5 Technology Trends That Can Transform Your Accounting Firm
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Technology trends have revolutionised the way business is conducted, and they will continue to shape the future of almost every industry.
The accounting industry has been undergoing transformation on a scale that has not been seen since the introduction of double entry accounting. The primary role of the accountant has shifted from bookkeeping to business advisory. This opens up the door to higher-value growth opportunities for both the accountant and their clients.
The advent of five key innovations, and adapted by the accounting industry, have made it possible:
- Cloud-based Systems
The Cloud has upended the business world. Cloud based accounting systems utilise servers that are accessed over the Internet, as well as the software and databases that run on these servers in order to run the accounting functions of a business.
Users of cloud systems will never have to manage physical servers themselves or run software applications on their own machines ever again. The free flow exchange of information via the cloud transcends the physical devices that companies are using because digital files can be synchronised across multiple platforms.
By using cloud-based accounting software such as Xero and Quickbooks, business owners will be able to keep up to date with their company’s financial situation anytime, anywhere. Collaborative work becomes much more effective when teams can discuss company financials and related reports in real-time on a regular basis.
Digitising the firm takes time. The integration of different technological tools into the firm’s existing operational workflow is far from easy. Business apps are being churned out on a regular basis. It can be confounding when one has to choose between all the indistinguishable offerings out there; before figuring out the least disruptive way to fit this latest acquisition into the picture. It can also be frustrating to have to toggle between different apps to manage different business functions.
In order to simplify the integration process for their clients, accounting software developers are seeing the value in creating and supporting entire app ecosystems. Accounting systems like Xero and Quickbooks allow for third party app integrations with their software. For example, Tsheets manages the time-tracking of jobs, Talenox can deal with payroll, Stripe handles payments. Basically, users gain an all-in-one access to an entire repertoire of business tools with just a single subscription or license.
- Machine Learning
Manual tasks are quickly becoming a thing of the past in the accounting industry. Many of the tech tools in the market utilise machine learning, an application of artificial intelligence.
Machine learning provides a system with the ability to automatically learn and improve from experience. The system will process data by recognising and applying patterns, derive sets of rules (algorithms) based on these patterns, and refine these algorithms based on feedback. By integrating machine learning into their use cases, firms can perform routine tasks for lower cost and with greater efficiency.
The Big Four accounting firms (PWC, KPMG, Deloitte, EY) are leading the pack by working to automate much of the accounting cycle. The AI initiatives in the works eliminate the need for most manual document handling processes, and therefore labour intensiveness.
Among various functions, AI solutions enable the easy storage and accessibility of data, as well as the auto-generation and digital cross-checking of financial reports through machine learning.
- Optical Character Recognition (OCR)
OCR technology is another game changer that reduces the manual workload for accountants. OCR applications have the ability to convert images of typed, handwritten or printed text into digital information.
It has become the gold standard for data entry in the industry.
The widespread usage of OCR-enabled tools such as Receiptbank and Hubdoc means that accountants no longer have to spend excessive amounts of time on the itemisation of bills, receipts and invoices. Human error will no longer be a consideration. Digitalising printed texts allows data to be electronically edited, searched, stored more compactly, and displayed online. The use case is extremely simple: Snap a picture of a receipt with your mobile device, upload it onto the system, and all the textual data will be quickly extracted for subsequent use.
Blockchain technology, also known as distributed ledger technology, fundamentally changes the way that finances are being managed. The blockchain enables the maintenance of records in distributed online ledgers that are open to authorised users. These ledgers are immutable and provide a transparent account of all the financial transactions that have taken place. This establishes absolute certainty over the ownership and history of assets.
Employing blockchain technology will greatly reduce the costs of reconciling ledgers and verifying financial information because it does away with traditional mediating entities like banks and audit firms. Having all the accounting transactions that have taken place between two parties automatically written onto the tamper-proof blockchain is essentially triple-entry bookkeeping, which enhances the security and reliability of financial data management.
Again, we see the Big Four accounting firms as early adopters of blockchain technology, collaborating with tech partners like Microsoft in their navigation of this new field.
The proliferation of technology in the accounting industry will not render accountants obsolete. On the contrary, it enhances the role of the accountant. The smart utilisation of technology will effect a shift from routine work to analytical and advisory work. The road ahead will see professional accountants increasingly take on important decision making and management responsibilities for organisations.
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