as long as that data is in a format that the RPA can read. So commonly, an Excel spreadsheet.

Drew: You and I have talked before, and the automation, RPA is like a bottom end of the whole automation process, but looking at RPA and automation, the reason they’re important is that it can address pain points with accounting firms, including one that I know you consider the biggest pain point. Can you talk about that?

Hartman: Yes. One of the biggest pain points I feel is movement of data. That is really a lot of what accountants that we in the industry have been doing. It’s taking information from a PDF or a sheet of paper and inputting it into software, or just getting information to the right person at the right time, the partner who wants to see when they’re close to the deadline, seeing, where’s all my work currently, and maybe aggregating that information into something that’s a little more digestible because partners and staff, they’re all inundated with information, data, and being able to just quickly look at that information and just automating the compiling of that information together is really what I think people in the industry need to focus on, is really just making sure that getting the right data to the right person at the right time.

A lot of that is what we tried to do at Kirsch Kohn & Bridge and Automata is to build those tools so that we can get information to the right place at the right time.

Drew: Now, you’ve been working with RPA for quite a while. Before we get into that, you and I met in 2019, the ENGAGE conference in Las Vegas, the big one from the AICPA, and I was still the senior editor for technology for JofA back then, and I remember you stood out because you asked really good questions in a couple of sessions I was at. I started talking to you, and we got you on to the TECH+ planning committee, and you’ve done an amazing job on there, by the way.

As part of that, you did RPA sessions for the 2021 and 2022 ENGAGE conferences, but your journey with RPA actually started way before we even met. Can you talk about that when you started with RPA?

Hartman: Kirsch Kohn & Bridge and myself started with RPA back in 2014. My firm, Carisa Ferrer, who’s the managing partner and the other partners, have always been very supportive of being tech forward. I think that’s really important to make sure that any firm is exploring new technologies. Back in 2014, I had an idea of how can we get information into our tax software so that we could just free up time on staff.

I did a little research, and I found at the time an RPA technology — they called it something else then — but I approached the partners with it, say, hey, I have an idea, I want to try this out. From there, they said go for it, so we purchased a license for that product. From there, I built the first RPA for our firm, and ever since then, if we had an opportunity to automate using an RPA, we always tried to.

Drew: How do you make that assessment of what is worth trying to put the time into automate, because there’s a risk/reward analysis you have to do, right?

Hartman: Absolutely. One of the product RPAs that we built was an auto input function into our tax software. We do look at it, and first thing we do is we determine how much data actually needs to be inputted. So the one I use at the ENGAGE conference, where I build a input for Schedule E information and to Pro System FX, if it’s one rental property, there’s some rental income and that’s it, and a few other expenses. It’s just faster to input the information than to try to do an automation but the example I use at the ENGAGE conference is an RPA that we used for a group or clients that have hundreds of properties that they rent out, and we’re able to get that information from their property management system as far as the numbers go.

So we made a determination that since we had all that data in Excel already and it was a significant amount of data, I know and that it scales, we decide OK, this is where an RPA would come into play. The other determination because with an RPA, there is what you would call a development cost. It’s that upfront setting up and building the RPA. So we determined that for the time it took me to build the RPA, but the year-over-year savings we would get and that it’s automated the input into the tax software. That was how we made the determination.

So it would be different for every project, but in this case, that was what we looked at. There was a lot of data that was menial work essentially. We needed to get the system quickly and efficiently.

Drew: Yes. Sorry to interrupt, but I was wondering, can you give an idea of how much time was saved with this project or just give an idea of the scale of time that can be saved with this type of thing?

Hartman: So I did the calculations once, a couple of times. I actually included in a slide, but if I remember correctly, entering in one property worth of information, or one data point is what I like to call it, one number. We’re looking at 10 to 20 seconds, 10 seconds per data point, finding it on the form, looking at the Excel. I did the math and it amounted to 40 hours of a person sitting there. Now, that’s a person sitting there perfectly working nonstop, no distractions, and they can just focus on it and never make a mistake.

But when I ran the bot, I was able to get all the inputs done in about 45 minutes, and the spreadsheet tied with what was on the tax return. So you’re going from 40 hours of manual labor to 45 minutes of a computer you just set aside and have it do its thing and maybe go take a lunch break.

