Accounting is a crucial business function. It involves numerous operations and processes dealing with voluminous data. Manual accounting is prone to errors and consumes enormous time and resources. Moreover, any deficiencies in accounting can lead to heavy losses, increased costs, loss of reputation, and reduced business profitability. Today, numerous technologies and accounting software solutions are available to help businesses automate, streamline, and control various phases of accounting to enhance overall business performance. Despite such advantages, numerous companies still rely on manual accounting. However, with ever-rising competition, ignoring such technological disruptions is risky for accounting professionals and businesses; let’s see why.
The News:
- In 2022, measured by revenue, the market size of the accounting services industry in the United States is USD 141.8 billion.
- 57% of businesses admit to not fully utilizing the services and insights their accounting firm is capable of providing.
- 83% of accountants believe that new technologies and a culture of digitalization is essential to keep pace with the market.
- 67% of accountants say cloud technology is improving client interactions and service offerings; 49% percent of accountants would like to automate number crunching, data entry, email, and diary management; and 66% claim that they would invest in artificial intelligence (AI) to automate repetitive and time-consuming tasks.
- The accounting software market will reach USD 19.59 billion by 2026, growing at a CAGR of 8.5% over the forecast period 2021 to 2026.
- The global accounting software market is projected to reach USD 70.2 billion by 2030.
- Around 72% of finance leaders believe that AI will be a critical technology for the finance function in the future and will significantly influence the way finance drives data-driven insights.
- The global cloud accounting software market size will reach USD 5653.5 million by 2028.
How did we get here?
#1. Accounting Challenges That Businesses Must Overcome to Enhance Performance
Businesses face numerous challenges in manual accounting, including:
- Manual errors that require rework cost businesses heavily.
- Voluminous accounting work leads to frequent delays and missing deadlines.
- Everchanging compliance norms and the need for diligent and timely compliance puts tremendous work pressure on accounting staff.
- Accounting data is sensitive and confidential; data security is a significant concern.
- Businesses face an ever-increasing need for accounting personnel to manage increasing volumes of data and accounting operations efficiently.
- Accounting operations require hiring skilled and experienced personnel that cost higher.
- Accountants need to generate various reports as and when required to meet regulatory needs.
- Accounting work involves phases of higher and lower workload; thus, sometimes, accounts departments are over-staffed and often understaffed, creating workload imbalance and putting an additional cost burden on the company.
- Expenses and cash flow need consistent tracking and monitoring for better cash availability.
- Budgeting and forecasting are vital for a business but cannot be effectively managed manually.
- Payroll management has strict deadlines that businesses must diligently follow to prevent attrition and statutory complications.
- Accounting processes are complex, and any interruptions or delays are unaffordable; thus, businesses need to ensure consistent availability of accounting staff to ensure uninterrupted work and compliance.
- While the remote working model has numerous benefits, accounting processes cannot be smoothly managed remotely due to data sharing, security, confidentiality, collaboration, and many more issues.
#2. Trending Technological Disruptions in Accounting
To overcome the above challenges, businesses must adopt software and technology for the digital transformation of accounting systems. Here are the most trending and valuable technologies companies can leverage to enhance accounting efficiency and performance.
Cloud Computing
Cloud computing is the technology that delivers various computing services on the internet or cloud instead of local servers. It has changed the way people save, access, and use data altogether. It enables easy access, update, sharing, and storage of data on the cloud from anywhere through an internet connection.
Cloud computing in accounting helps enhance communication and collaboration among accounting personnel and other stakeholders. It improves efficiency and productivity in accounting operations. The cloud also ensures the remarkable conservation of resources for businesses, including space, labor, and time. Moreover, it helps reduce hardware, software, system maintenance, infrastructure, and human resources costs. Thus, leveraging the cloud helps businesses save significantly at nominal prices with convenient subscription-based monthly payments.
Besides, leveraging cloud computing ensures safe and secure data storage by enabling continuous real-time monitoring for security threats, end-to-end encryption, reliable disaster recovery processes, and scheduled/automated regular backup systems to prevent data loss. Cloud can host voluminous data without compromising data security and integrity. With enhanced data management and so many benefits as above, the cloud thus helps businesses scale and flourish without hassle.
Robotic Process Automation
Robotic process automation (RPA) is a technology that leverages software robots to automate manual processes and repetitive tasks. It enables businesses to save time, reduce human resource needs, and enhance productivity by automatically managing and executing simple, repetitive work. As machines can do the work much faster, RPA is revolutionizing every sector, including accounting.
RPA creates wonders in all accounting operations, including gathering, processing, and presenting financial data. It helps consolidate records, adjust journal entries, and prepare financial statements according to the norms and protocols. It helps maintain consistency in the accounting processes. RPA enables enhanced accounting operations through quicker repetitive document analysis and processing. Moreover, leveraging RPA in accounting helps eliminate human error and thus ensures enhanced accuracy.
