Technological advancements and changes in consumer attitude herald a shift in the accounting industry. These changes have been long in coming as reports revealed that 99% of accountants felt the industry was experiencing a shift towards technology dependence.
The COVID-19 pandemic has served as a major catalyst for the swift adaptive changes in transaction processes. In the last couple of years, we have seen several changes disrupt financial markets. And more changes are on the way. Here are the 10 futuristic trends in accounting that you should know.
1. Automated accounting
There’s a 98% probability that auditing clerk, bookkeeping and accounting jobs will become fully automated. Automated processes are faster and decrease errors. It would allow accountants and businesses to use data to optimize processes and arrive at data-backed decisions faster than before.
At the earliest predictions that businesses would become automated, many professionals worried about being replaced by computers. The reality today is that, with all the strengths of automation, it is vulnerable to fraud and cyber attacks. Therefore, accounting professionals would still be needed to audit data for inaccuracies.
2. Rise of accounting software and cloud-based accounting
Accounting automation can not advance without targeted innovations from the tech community. It is expected that companies that specialize in creating accounting software will experience significant growth. Businesswire predicts that the accounting software market will grow at a CAGR of 6% between 2020 to 2024.
Cloud technology is becoming popular in the accounting industry as it makes remote work easier. Cloud-based accounting systems allow firms to access data anywhere and anytime. They can create workflows, track inventory, manage projects and communicate with clients remotely.
Accounting companies that have adopted cloud technology are recording about 15% year-over-year growth. This contrasts with the 4% year-over-year growth of firms that have not quite embraced cloud tech.
3. Outsourcing accounting functions
With the economic challenges that came with the COVID-19 pandemic, many businesses had to lay off personnel. On the upside, having to cut back on staffing has opened the eyes of many businesses to outsourcing.
Outsourcing allows accounting firms to achieve optimal results without taking on extra salary costs, training costs or taxes. It allows firms to better manage their limited resources and be more profitable.
Certified public accounting (CPA) firms are now embracing outsourcing. Also, accountancy in business processing outsourcing companies is fast gaining ground as a respected career.
4. Big data and IoT in accounting
Big data and the Internet of Things (IoT) are influencing the creation of new technologies that help firms expand their assessment scope and methods. Using big data, CPAs can identify potential challenges and set up contingency plans.
Firms that understand how to leverage big data will be more proactive than those that do not. According to Dresner in 2020, 63% of organizations all over the world plan to incorporate big data processing. Finance experts and accountants are now more than ever required to work to identify valuable data and guide firms to take action on the insights gained.
Leading accounting firms, like Deloitte, KPMG, Ernst & Young and Price Waterhouse, have jumped on the Blockchain train. These firms have people working in distributed ledger labs, hoping that they can come up with fixed distributed ledgers.
Blockchain technology is revolutionizing the finance sector. It has reduced the cost of maintaining and reconciling ledgers and made it easier to track digital assets. Blockchain is so appealing that firms in the US are projected to spend $1.1 billion on it by the end of 2022.
Learn more in What Controllers and CFOs Need to Know About Blockchain.
6. Data analytics
Companies are showing a preference for accountants with a background in data science analytics. That is because technology in the accounting industry is drawing attention to data analytics. Accountants are now needed to play the role of advisors with strong data analyzing skills.
Although data analytics in accounting is not novel, it is just now gathering momentum to become an integral part of the industry. Accounting firms are applying data analytics to taxation, risk management, auditing and consulting. It is proving useful in identifying weak points in proceeds that require immediate improvement.
7. The role of Artificial Intelligence (AI)
AI optimizes administrative duties, increases work speed and productivity with minimal errors. Accountants are turning to artificial intelligence to match up with the speed and efficiency demanded of them.
Sage 2019 reports show that 58% of accountants will work with AI to improve their overall efficiency. It is expected that the role of ai in the accounting industry will become significantly larger without obliterating the need for human-influenced decisions.
Learn more in Transform Collections and Planning with AI Bots.
8. Mobile computing
Mobile phones have become much more than communication devices for some people. A person could use their mobile phone as their virtual office, carrying out transactions and storing information on the device.
To reach more clients accounting service providers will have to make their services accessible via mobile. Evidently, accounting services are already adapting to meet the needs of a generation of busy clients who manage their businesses on the go. Mobile bookkeeping apps are becoming more common and efficient.
9. Advisory services
Despite the increasing popularity of automation and AI systems, we cannot eliminate the need for human influence. Rather automation will make accountants more efficient and reliable, earning the trust of clients.
Accountants and finance experts can use artificial intelligence to analyze data, understand client’s actions and predict future trends to provide quality advice. Advisory service is expected to bloom in a situation where technology combines with financial advisory.
10. Social media
Globally, there are 4.20 billion people actively using social media platforms as of 2021. It makes sense that social media be regarded as a powerful marketing tool. Accountants have long tapped into the value of social media marketing to promote their brand, boost sales and establish a credible reputation.
We should expect to see more accountants using social media as a branding, communication and learning tool.
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The emerging trends in the accounting industry can be attributed to factors that include generation change, marketing trends, public health regulations and economic upheavals. These changes will help the accounting industry keep up with developments in other sectors of the economy and position itself to serve a new generation of clients.
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