Drew: So it’s doing all that, it just takes a while to get through everything, but you’re not having to sit there and push a button or double-check later. But like in the middle of the process, it could just go?

Hartman: Correct. Schedule E, the example, it’s a fully automated bot. Once you load this spreadsheet in and you click “Go” or “Begin,” it does its work. That’s the purpose of RPA and any automation, is we want to minimize user input as much as possible.

Drew: As you alluded to also, because there’ll be fewer mistakes. The system, once it’s set up correctly and you’ve got like structured data coming in, by structured in a table or something like that for listeners and is coming in and that’s pretty consistent, then it’s going to get it right. It’s not going to make mistakes.

Hartman: Correct. As weird as it sounds, as long as you don’t grab the mouse and start typing keys because it is simulating a keyboard. So if while the work is happening you start typing, it might input into the system. That’s why one trick I like to do is I like to remote into another computer. So what ends up happening is that this other computer that I remoted into is doing the input. Then I’m actually still working on my main computer. So I’m basically doubling up my work efficiency, because I’m still working.

Drew: That’s smart.

Hartman: Yeah.

Drew: That’s always stood out about you for me. So you just think about things really clearly. I know you did another project. You’ve done a lot of projects with your firm, but I know one was for emailing invoices, and I thought that’d be a good one to walk through as another example for our listeners of the types of things they could be doing and saving time and money.

Hartman: So this other project has to do with how we send out invoices. Now, our time and billing system does have the ability to send invoices already, but we just didn’t like how it was being sent out. One of the big problems was that it would send out one invoice per company, but if we have a client that owns 20 companies, we don’t want them to get 20 separate invoices. It’s just not very efficient.

So after I sat down with the administrative staff because we’re just sending out invoices still by paper actually at that point because it was easier for us, but clients were wanting electronic. So I sat down, I worked with the administrative staff, as well as the partners, on some of their billing procedures and determined where the difficult point was. From there, I built an RPA. It retrieved all invoices for a selected time period. It would merge PDFs together of all those invoices for the different companies. I put the list of entities inside the email to the client and then, in addition, because we’re sending the email, I was able to customize the email a little bit by adding payment instructions, payment links, that sort of thing.

So we went from paper, sending invoices, we’re pretty much all digitally sending out invoices now in one shot. For our clients, it’s very convenient because they will get one email, just has all the invoices in one PDF, has everything they need to pay us. So we’ve revolutionized how we send out versus what would normally happen, if we’re back in the older days of maybe a decade or two ago. An admin would basically be told, OK, you guys sit there, you got a PDF each invoice, and then you have to manually grab all of those onto your desktop and then merge them together and then copy and paste, in theory, the email address that is going to go to, type in all the names of the entities for all those invoices.

Very, very time-consuming process. So this is a project you can see where it’s great for scaling to help administrative staff. So it just shows that RPA can help everyone. It’s not just, it helps the accountant, which is important, but it also can help your admin staff, which is also important.

Drew: So what would you say the biggest benefit that your firm has seen over like eight years of using RPA?

Hartman: Well, I’d say the biggest benefit is capacity. We could say that’s the keyword of the current times. There’s a severe shortage of CPAs and accountants and our industry, and that’s what I’m always hearing. We are all fighting over the same pool of accountants, but adding RPA, basically adding robots essentially to your work pool that can handle these very specific jobs is a way to add capacity. So instead of your accountants spending 40 hours entering Schedule E information, you give it to a bot and now that accountant can spend that 40 hours working on the more technical and complex issues.

So that’s really what for us the biggest benefit we’ve seen is that it helps our staff. I really want to emphasize that there have always been talk in popular media and all that is that all the robots are going to come and take over everything, and I really feel that RPA is there to augment your staff. It’s not there to replace your staff because we all need more staff. But it’s just really there to help your staff get away from boring work, do more interesting work, and really just expand the firm’s capacity number of hours that they can work on projects.

Drew: What would you say to those CPAs in our audience that, they like to have control of things or they get a little nervous about letting go or letting something be automated?

Hartman: That’s always a fun question. It’s a little tough, but part of it is just becoming comfortable with technology. We all use email, and we all trust that when we send an email it will end up at the recipient. I’m sure if you ask someone the same question back in the mid-’90s when email first started coming out, there was also a lot of lack of trust. Like is it really going there? Do I need to print this out and fax it? Because that was the technology at the time.

