A new year means new challenges for accountants and business owner want to be on top of their accounting game. To do so, one needs to stay on top of the greatest and latest technological trends that have taken over the world of finance and accounting.
In our lifetimes, we’ve all seen technology being the biggest disrupter to every factor industry.
The advent of new technology and innovations around the globe has led to a dynamic economic environment, which means that it is continually grown and thrives. Therefore, your accounting firm must adapt to the changes because they are the new constant. Hence, organizations should be aware of the change so that they know about the latest accounting trends.
Accounting is a vital component of the entire business process, and it requires timely functions that provide relevant information for proper decision making.
On-premise storage is being overshadowed by cloud storage, the world of finance is slowly being automated, domains like healthcare are being transitioned into 0s and 1s on the internet.
A number of emerging trends that are shaping the accounting industry for the future, providing more opportunities to businesses of all sizes and efficiency to their accountants.
Some of these trends that will shape the future of accounting will be:
By 2020, labor-intensive tasks like tax preparation, audits, and banking will be fully automated according to a Forbes study. This is a trend that’s considered one of the greatest transformations since the introduction of double-entry bookkeeping around 500+years ago.
According to a PwC survey, 87% of accountants and finance professionals themselves feel that accounting and tracking financials can be carried out with the help of AI and digital assistants.
You can read the entire study here!
Numbers such as these might make you think that accountants and financial professionals will be replaced by technology.
So what can you do to not be left behind? We suggest you prepare now for the changes by staying informed of them.
Now we know that all changes can be difficult but the fact you’re reading this article is a step in the right direction.
And it’s not just you who should be aiming to stay informed. Make a point to encourage your fellow accountants to keep informed of the changes in the accounting world because AI is likely to bring a lot of changes in practice.
The accounting industry has evolved quite a bit over the years, and while cognitive and automated technology like AI and robotics will take on an increasing portion of the in-manual work segment in the industry, we are still a long way from when robots start analyzing data with logic, that is similar to a human, and which will help them come to practical conclusions.
However, Artificial Intelligence is quite important and it’s growing at a steady pace because it’s successful in optimizing costing processes and admin tasks. This also results in various structural changes. AI helps provide many opportunities for accountants; this will help gain new levels of workflow efficiency as well.
One of the future trends in accounting profession includes adopting automation. If you look at small business owners you will notice that they never have enough time, and the reason is they are busy following up on late invoices that haven’t been paid. They are also busy dealing with other annual processes/audits/taxes, as well.
Automating accounting platforms will allow business owners to skip any mundane tasks like dealing with invoices and bill charges, and focus on their vital functions. Automation will also help accountants find data and access it easily.
Speaking of automation and artificial intelligence, two trends that have revolutionized accounting, blockchain is another tech trend looking to revolutionize the way we understand fund transfer and globalization.
Before we talk about how Blockchain will change the way finances are handled, let’s take a moment to understand what Blockchain is really all about.
If you send money to a friend, you usually have to use your bank, who then sends it to your friend’s bank. The ledger of your bank will show the money being taken out. The ledger in your friend’s bank will show the money being put into his account.
But without a bank, how would you send money over the internet? Instead of “trusting” the banks to do the work, you can use a public blockchain, which doesn’t rely on the trust of any entity except the blockchain itself.
The blockchain is a distributed ledger that is made in a way so that if a fraudulent transaction is attempted, or someone tries to “spend” the same amount twice, the blockchain will reject the transaction. It’s a form of “trustless trust”, and does not need big institutions like banks to work.
Globally, Blockchain is still in its infancy and its evolution as it moves from the prototype stage to a fully functioning technology will still take a few years, to say the least.
Blockchain has the potential to enhance the accounting profession and take it to the next level, which is why it’s considered as one of the new trends in accounting. It can reduce maintenance costs and help reconcile ledgers. Blockchain is a popular choice for accounting in IT industry because it helps provide ownership and clarity over the history of assets. It can help accountants free their resources and concentrate on valuation and planning.
