Accounting, a vital field in today’s workforce. And as such, it is only logical that the technology used by them evolved. Accountants need to take advantage of those advances as well as getting a deeper understanding of what they mean for the industry as a whole. That is the topic we will be covering today. What new perspectives tech and Artificial Intelligence can bring into the table, how the accounting profession can change in the future, and what edge can be gained by implementing new accounting developments.
Accounting is a system used to measure financial performance, they gather valuable data by taking note and classifying every transaction in a standardized format, while taking care of bookkeeping. This also includes important events in a company’s life, as well as sales, purchases, asset appreciation, and risk management. With the gathered information they help businesses evaluate their past, present, and future conditions, in order to allow for smarter financial decision making.
Automation is already a big part of the industry, with many softwares and digital tasks taking root. These tools help with the most mundane aspects of the job like processing, human errors, duplicated tasks, and complicated operational procedures. But it can go even further than that. Let’s take a closer look.
Impacts of Technology in the Accounting Industry
One of the most important advancements IT and the rise of digital and cloud based infrastructure had for accounting professionals radicates in a company’s capability to create computerized systems and feed them continuously with their records about financial transactions. The clear tracking of these movements, without having to depend on hand written reports or manually filling spreadsheets is a blessing for both companies and accountants. And these tools can also generate reports within the desired filters and views, in mere seconds.
And this can help analyze critical business operations with better context, as well as streamlining accounting systems and accounting processes. Honestly, accounting today benefits from multiple and varied technological advances.
Accounting departments have managed to improve their delivery times for gathering accounting information and financial information. And in doing so they improved their reporting capabilities as well as their operations analyses, giving management a clear and transparent view of a company’s state of current operations. Since the utilization of computerized systems, and the rise of digital transactions, the sheer number of reports has grown, from market share reports, to departamental profit or loss ones. More pertinent and clear reports give the company’s a better chance of making the right decision.
Software solutions with accounting systems empowers accountants to process extremely large amounts of financial information, and analyze it fast through their accounting system. Less time is needed in order to close each accounting period, this happens due to faster processing times for each transaction, and the general use of cloud computing and digital systems that have almost erased the need for physical data entry.
Important financial events, like end of the year closing periods, can take a big toll on the accounting department of a company. Some accountants may need to use extra hours in order to meet their deadlines, which leaves the talent pool extremely tired and makes the company incur in higher labor expenses. Shortening the time needed to process, thanks to new technologies, helps individual employees work better and in a more healthy way, as well as lowering costs for the business.
Most accounting technology have internal checking features to help their users guarantee every single transaction and account is balanced correctly before preparing financial statements. These tools won’t allow the posting of new journal entries that are out of balance, establishing a trustworthy structure of financial information.
Some accounting softwares even come with layered access permits, reducing the amount of people that have an entry to sensible information. As well as employing new cybersecuruty features, like blockchain. Having a hierarchy of data access improves the quality and accuracy of the financial statements, allowing only qualified supervisors to make adjustments to important projects.
Improved Communication via Reporting
One of the most important responsibilities an accounting firm or department has is to report back with the financial data. Stakeholders and investors can have better reports delivered to them, middle management can access relevant data faster, and even clients for the company can benefit to some degree of improved decision making when being explained how that company’s fees function.
Reports are a high value object of analysis, and can position a business where it wants to be. Records can explain where the real value a company has lies, and help them develop it. Reports help investors for equity finance, they signal which events are good growth opportunities, or how the company’s work has improved their clients finance.
Tax filing, updated.
Filing taxes is a terribly complex endeavour, and that’s without taking into account that tax laws change like the weather. It’s such a complicated affair that some companies are willing to pay in order to use tax preparation softwares and minimize manual tax preparation. This emerging technology is not good news for accounting practices, since filing taxes usually meant hiring an accountant and not buying software.
These types of solutions are one of the many examples of the change in accounting services. There are multiple tasks that can be automated and simplified, but that only means that accountants need to take a closer look at what areas of work are still prolific and available. This does not mean the profession is in decline, on the contrary, some studies say it will only grow.
Manual auditing was extremely time-consuming. Information technology has greatly helped Auditors perform better, more accurately and faster. Software packages are now on the market, and can be really efficient in helping auditors. Trial balance software can empower auditors to enter the working trial balance, handle adjusting entries, and compute automatically the trial balance.
These softwares programs can be complex or have basic features. And hiring the most expensive one it’s not always necessary, many businesses only require a simple solution, like an all-in-one software. While managerial accounting could require a more complex support. Both of these types of softwares can come with templates for easier and automated reporting, and graphic features that can simplify the task of creating graphics to accompany the written information with visual aids. Some of these softwares even have graphics evolve in real time as the information that feeds them is refreshed.
