The Evolution of Accounting

Roll Up Your Sleeves!

What’s the origin of this idiom? We know it means to get ready for hard work, but why? Maybe this is the reason:

My long-time accounting mentor, called Mr. Mac by friends and family, was born in 1910. By the time I was learning accounting procedures from him, he had already retired from one career and embarked on a new one to “keep busy.” Mr. Mac kept busy into his nineties.

There is much to gain from the wisdom of experience, but my favorite times with Mr. Mac were when he was talking about his early accounting jobs in the 1930s. He lived in Texas and worked for a large meat packer. He told in colorful detail about dressing in a suit and tie every day and working in a room full of other men (only men) who were doing the same thing.

Each morning when he arrived, he would take off his suit jacket and hang it neatly, then roll up the sleeves of his white dress shirt. This was so that he didn’t get ink on his cuffs as he worked.  Each person sat at a table with a large pad covered in columns of figures. He added the figures in his head all morning. At noon he stopped, rolled down his sleeves, put on his jacket and went to eat lunch. Then he came back and added more figures until five o’clock.

My beginning in accounting was with a ten-key calculator and a black ledger. I was pretty darn fast on that ten-key (I had to be to keep up) and extremely accurate. One thing Mr. Mac taught me was to never add a column of figures twice because if you get a different answer the second time, then you have to spend the time to add them a third time to see which one was right. So do your best, go with your gut, and if you’re out of balance, then you can look for your mistake.

It has been less than a century since Mr. Mac sat at that big desk adding those columns. And only a few decades since I started with a ten-key. How much accounting has changed!

But has it? The double-entry system we use today is widely attributed to Luca Pacioli in 1494. It’s survived for five hundred-plus years because it works. We need this system to properly record the dollars and dimes that go in and out of a business.  Without accurate and timely financial records, it’s impossible to make smart business decisions. How much was our profit? What do we owe to vendors? Have all of our customers paid us? We need to know these things, and we need to know them as quickly as possible.

Our need for information hasn’t changed over the past five hundred years. Our double-entry system hasn’t changed. But the processes we use to record those dollars and dimes has. Adding computers to the mix streamlined our procedures. No longer did we sit at a big table adding numbers and entering totals into a thick black ledger. Computers ushered in the age of Data Entry. We only had to feed the information to Big Blue, and all of the math was done for us. Instead of a roomful of men adding columns of figures, you were more likely to find a roomful of women, punching cards.

Data Entry reigned for a while, but the industry game changers never slept. The process continued to evolve until the automatic feed of information into the accounting system was developed. Remember the early days of bank feeds to QuickBooks? There were times when multiple days would be left out. Or duplicated. But over the past ten years or so, the system has been refined. Most bank feeds are reliable these days. The system of setting rules for transactions has become more sophisticated.

No longer do we rely on Data Entry to get the job done. Now we’re practicing Data Management. We have the information; what do we do with it? The role of the accountant is evolving along with the technology. With faster, more accurate information literally at our fingertips, we’re better able to serve our clients. Since we’re not busy balancing debits and credits, we can spend our time budgeting, forecasting, and help them make informed business decisions.

Automation and AI are making everything easier for business owners. Both management and accounting can benefit from the use of Apps. There are thousands of them available, but if you’re looking for quick solutions to increase your cash flow, is the proven choice. By automating invoice reminders and the collection processes, you will be able to increase your cash flow twice as fast.

These days we’re standing with both feet firmly planted in the twenty-first century. We don’t have flying cars or jetpacks yet, but we have streamlined accounting processes that Mr. Mac could never have dreamed of. What would he say about all of these fast and efficient changes? He’d probably roll down his sleeves and say, “More time for fishing!”