For many years now, we’ve been reading and hearing about how technology will change the accounting profession. Businesses and professionals who embrace new opportunities with tech are better positioned to handle the evolving economic landscape with cloud computing, big data, online collaboration and other advances.
Technology Trends Impacting the Future of Accounting
CFOs and some accounting professionals have been trailblazers in adopting new technologies by leveraging them for critical business functions and proving their ROI. What technology trends will impact the future of accounting?
- Cloud Computing
Accounting processes are still partially or largely a manual effort at many companies. But that’s quickly changing. Accounting firm PricewaterhouseCoopers (PWC) has reported a significant number of clients are moving from on-premises enterprise resource planning (ERP) to the cloud. They’re taking the opportunity as a clean slate to implement process optimization initiatives that build transformative finance processes.
Cloud accounting software is especially important to support remote accounting teams – even for historically in-person processes such as month-end close – giving teams secure access to reliable, real-time data, no matter where they are. When the lockdowns in spring 2020 first began, companies that relied on cloud-computing technology had a leg up on the competition, and the move to remote work was less of a heavy lift. And those benefits are going to give companies with more agile approaches to finance a competitive advantage as remote and flexible work continues to effect how we do business.
- Mobile Accounting
Millennials are now the largest generation in the U.S. workforce. As more move into leadership roles, in many cases they carry with them the expectation that consumer-grade technology will be a staple in the businesses they now help guide. Those rising expectations are being met with enabling technologies like 5G.
What is the future outlook for accountants? Increasingly mobile and adaptive. Business processes that formerly required someone to be parked at a desktop will increasingly take place on mobile devices. This includes the accounting team itself, which can leverage functionality to reconcile business transactions and bank statements, invoice clients and get alerts on pending approvals. Mobile accounting also means creating mobile-responsive reports that management can view on a mobile device. And employees will continue to require mobile support for actions that touch the finance function, like expense reporting.
Adoption of Robotic Process Automation (RPA) is growing rapidly. RPA technology is mature, and initiatives are low cost and can return benefits rather quickly by reducing errors, manual effort and processing time, as well as accelerating the auditing process and eliminating time-consuming tasks. Think of RPA as automated workflows that reduce human error and increase output by outsourcing tasks to a digital workforce. Many begin using RPA for reconciliation processes. Automatically downloading bank data and reconciling accounts is faster, more accurate and more efficient than performing the same process manually.
So, with this move toward automation, it might be easy to wonder, is accounting a dying career? It’s not dying, it’s just changing. Taking advantage of the outputs that come from the complex sets of algorithms with automated intelligence requires additional training and education for digital skills. When you’re thinking of tips for accountants in small or large businesses, make sure training is incorporated into your business plans.
- Big Data
Projects that leverage big data – large amounts of structured and unstructured data to be processed and analyzed – will grow in finance and accounting. But it’s changing with the increase of automation, big data and other technological advances. Finance departments often rely more on data than other departments, and big data projects hold promise in financial planning and analysis.
Finance and accounting teams also play a role as stewards for big data projects organization wide. Finance teams ensure proper data governance and put data to good use by looking at business trends to inform and enhance organizational risk management. Many finance teams will implement or build on predictive analysis to uncover revenue trends, predict shifts in consumer behavior and spot fraud. Gaining more prowess and proving the value of big data will provide the foundation for projects that leverage AI, which is also growing in importance in accounting departments.
Blockchain technology improves the efficiency and safety of transactions and helps them happen at faster speeds. It provides a digital, global, distributed ledger whereby any asset can be exchanged without intermediaries. The thought is that blockchain applications will evolve such that data and transaction reconciliation will no longer need to exist and data reporting will eventually be more reliable and real-time. More businesses are building blockchain applications – and accounting departments are helping guide the structure with use cases.
For instance, the International Federation of Accountants points to blockchain’s promise in transforming the processes of procure to pay, record to report and order to cash. The technology is ushering in new best practices and driving down costs by reducing the reconciliating and validation processes. Blockchain will act as a shared ledger across ERPs, connecting through the creation of a smart contract. Blockchain will also have a huge impact on auditing, as it becomes entirely possible that 100% of transactions could be audited by combining blockchain with AI.
Accounting and finance processes are a common target for online attacks. And finance teams working remotely has added another layer of complexity to cybersecurity. Invoice and payment fraud(opens in new tab) from spoofing at finance departments increased by 54% a week from Q2 to Q3 in 2020. Attacks are possible in any industry, but the most frequently targeted industries are retail, consumer goods and manufacturing. Some threats to watch out for are phishing attacks via email, phone or SMS, malware and data leakage.
Finance teams should identify key areas of risk, plans to respond and check-in with team members regularly. Training them to recognize potentially harmful emails and spot attacks is crucial. Because they’re some of the most likely employees to be targeted, keeping them up to date with the latest tactics and asking them to evangelize the importance of cybersecurity safety protocols can help your business immensely.
- Online Collaboration
With remote work the new norm, one of the biggest challenges for accountants is how to continue to collaborate with less face time, especially in an industry that often relied on late nights at the office to close the books for the month. Cloud-based accounting software is a vital online collaboration tool for finance teams. It allows all team members access to current, accurate financial information in real-time and conforms with the asynchronous nature of work. Accounting software vendors will look to build and enhance collaboration tools built into the platforms to allow for secure, real-time chat in the context of workflows.
When considering what investments to make in technology, consider value and what return on the investment each technology can make. Finance leaders are uniquely suited to add to the conversation and weigh in on decisions about where to place resources and invest in the future. With a shifting business landscape ahead, there are undoubtably challenges for finance teams. But there are also many opportunities to be trailblazers in leveraging innovative technology, such as financial management software, to deliver process efficiencies, process transformation and ultimately create busines value.