I think really, a big part of it is just becoming acclimated to it. The great thing about RPA is that first of all, some of the tools are free. Microsoft has Power Automate, which is a free tool. If you have Windows 11, it’s already installed. You can just click on start, type in Power Automate, and you can load up the Power Automate function.

In addition, things like Power Automate use what’s called “low code, no code,” and what that means is that it’s basically drag and drop. You can drag and drop the actions on the left, which is what I show at the conference. Really, from there, because it’s this drag and drop or you’re reading like the ifs or the variables. I’m getting a little more technical. I apologize. But the actions for the RPA platform, anyone can go in and start experimenting with it. I think that will really help make people more comfortable with this is what it can do.

I can make it do a pop-up that says, “Hello, World,” the classic programming pop-up, or I can have it load an Excel spreadsheet into the RPA that I’m currently building and maybe add some stuff up or input it into somewhere else. Power Automate because it’s accessible by everyone, and I really encourage everyone should launch Power Automate and try it out.

Drew: So then I think we’ve come back now to the question I promised we would answer, and that is what is an RPA-managed service provider?

Hartman: It’s funny, I’m telling everyone, go launch RPA Power Automate. It’s an RPA tool, it’s free, you can do it yourself. Now, the best way I can describe a managed service provider is that it’s hiring professionals. It’s the same thing we tell CPA clients. A client of a CPA can go and download all the forms and download all the laws and try to do their tax return themselves, but what do they do?

They go hire a CPA, one of the small to medium-size firms to do the work for them. Part of it is time. These are business owners; they don’t have time to do their own taxes. It’s also professionals. We want the CPAs and accountants to do the work because this is what they do all day, every day. As a managed service provider, it’s along the same lines.

If you have a very specific tech stack that you’re not sure how to build an RPA for, that is where we would come in. We can build that RPA for you. That’s the idea. We would interview you and look at the different software packages that you want to merge together, so to speak, to move that data from one system to another. A good example would be you bring on a new client and you have to enter that information into five different pieces of software.

But it’d be nice if maybe you enter that information into a single PDF and then you load that PDF into an RPA, and that RPA then goes into the five different softwares and inputs all the correct information into each one, and enter one and done. So, that’s the idea of what we do now. Again, a person, Power Automate, some of those tools are out there for free to be used. But if as the accountant, again, we talked about capacity. CPAs, they don’t have time to do these sorts of things. As much as they might be excited to try and play with new toys, the idea is that they can come to us at Automata and we can build a tool for them.

Drew: Now, you’re the first RPA-managed service provider or at least the first time I’ve heard that term, and you guys focus on accountants. I’m guessing there’s not a whole lot of competition in that specific space. I have no idea if there’s a lot of managed service providers for RPA just in general in the business area, or how would you describe the market?

Hartman: A lot of what I’ve seen actually is they are in finances, and I also see them a lot in insurance for processing documents and processing information. Those are two areas I’ve seen. I’ve also heard about them being in, like, medical as far as managed service providers. I want to focus on the accountants for a couple of reasons.

One, I worked for an accounting firm, so I know it the best. Then two, a personal side, my father-in-law is an accountant, and he’s been doing the CPA thing for a very long time, and it’s stressful and same thing with the partners at my firm. Going through tax season is not easy for anybody. In some way, this is my personal mission to help CPAs and accountants in the accounting vertical to simplify their job, make it a little easier so that they can focus on maybe some of the more fun things they want to do as CPAs.

Drew: Well, we are about at the end of our time, so I’m going to ask you the question that I ask all of my guests. Is there something I should have asked you but didn’t?

Hartman: I think the one thing I think is that I guess this is less of a question, but the question would be maybe what should people focus on, on their firms? I do really think automation is so important right now. Whether it’s just looking at your existing software stack, and just figuring out, are there automations already built into the system, things that will maybe send emails to clients already automatically, things that the firms are already paying for, and they really just need to implement.

We automate so many things in our life, the easiest thing, my thermostat, it’s a smart thermostat. I put in my schedule for when I go to the office versus when I’m at home, and it adjusts the temperature. I don’t have to change it every day. I just trust that it works. I really think that automation is so important right now to help accountants and CPAs just have some relief. That’s a big part. Just have some relief from the stress of all the work that has to get done.