Blockchain is the next big thing in accounting because it will lead to more transactional-level accounting. This also means that accountants should enhance their knowledge and skillsets to assess the real economic interpretation of blockchain records while connecting them with economic valuation and reality.
Accountants can also work as company advisers, they can provide advice on weighing the costs and benefits of using the blockchain system. If you have a combination of business and financial knowledge, then you can be a key advisor to businesses who are approaching the recent trends in accounting.
Thus it can be said that keeping your eyes open to the change it brings will be vital to stay ahead of the curve.
While accounting software has been around for ages, the move to the cloud is a relatively recent phenomenon that has been developing for a decade or so. The transition may still be in progress but many businesses have already taken the leap of faith.
The numbers too sing the same song. The overall adoption of cloud accounting today is between 45% and 58%, depending on the size of the company, according to Accounting Today 2018, survey.
The study mentions that 45% of small, 57% of midsized and 58% of large businesses select cloud accounting over desktop ones.
Another study by Accounting Today said that by 2026, the global market for accounting software will have a value of $11.8 billion.
Cloud accounting software is a major accounting trend to look out for in 2020. This is because the cloud will allow companies to go global with their business. The employees and clients will be able to access the same application and files from any location. Cloud accounting will also have a good layer of security and it will keep the data safe from hackers. Cloud technology has provided business owners with a new way of working. You can transfer information easily and in real-time while providing bookkeeping services at an affordable rate. It also eliminates any need to install and maintain accounting software on the company computer.
When making any financial decisions, it’s important that you have the right information. New software and database techniques, along with advancement in data centers, have bought in an age of data mining that will help companies make significant management decisions. The information that is generated through accounting has always been an important element, especially in business decisions. It’s important that you focus on data analysis of underlying accounts, as well as crucial financial information; these elements have become the emerging trends in business accounts for the upcoming years.
You may wonder how data analytics can affect an accountant’s role. Well, an accountant already works with big data and data analytic outputs that help them assess business performances within the company framework. They also use the analytic reports to look at the latest trends and any unusual activities within the industry. It’s important that accountants have the following skills to stay ahead in a data-driven world-
Excellent technical skills- this will allow them to understand data and will allow them to manipulate it as well.
Understand the business context- Accountants need to solve a business problem or address questions about future trends in accounting; this will allow them to understand data analysis and the company’s business flow.
Analytical mindset- This means that an accountant must have an inquisitive personality.
Advanced Excel- Even though the recent trends in accounting are released daily, most data scientists prefer working with excel sheets. But, they tend to use excel sheets at their highest potential, which includes sophisticated data tables, report automation, statistical functions, along with self-correcting models.
Advanced Revenue Analytics- If you want to add profit to your business, then the fastest way to do so is through smart pricing techniques and optimization of sales channels. The latest accounting trends suggest that accounting professionals need to be aware of the company’s pricing structure, proceed with the correct data, and apply the math that is required.
Visualization: Most people think visualization means “over-the-top” graphs and diagrams, when it should mean the ability to reformat any data insights that will lead to easy consumption, depending on the target audience. Accounting professionals should be able to aggregate the same data from many perspectives. This will allow the information to be easily identified. It will also help the company navigate through any challenges in the business’s external environment.
These are the main skills that an accountant needs to develop if they want to thrive in the industry.
Another one of the latest additions in the list of new trends in accounting is E-commerce. E-commerce began during the 1970s, and it ushered in the era of credit cards, mail order catalogs, overnight delivery, and the concept of shopping at home. The internet has managed to take e-commerce to another level by making it a shopping alternative as well.
Even though the e-commerce industry is continuously growing, it does not change the existence of any professional guidelines. This means that even if an accounting firm wants to adapt to any e-commerce concepts, they will have to know the basics of the traditional guidelines in order to adapt to the new economy.
The information and technology that comes with e-commerce can help accountants by providing details that are meaningful and will allow them to find the true cost of products. It will also allow them to match the true cost of products with advertising expenses.
Technologies such as cloud computing are revolutionary when it comes to accounting. Why? It’s because cloud computing is the enabler for all technologies that we talked above and more than just those.
