The Rise and Fall of Automation in Accounting
Table of Contents
Introduction
The History of the Accounting Industry
How the Accounting Industry Is Changing
Why Changing the Industry Is Hard
The Problem with Accounting Startups: Lessons from Bench
Other Examples of Failed Accounting Startups
Can Accounting Ever Be Automated?
Takeaways from Bench
The Opportunity: A New Dawn for Smaller Australian Firms
Summary
Introduction
There has been a lot of talk in the accounting world about the closure of Bench. Known for its reliance on automation-driven bookkeeping services, Bench sought to offer cost-effective, streamlined solutions to small businesses. However, as has been witnessed in other accounting startups, scaling such a tech-centric model can become challenging—especially in an industry where compliance, personal relationships, and nuanced professional advice matter.
In this blog, we will look at the history of the accounting industry, observe how it’s changing, and discuss why these changes are difficult to implement. We’ll explore the problems that can arise from automation in accounting, drawing lessons from Bench’s downfall. Finally, we’ll highlight the opportunities available for smaller Australian accounting firms. By the end, it will become clear that although technology holds tremendous potential, clients often still seek human interaction, meaningful partnerships, and trustworthy expertise from their accountants.
The History of the Accounting Industry
Before diving into modern accounting challenges, it helps to reflect on how the industry evolved. Historically, the fundamentals of accurate record-keeping and financial integrity have been cornerstones of the profession, guiding accountants’ day-to-day responsibilities and long-term career paths.
Ancient Roots
Archaeological findings show that bookkeeping systems have been in use for thousands of years, beginning with simple records kept on clay tablets in ancient Mesopotamia. Although the methods have changed dramatically, the underlying principle—faithful documentation of transactions—remains constant.Invention of double entry bookkeeping
The concept of double-entry bookkeeping emerged in Florentine trade as early as the 13th century, with records attributed to Amatino Manucci. However, Luca Pacioli formally documented it in his 1494 work, Summa de Arithmetica, Geometria, Proportioni et Proportionalita. Pacioli's system introduced the fundamental principles of debit and credit, which laid the foundation for modern accounting practices and financial accountability.Professionalisation in Australia
Over time, accounting in Australia formalised through the establishment of professional bodies such as Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia. These organisations introduced rigorous education, ethical standards, and ongoing professional development, building public trust in the profession. More recently, specific roles like registered tax agent and BAS agent have become integral in ensuring compliance with Australian taxation and bookkeeping requirements.Technological Advancements
The last few decades have seen accounting adopt robust technology solutions. Software like MYOB, QuickBooks, and Xero made it possible for businesses to keep their books in order more efficiently than ever before. Today, cloud computing, bank feeds, AI, and machine learning offer near real-time financial data, shifting accountants’ responsibilities from manual data entry to advisory and strategic roles.
Even with these advancements, the profession has maintained its emphasis on accuracy, client relationships, and compliance—a balance that automation-centric models sometimes fail to sustain.
How the Accounting Industry Is Changing
The accounting landscape is undergoing significant evolution. While the traditional principles of integrity and professionalism remain, new factors—driven largely by technology and global connectivity—are shaping how accountants and clients interact.
Cloud Accounting
The adoption of cloud-based accounting software has transformed how businesses manage their finances. No longer constrained by desktop installations, users can now access real-time financial data from anywhere with an internet connection. Automated bank feeds simplify transaction entry, reducing manual data input errors. Additionally, cloud-based platforms integrate seamlessly with a wide range of third-party add-ons, allowing businesses to automate workflows, enhance reporting capabilities, and improve overall efficiency.Embrace of AI and Machine Learning
Modern software integrates AI and machine learning to categorise transactions, flag errors, and create instant reports. This reduces manual bookkeeping tasks, potentially freeing accountants to focus on higher-level advisory work.Remote Work and Globalisation
The internet has enabled Australian accounting firms to serve clients beyond geographical boundaries. Collaboration tools and video conferencing allow professionals to maintain strong client relationships regardless of location. Remote work opens up opportunities for outsourcing certain accounting functions, potentially reducing costs and increasing efficiency.Increasing Regulatory Complexity
The Australian Taxation Office (ATO) frequently updates its guidelines. Businesses must comply with a range of legislation, including Income Tax and GST obligations, superannuation rules, and state-specific taxes.Subscription-Based Pricing Models
Many firms and startups have experimented with monthly subscriptions for a suite of services, such as bookkeeping, BAS lodgements, and advisory. While this model can be advantageous for certain clients, it requires the provider to streamline operations, retain enough qualified staff, and consistently deliver value to stay profitable.
