Did you know that according to Statista, the US accounting industry alone generates over 110 billion USD in revenue? Even within a firm, accounting decisions matter a lot.
Yet, 60 percent of business owners don’t believe that their resources are knowledgeable in the field, as per Wasp Barcode Technologies. Another report by Forbes suggests that accountant roles have expanded far beyond those covered by certifications and courses.
Being abreast with the latest development in accounting is a must for ensuring that a given business is ready to embrace the future. After all, accounting and finance are one of the most crucial departments, governing a company’s ability to remain afloat.
In a dynamic world like ours, here are the top new accounting trends you must consider to prepare yourself for the upcoming years.
The Growth of Big Data
A report published in the Business-Higher Education Forum highlighted that over 59 percent of accounting professionals firmly believe that data science and analytics will disrupt the accounting industry in the near future.
Considering the sheer benefits of big data, it is not hard to understand why. For instance, one aspect of Accounting and Finance is forecasting and budgeting. Here, historical data is used to make predictions about the revenue or expenses of the future.
Forecasting helps a business in creating benchmarks and allocating resources accordingly. Analytics and big data today, allow businesses to gather crucial data from different data points. All of this data can be used to further hone the forecasting process.
Additionally, another aspect of Big Data is how information is available in real-time. The access to unstructured data that can be analyzed through software and natural language processing allows accounts to monitor different financial matters as they happen. Every action within and outside a company leaves a digital footprint that can be further channeled into the system to gain insights into the internal operations of a company.
Overall, the growth of big data and analytics allows firms to accumulate data-driven insights that can further help in improving their bottom-line and boosting the experience provided to clients.
The rise of outsourcing
One trend that many did not see coming within the accounting and finance sphere is the rise of outsourcing. This is because, generally, accounting firms and traditional businesses alike always had a cohesive in-house accounting team to keep their financial matters within the company.
However, the inclination for outsourcing different projects and specialized accounting tasks to third parties has significantly increased. This trend is likely to have been accelerated by the onset of the COVID-19 pandemic, which left many businesses with huge losses.
Therefore, firms tried to find new ways to save money and cut their expenses. Recent surveys suggest that 59 percent of businesses now choose to outsource functions in an effort to minimize their expenses.
Considering the high cost of hiring technical expertise, which different functions of accounting primarily require, it is much more cost-effective for firms to hire third parties for project-based accounting tasks. Not to mention that cost is also saved in the form of training and benefits expenses.
While this may look like a gloomy trend, it is all about flipping the picture. While traditional jobs may not be available as abundantly as before, it means that accounting service providers are likely to be in demand. Not to mention that it allows people to take on freelance accounting projects for firms beyond their geographic restrictions.
Cloud Accounting will become a staple
Considering how popular cloud accounting is these days, it is hard to imagine how the solution would further change in the future. Currently, between 45 to 60 percent of businesses have already moved to cloud computing. And Accounting Today reports that the accounting software market will reach a value of 12 billion USD globally by 2026!
Apart from the further adoption of cloud accounting by the masses, there are likely to be many changes in the way accountants work due to it.
For starters, owing to the demand for cloud accounting, software updates will be further streamlined by eliminating the need for in-house renewals and downloads, which tend to be much more time-intensive. This will help the department save time and hence improve efficiency.
Additionally, the ability to access financial resources remotely means that remote accounting jobs are likely to increase. However, one must also note that the fact that a single cloud accounting software is likely to perform multiple functions can also reduce the breadth of jobs available.
For instance, a cloud-based automation software like the Freshbooks accounting software can be used for invoice creation, following up with clients, and streamlining the bookkeeping process. Therefore, a job done by a group of people can now be managed by one. This leaves others to deal with other facets of accounting.
Keeping in mind the adoption rate of cloud accounting solutions, it is safe to predict that accounting software companies will further try to offer value to accountants by streamlining processes and minimizing their manual tasks.
Task automation via Intelligence of Things
Artificial Intelligence has surely changed the outlook of various facets of a business. Whether it be leadership roles, customer support teams, or accounting resources, AI has made the life of everyone quite easy.
So much so that according to JA, 80 percent of accountants are of the view that AI will allow their firms to gain a competitive advantage via automation of tax management and payroll processing.
AI has allowed the rise of the Internet of Things, whereby a system of interconnected machines and AI can help a firm in communicating and operating without the need for human intervention. In finance, it allows professionals to track ledgers and transactions in real-time to identify pain points that require resolution.
Similarly, AI has led to a phenomenon called “Intelligent Automation” where human interactions can be mimicked by robots. This robotic process automation will handle repetitive and redundant tasks like document analysis to free up resources for strategy work – work that reaps long-term benefits for the company.
Understand and get accustomed to the key accounting trends. This will allow you to make the most of the upcoming technologies. It is imperative to train the workforce according to these futuristic trends to ensure that your firm is ready for embracing the changes.