“We do think there’s a huge opportunity to roll up accounting firms and automate a lot of the workflow and let the same accounting firms take twice as many clients,” says Marc Bhargava, Managing Director at VC firm General Catalyst to Wall Street Journal for their recent piece ‘AI Has Venture Investors Excited About (Yes) Accounting Firms.’ “The idea is not to cut people with AI, the idea is to enable them to do two to three times the work.”
According to their LinkedIn description, General Catalyst is “a global investment and transformation company that partners with the world’s most ambitious entrepreneurs to drive resilience and applied AI.” Yeah, sounds like a great fit for…accounting.
AI Has Venture Investors Excited About (Yes) Accounting Firms [WSJ]
Wait till they realize they will actually need 2-3 times as many accountants when they realize how much of a mess a majority of the data is.
It always amazes me when people outside of the industry think you can automate your accounting function…you can but that requires so many things to be done ahead and for the WHOLE organization to be on the same page to enable that. That is rarely the case…
This was always the #1 risk with allowing non-CPA ownership of firms…these people have zero clue what the profession actually entails.
It’s not stopping here; AICPA then PCAOB, then maybe SEC. Who could believe PEs could go after accounting firms. Nothing is impossible.
Maybe I’m missing something, but if accounting firms can take on twice the clients with the same number of people…doesn’t that mean we need half as many accounting firms and accountants? There is not an infinite pool of clients, so if Firm A takes on twice as many, who are they taking those clients from? Another firm with accountants who WILL be cut.
The only way this will happen is if they cut their fees by 50% and are able to deliver the same results. I doubt that will ever happen unless we get true automation via true AI, not that “actually Indians” bs.
I think most accountants will know they’re full of it so they’ll pass and work with a traditional accounting firm…but I’m sure every company without a dedicated accounting department or execs with accounting experience will jump on board for the short term cost saving that will most likely lead to long-term issues.
I work for a firm that has a PE investment. The only real change I’ve noticed is pressure on non-charge expenses. While true that there was always some level of waste in there, BD expenses are a real necessity and the environment is borderline short sighted in that I perceive that it has stifled, to some degree, legitimate networking and BD expenses and therefore possibly lead and opportunity generation.
In reality I think the PE is trying to roll up smaller firms and then flip their stake to the next firm in a few years without actually changing anything else about the operations. It’s really kind of a brain dead approach enabled purely by access to capital.