Why Changing the Industry Is Hard
Although technology promises efficiency, changing the accounting industry—steeped in tradition, regulation, and professional ethics—comes with inherent challenges.
Professional Obligations and Compliance
Accountants in Australia are tightly regulated. They must adhere to the standards laid out by organisations like CA ANZ, CPA Australia, and, for tax practitioners, the Tax Practitioners Board (TPB) under the Tax Agent Services Act. Failing to meet these obligations can lead to significant penalties and reputational damage. As a result, firms are rightfully cautious about adopting unproven technology or business models.Human Touch and Client Relationship
Many small business owners depend on their accountant for more than just number-crunching. An accountant often becomes a trusted advisor—someone who understands industry-specific challenges and personal goals. Automated tools may handle basic bookkeeping, but they cannot replicate empathy, nuanced judgement, or personalised advice.Inherent Risk-Aversion
Accounting is by nature a conservative profession, and for good reason. Financial mistakes can lead to audits, penalties, and even legal consequences for business owners and accountants. Embracing new methods demands rigorous testing and quality control. This cautious approach can slow innovation but also protects clients from potential harm.
The Problem with Accounting Startups: Lessons from Bench
Bench Accounting’s promise of affordable, automated bookkeeping seemed to tick the boxes for cost-conscious small businesses.
However, the obstacles they faced are revealing:
Non-Human Touch
Automation-centric models can struggle to offer meaningful dialogue. Clients with complex tax or financial questions often need a conversation with a registered tax agent or BAS agent who understands their specific circumstances. Without this interaction, advice can feel generic, leaving clients under-served.Limited Accessibility to Real Experts
Many startups minimise staffing costs by employing customer service representatives instead of qualified accountants. If these representatives are not properly registered or fail to satisfy the obligations under the Tax Agent Services Act or Tax Practitioners Board standards, clients risk non-compliance. In turn, this erodes trust and jeopardises the client’s reputation.Difficulty in Customisation
Every business is unique. A café in Melbourne has different financial and regulatory needs than a tech startup in Sydney. Generic, automated processes may not capture the nuances of each client’s operations. When the system cannot adapt to an outlier or specialised issue, clients often end up frustrated.Race to the Bottom
Competing on price alone can lead startups down a dangerous path. Lower fees usually mean trimming the level of personalised service and professional oversight—potentially compromising quality. Over time, failing to deliver consistent value results in high churn, poor client satisfaction, and, in extreme cases, business collapse.Professional and Legal Complexities
Filing returns, meeting deadlines, and advising on complex rules demand more than just data entry. Tax compliance involves multiple layers of legislation, such as superannuation obligations, GST registration thresholds, and industry-specific concessions. An app or unqualified staffer cannot match the expertise of a tax agent or BAS agent who truly understands the intricacies of Australian regulations.Too much reliance on automation
Over-reliance on automation without proper oversight can lead to costly errors. While AI and other technological advancements have made accounting processes more efficient, they are not infallible. Automated systems can misclassify transactions, apply incorrect tax treatments, or fail to capture unique client needs. Without skilled professionals reviewing the output, businesses risk non-compliance, financial misstatements, and reputational damage. Technology should enhance human expertise, not replace it entirely.
Other examples of failures
Bench aren’t the only ones to try and fail. ScaleFactor, a U.S. accounting startup, raised over $100 million by promoting itself as an AI-driven bookkeeping solution for small businesses. However, it was later revealed that much of its “automation” was actually manual work outsourced to offshore accountants. This lack of true automation led to numerous errors, forcing customers to hire external accountants to fix the mess—a costly and time-consuming process.
One accountants went so far as to say "That’s what I found out ScaleFactor is: pretty much a glorified bookkeeping firm," says one accountant, who, like other former ScaleFactor employees that spoke to Forbes, asked to remain anonymous because they signed non-disclosure agreements and feared retaliation from the company. (Forbes)
Closer to home, 2Clix, an Australian accounting software company, serves as a cautionary tale about the risks of poorly executed technology. The company attempted to sell an accounting system that was riddled with functionality issues, slow performance, and unreliable reporting. Users reported critical system failures that made the software unusable for real-world accounting tasks.
We have gone through the reasons that Bench and others failed. There are a variety of reasons they failed, but the key reason?
They didn’t understand the problem.
Can Accounting Ever Be Automated?
Yes it can, but it still needs humans to oversee it, ensuring that what it is doing is correct.
