“Accounting is the language of business.”- Warren Buffet
Accounting is one of the key pillars of every business and will continue to remain so in 2020 and decades to follow. But in all these years of accounting, the one thing that has remained constant is ‘change’. Year after year, accounting has been constantly evolving and changing in order to walk hand in hand with the changing trends and advancing technologies. From doing manual calculations to using calculators to maintaining and managing all the transactions in Excel sheets, accounting has come a long way. And this change will continue in 2020 with new accounting technology trends emerging.
Bookkeepers and Accountants need to adapt to the changing trends that will be affecting ‘how accounting and accountants work?’ So, here are some technology trends that are already influencing Accounting and Bookkeeping and will continue to evolve even further in 2020:
Accounting Technology Trends in 2020
Just like every other field, Technology is playing a major role in Accounting too. Accounting is undergoing a lot of changes and uncertainty with the advancing technology playing the key role and therefore, Accountants and bookkeepers need to be well-aware of all such trends to stay a step ahead in the evolving industry. Financeonline.com reports, “90% of accountants feel that there is a cultural shift in accountancy that leans toward technological adoption.”
Here’ how the technology is transforming the industry:
Rise of Online Bookkeeping due to the rising popularity of Cloud Accounting
The rapid infusion of technology in every sector from health care to manufacturing to finance and accounting is changing how each sector works. When it comes to accounting, one of the most influential technological infusions is Cloud Accounting. Cloud Accounting software like Quickbooks, Xero, Nomisma, BrightPay have become quite popular and the expected global cloud accounting market share will increase by up to $4.25 billion by 2023.
Moreover, the rapid adoption of cloud technology has transformed accounting as an online service by offering services like Asset management, payroll management, expense claims, accounts receivable, and other regular bookkeeping tasks online. Such accounting firms offer clients with a subscription package(monthly or annually) to cloud applications that allow them to access data online via the cloud.
Over 67% of accounting professionals now prefer using cloud accounting than the traditional desktop-based methods, as it helps in streamlining the bookkeeping and accounting functions with technology. A massive 78% of SMEs are expected to be completely relying on cloud technology, by 2020. The global accounting software market value was around $57 million in 2017 and the rising popularity projects it to be somewhere near $ 117 million by 2026.
However, many accountants still rely on Microsoft Excel and desktop-based processes to carry out Accounting, they are severely impacted as compared to accountants relying on cloud-based systems.
Here’s how cloud accounting is transforming the profession:
- Cloud Accounting systems can be securely accessed from remote locations as compared to desktop applications.
- Cloud-based software allows multiple user access at the same time
- Cloud software needs no installation and can be accessed directly via the web.
- All the updates and changes are saved and backed up.
- Cloud accounting software offers multi-layer encryption as compared to desktop software and therefore data is secure and can’t be easily manipulated.
- Cloud software can easily integrate with online banking, thereby automating manual data entry processes like invoicing, billing, and more.
AI Automation and Accounting
Automation incorporates technology(Artificial Intelligence) into the existing business model to minimize human efforts, thereby increasing efficacy and eliminating human error. Manual Accounting practices are being eliminated regularly as 50% of accounting tasks can be now automated through the currently available technologies. Workforce involving processes like payroll, auditing, tax preparation, etc are expected to be fully automated by 2020. Accountants and CPAs are using robo-advisers to get better investment insights which combined with the experience proves to offer better results.
The major reason behind the adoption of automation of accounting processes is to increase efficiency and productivity, improve the quality of services, and attract new clients.
The rising era of tech-age clients
As technology is advancing so are the expectations of clients as they want accounting firms to be driven by technology instead of the old age practices. Clients are now more into standardized accounting practices and looking for operational transparency as well as minimizing manual tasks, thereby eliminating the risks of human error. Clients now more than ever expect their accountants to be consultants too.
Social media platforms are becoming popular for Accountants
Social media platforms like LinkedIn, Twitter, Facebook where clients and colleagues can stay connected easily have become a popular hub to market their services for accountants. Apart from marketing, social media offers immense opportunities to grow your network, stay updated with the industry trends, and share thoughts and have discussions with other field professionals as well as prospective clients.
Account and bookkeeping Outsourcing is becoming more popular
Outsourcing is on the rise as more and more businesses are moving towards hiring an outsourced accounting firm due to the many benefits like streamlining their limited resources on core business aspects, reducing internal staff costs like salaries, payroll, taxation, training and recruitment expenses, etc. This has in turn opened up gateways for more opportunities for outsourced accounting service providers.
Rising Competition due to the rising demand
Following up on the above point, the increase in the demand of accounting service providers, the competition has become intense, and since clients expect accounting firms to be occasional consultants, accounting as a profession is transforming and has become one of the top career choices. Around 30 percent of SMEs place accountants at the top of their list of trusted advisors for their business(ICAS report).
Data Analytics is becoming a core Accounting process
“Data will talk to you if you are willing to listen.”-Jim Bergson.
Data Analytics has become one of the key aspects of every business and accounting is witnessing the same. Studying data to offer valuable insights, areas of improvement, decision making based on data as well as predicting the future to efficiently manage risk are some of the major benefits that Data Analytics has in terms of Accounting. Even though Data has been a core part of Accounting, technology has transformed how data used to be managed and treated before as Data Analytics solutions are becoming more and more popular every day. Finance and accounting professionals expect data science skills to play a major role in the industry in 2020 and accountants should focus on building them.
Accounting and Blockchain
Blockchain in its most basic sense means a blockchain is a distributed, decentralized, public ledger where the blocks store digital information on transactions and are concerned with the transfer of ownership of assets. Accountants can largely benefit from the technology as
This technology offers clarity over ownership and the history of assets and the existence of obligations. It can assist accountants in focusing on planning and valuation instead of exhausting resources on recordkeeping. Moreover, it offers transparency while reporting and accounting for clients.
Even though blockchain is slowly and gradually entering the accounting sector but it has immense potential to reform how current record-keeping processes work which accountants need to be aware of in 2020.
Remote Working Teams
Remote working has been quite popular for quite some time now, however, with accounting, it’s still something that needs to be adapted. But the ongoing COVID-19 scenario has accelerated the remote working process and this trend will continue to be a focal point concerned with Accounting practices. Moreover, technology has connected humans and by leveraging it, clients, employees, and teams can deliver results efficiently without wasting unnecessary daily commute hours.
The advancements in technology have changed how accountants used to work. Easy access to data with just a click, combined with the financial knowledge has made Accountants as trusted advisors. The use of information technology has opened gates for more diversified opportunities in the field of accounting and now more than ever, businesses heavily rely on Accountants for business development.
Rising need for Forensic Accountants
Technology has transformed accounting completely and that too positively, but it has also increased the number of financial frauds and crimes via identity theft, email phishing, hacking, online scams, and so on. The rising risk of such financial frauds has given rise to the need of Forensic accountants where accounting, auditing, investigative skills, and technology are used to analyze information and prevent accounting frauds and embezzlements such as business insurance, business disputes, business interruption, cyber-crime, products liability, business valuation and many more. Forensic accountants are also used by firms to train internal auditors and investigators.
The ever-evolving technology which has been influencing the Accounting sector will continue to contribute and it is only going to get even better in 2020 as the new trends will further improve functionality, accuracy, increase productivity and efficiency. Accounting companies are expected to invest more and more in new tech solutions like AI, cloud, blockchain, and more.