So, if you or your clients want to be updated on the real-time financial data, then it’s simply not possible without the cloud.
If you want to collaborate together with your accountants or sales team, again you would need cloud-based accounting software that encourages collaboration across multiple departments.
If you want to embrace AI then, again, you can’t do so without first jumping on the cloud because it’s the only way to access the massive amounts of data.
The growing ecosystem of cloud applications that integrates with accounting platforms has also proven to be efficient by making back-office processes for a wide range of businesses and industries.
So if you are still skeptical about jumping on board with cloud accounting, now is the time to take the leap of faith.
F- Faster Fraud Detection:
In the accounting industry, financial institutions will face fraud charges at some point. This can cause significant damage to the company’s reputation, a huge loss of revenue, and additional legal costs to settle the case. It’s always said that prevention is better than cure, which is why one of the recent trends in accounting companies is fast fraud monitoring. This would include creating a digital approval workflow that will help you filter out the suspicious invoices and delete any duplicate payments. You can also utilize new trends in accounting which feature documents that are secure and possess tools that process invoices; this process will decrease fraud as well. When you take up the proper precautions with accounting in the IT industry, it will help you avoid any fraud problems and helps your business maintain ideal customer trust, while generating a constant revenue stream.
Giddh – The rise of cloud accounting in general:
One of the future trends in the accounting profession is taking up cloud software for your company; mostly because the software will help improve accuracy and you can have all your information in one place. Once you enter the necessary data, consistently, in the system then you will reduce any accounting errors and risks, which could cost you loads of money. Cloud-based accounting systems are quite the rage in the accounting industry because they are easy to use and automate invoicing and enable seamless GST filing. It will also allow you to put the data into various categories. The organized approach will help you track and review the expenses and ensure that all your financial data is accurate. You won’t need to use an Excel sheet and you can make use of accounting software to keep track of your incomes and expenditures. All you have to do is enter the correct information, constantly, and you will start receiving accurate reports.
H- Having an Outsourcing Partner:
Accounting in the IT industry includes businesses outsourcing their accounting functions and receiving immense cost-related benefits. Outsourcing has become one of the recent trends in accounting because it allows various companies to focus on their limited resources and increase profits. It saves dedicated employment costs like taxation, salary, benefits, and payroll. So, outsourcing accounting functions is quite popular with companies. This has also given rise to many outsource accounting providers, and this segment is rapidly growing in the accounting industry as well. Businesses experience profit and satisfaction, every year, once they start outsourcing their accounting functions and seeing positive results.
The future is unpredictable. But our analysis about it has to be based on the conclusions we have drawn from the past and present. Based on the same, 2 major conclusions can be drawn about the future of the accounting industry:
The cloud and AI offer powerful ways to automate and streamline manual and transactional tasks. However, the functions that will be impossible to automate will be those offered by financial experts specialized in decision making and planning.
As mentioned before, accountants can advance in their careers by embracing technology and building on their roles as their clients’ most trusted and valued business advisers. They can only do so if they remain adaptable to all the changes that come their way.
When Tesla built its fully automated manufacturing plant in California, it was supposed to be a revolution in automation.
But what ended up happening is the painful reality. The AI empowered robots actually slowed down the production and ended up being the biggest reasons for the plant not meeting its benchmarks. The company had to shut down the factory and hire specialized workers to train and manage the robots.
Founder Elon Musk himself admitted and went on to tweet-, “Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”
So with a fair certainity, it can be said that human accountants should and will never be underrated. The accountant that has obtained specialized training will both gain from and add value to whoever they assist in their financial pursuit.
The technological transformation has been at the center for every industry across the world, and its effects have been felt in even the smallest of businesses.
So, embrace change. Embrace cloud technology. And, embrace automation.
The only constant in the accounting world is change and finding stability in its fluctuations. With these trends as your guides, make 2019 your best year yet.
What accounting and bookkeeping trends are you most excited about? Which trends do you think will be most important to keep on your radar in 2019 Comment below and let us know.