Xero promised to automate accounting and encouraged us to become the ‘trusted adviser’. They were right, they did automate using bank feeds and add ons, yes they are right about being a trusted adviser, but there is still just as much work as ever, just the way we do it has changed.
Tools such as Dext and Lightyear can automate accounts payable. Tools like Cin7 and Unleashed can give you clarity over your stock levels and margins. A2X and Parex Bridge can automate your e-commerce sales. There are a multitude of apps that can help you with your clients' business.
Can we automate more? Absolutely. Can it be automated completely? No, the human element will always come into play.
Takeaways from Bench
The downfall of Bench Accounting offers several critical lessons for the accounting industry:
Automation Will Never Fully Replace Accountants: While AI and automation can improve efficiency, many accounting processes still require human oversight and expertise. Clients rely on accountants not just for data entry but for strategic insights, compliance, and tailored advice.
The Race to the Bottom Doesn’t Work: Competing solely on price often leads to reduced service quality, increased client dissatisfaction, and ultimately, unsustainable business models. Firms that prioritise value over low-cost services tend to foster long-term client relationships.
Legal and Compliance Obligations Are Too Complex for Full Automation: The regulatory landscape in Australia is ever-changing. Registered tax agents and BAS agents must ensure compliance with strict legal requirements, something automation alone cannot manage without significant oversight.
Client Relationships Still Matter: Trust and professional rapport remain key differentiators. Many businesses seek personalised financial guidance, which cannot be replaced by AI-driven services alone.
The Opportunity: A New Dawn for Smaller Australian Firms
Despite Bench’s closure, a silver lining exists for smaller, local accounting practices. Businesses searching for reliable, human-focused services may be especially drawn to established professionals who provide in-person guidance, tailored services, and real-world expertise.
Personalised Service and Niche Expertise
Smaller firms have the capacity to specialise in certain industries. For example, a practice might work closely with hospitality businesses, advising on employer obligations or wage compliance. This niche expertise can be invaluable, creating strong relationships built on deep industry knowledge.True Partnerships and Business Mentorship
Far beyond compliance, an accountant can serve as a business mentor, guiding clients through growth strategies, cash flow analysis, and even marketing budget decisions. This mentorship component is something automation simply cannot replicate. When accountants take a genuine interest in their clients’ success, they become trusted allies, not just service providers.Focus on Value, Not Just Cost
Some clients may prioritise the cheapest option. However, many are willing to pay for quality advice, timely responses, and peace of mind. Accountants who demonstrate tangible value—whether by optimising tax positions or providing proactive financial planning—can justify their fees and cultivate long-term client loyalty.Human Interaction and Validation
Money can be a major stressor. Having a real person to speak with—a registered tax agent or BAS agent who knows your history and goals—offers emotional and practical support that software alone cannot. This personal touch fosters trust and often leads to referrals, still a powerhouse in the Australian accounting market.Referrals and Word-of-Mouth
The accounting profession in Australia remains heavily reliant on personal recommendations. Satisfied clients often pass on an accountant’s details to friends, family, or business associates, creating a healthy pipeline of new clients without massive marketing spends. For smaller firms, this organic growth can be both sustainable and profitable.
Summary
The closure of Bench Accounting stands as a stark reminder that automation, while valuable, must be balanced with human insight, professional compliance, and genuine interpersonal relationships. Registered tax agents and BAS agents bring a level of expertise and accountability that goes beyond data entry—meeting obligations set by the Tax Agent Services Act and overseen by the Tax Practitioners Board. When these professional requirements are not met, clients risk non-compliance, reputational harm, and ultimately, dissatisfaction.
For smaller Australian accounting firms, this represents an unparalleled opportunity to showcase their unique strengths: personalised service, expert advice, and the potential for business mentorship. Clients seeking meaningful interactions and proactive guidance will naturally gravitate towards firms that understand their unique needs and comply rigorously with local regulations.
Indeed, technology can offer efficiency gains, but it cannot replicate the nuanced understanding that comes from human interaction. The future of Australian accounting lies in a hybrid approach—one that utilises state-of-the-art tools for data processing but retains the essential qualities of professional integrity, personal attention, and strategic thinking.
If you are a small business owner, remember that not all accounting solutions are created equal. Align yourself with qualified professionals—those who operate within Australian legal frameworks and maintain the personal touch that fosters genuine trust. And if you’re an accounting professional, let Bench’s story serve as a lesson: automation works best when it bolsters, rather than replaces, the timeless hallmarks of the profession—expertise, empathy, and integrity.
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