Why is data important?
Asking why data is important for business decisions is like asking why air is important for humans. It’s not only important, it is vital. The digital transformation happening is a possibility in enhancing partnerships, and the pace of this advances has only been accelerated by the pandemic.
Accounting firms have traditionally looked after one client at a time. With recently acquired capabilities they now can analyze information across an entire client’s data platform, change the perspective by adding more trustworthy contextual market data, and enhance their financial processing and automation.
A shift that has been happening is the hiring of non-accountant employees, like data analysis experts or data engineers. The perspective of these individuals can greatly enrich the outcome of several accounting projects. The language they speak is an opportunity for added value. Good financial accounting manages to get sets of numbers under standardized categories, and analyze them from a quantitative state of mind. Great financial accounting manages to look at their client’s numerical outcomes and evaluate what it means for the business going forward. A spreadsheet is only a spreadsheet unless you can connect the dots and understand the true meaning behind it.
Data analytics helps understand the context of what is positively or negatively affecting a business. Being able to see the patterns and insights can augment risk analysis and improve beneficial opportunities. This has nothing to do with the rift between managerial and public accounting, this mindset can be employed in multiple ways, with favorable outcomes.
With information systems in place, data can be checked automatically and consistently across enormous sets of data. Allowing for high accounting standards.
Outcomes and relationships with clients
Like we mentioned before, the digital landscape gave way to a shift in client relationships, allowing for a partnership role to be achievable. In these bonds, accounting firms can gain a deeper understanding of their clients internal processes and help them in more profound and valuable ways. This value comes from more data, newer services, and the slow change of our current business model.
The professional service offered by accountants is not a commodity, they have historically added valuable insight to their client’s operations. With the rise of accounting tasks automation, the industry needs to take a good look at what they can offer clients, and market towards the services that add real and meaningful value.
Let’s look at tax preparation softwares for example. They let companies file their own tax return in a simple and easy way, shrinking a great area of work for accountants. This, of course, doesn’t mean the end of the accounting profession. But it does show the changes the industry is facing, and the necessary self actualization that is needed.
Maybe corporate taxing is not as big a business as it once was, but this only means accountants need to focus on improving their relationships with clients. They need to provide the service that no automated software can give, and that means using the technology as a middle man between accountant and client. This can translate into a more risk and opportunities analysis mindset, advising, or incorporating changing laws into financial readings.
For example, there’s a new generation of jobs that can have astronomical financial gains, but are not regulated as of now. Or if the regulation exists it is not up to date with the changing landscape of social networks and digital trading. Think about Youtubers with millions of subscribers, the population that chooses to become content creators is growing fast. And the impact that has on the economy and the financial landscape is still up for debate. New business opportunities are everywhere, and accountants can take on new roles with these growing markets.
Using the communication features software programs present, allows accountants to evolve into a more transparent operation and bring the client into the software. Let them share and be a witness to how their information is processed, to gain a better understanding of how you are adding value to their business. Automation can help with these changes, now is not the time to shy away from technological advances, but rather use them for your own improvement.
Digital Transformation: the future of accounting
The digital transformation taking place has influenced and changed the whole market, and almost no industry has been left unaffected. And this rings especially true for accounting and financial administration.
The biggest technological change in the last decade has been the incorporation of AI solutions in the form of robotic process automation (RPA) and machine learning among others. We have a deep curiosity for AI technologies, and have dedicated some thought to what it means for businesses. Many are still weary of these advancements, fearing their job may be on the line. And there is some truth to that, historically big technological changes have had a modifying influence on certain jobs, this has been happening ever since the Industrial Revolution.
But AI systems don’t replace jobs, they automate tasks. And when an industry has a lot of time consuming, repetitive tasks, AI will be a way of making those operations a more streamlined affair. Accounting has been affected in this regard. Filling spreadsheets manually, creating analysis by hand, and importing or exporting data are things of the past.
On the other hand, the study from the Bureau of Labor Statistics we mentioned earlier predicts that accounting and auditing employment will increase 10% up to 2026. And this has a clear message: automation won’t drive an accountant to unemployment. On the contrary, they can keep doing the more valuable part of the job and dedicate themselves to more complex endeavours and tasks. Tasks that could never be done by a machine.
Taking a more consulting role, using innovation to their favor, taking new responsibilities in order to help their clients adapt to changing economies and regulations.
Technology doesn’t deliver value to clients, professionals do. And with the amount of data and information we have today, professional services, like accounting, are in a privileged state in their expertise.
At COR we wish to help the professional service industry rethink the value they bring into the market, and de-commodify their work. We want to allow them to improve their operation’s efficiency, client relationships and profitability, while taking care of their talent. If you want to start this journey, take a look at our all-in-one project management, AI powered solution. Request a demo today!