Artificial Intelligence (AI)
AI has transformed numerous industries, including accounting. Artificial intelligence can quickly identify hidden patterns and trends with higher accuracy, even from voluminous accounting data. These patterns and trends provide data-driven intelligent business insights that can help businesses gain a higher edge over their competitors.
AI-based insights from accounting data enable better forecasts for strategic business planning. These forecasts help businesses foresee opportunities and threats, prepare in advance, prevent losses, and ensure uninterrupted business operations through enhanced planning.
Auditing is another crucial accounting operation. It involves evaluating financial statements and ensuring they are up-to-date, accurate, and meet regulatory norms. AI helps automate and improve audit processes, including numerous routine and repetitive tasks prone to errors. Moreover, auditing demands very high accuracy that manual work cannot assure. AI can help identify human errors, duplicate payments, and compliance deficiencies for quicker and flawless auditing.
AI can assess data for risky activities and behaviors in accounting operations to predict risks beforehand. This information is utilized to solve issues, take corrective measures, and prevent such problems. Leveraging AI in risk assessment can thus also reduce auditing efforts by ensuring flawless accounting management routinely.
Accounting fraud can cost businesses heavily. Thus, another great AI use in accounting is fraud detection. AI can efficiently and flawlessly collect, sort, and visualize data. Moreover, AI identifies correlations between transactions, preventing improper or overpayments. It helps detect anomalies, human errors, duplicate invoices, and indications of fraudulent transactions. These AI traits enable timely fraud detection, allowing businesses to take action and prevent further damage.
Data Analytics and Big Data
Data can be leveraged for numerous purposes in accounting, like analyzing transactions, identifying patterns, and detecting unusual events. It also helps better understand various stakeholders of the business, including the employees, vendors, and customers. Data analytics in accounting involves gathering and analyzing relevant data for useful insights. There are numerous ways data analytics can help businesses perform better, including cash-flow analysis, monitoring business performance, improving client experience, identifying & controlling risks, enhancing profit margins, making better strategic decisions, and more.
Besides, data analytics enables businesses to measure performance goals and fund requirements to ensure uninterrupted operations and steady growth. Gradually, this helps enhance client trust and retention, bringing long-term stability for businesses.
Big data analytics allows businesses to generate data-driven audits using real-time data, easing the work of auditors and improving the reliability of the audit process. Moreover, it helps track the budget and expenses and forecast for resource allocation, expense management, and expansion, saving considerable time and money for the accounting department. It also helps prepare reliable financial reports. Thus, data analytics in accounting is emerging as a game-changer for businesses.
Internet of Things (IoT)
IoT or the internet of things is a system or network of interconnected devices communicating with each other. The technology utilizes numerous sensors, software, and technologies to collect and exchange data across systems. IoT is expected to completely revamp accounting.
IoT helps businesses access accounting data in real-time, automatically collect data, track, and transmit relevant information through various devices and sensors connected to the IoT network. IoT technology enables managing voluminous data with enhanced accuracy without human intervention and manual errors. Complete automation of accounting data management through IoT enables businesses to save enormous amounts of time, resources, and money.
Blockchain
Accounting majorly involves measuring, analyzing, and communicating financial data. Blockchain is a distributed ledger technology that retains a secure record of every transaction. It thus helps eliminate multiple entries of accounting data into separate databases. This greatly reduces auditors’ work and time consumed in reconciling separate ledgers. It eliminates manual error, enhancing accuracy and efficiency. Moreover, blockchain permits real-time recording and settlement of accounting transactions in a consistent format that also improves audit reconciliation, analysis, and overall performance. As it eases the work of auditors, they can switch from quarterly or annual audits to more routine exercises to reduce excessive workloads during planned audit phases. It thus optimizes the complete accounting system, making it more audit friendly.
Other benefits of blockchain in accounting include:
- Real-time settlement of accounts through blockchain prevents non-payments and duplicate payments in accounting.
- Blockchain enables the automation of transactions with enhanced accuracy.
- With an immutable record of transactions and better traceability, blockchain ensures higher transaction security, less fraud, and enhanced trust.
Accounting Software
Leveraging accounting software tools for extensive accounting process automation is the most useful technological disruption in accounting. Accounting software offers all tools to cover basic accounting functions, including accounts receivable, accounts payable, billing and invoicing, budgeting, forecasting, inventory management, cash-flow management, payroll management, fixed assets management, general ledger management, bank reconciliation, audit trails, data analytics, reporting, and more.
Moreover, advanced accounting software solutions utilize all the above technologies and tools to help businesses streamline and manage their accounting operations, save costs, boost profits, and stay ahead of the competition. Using software and technologies for accounting also enable remote working for accounting professionals, ensuring uninterrupted and timely accounting management.
#3. Why Accounting Software Is a Must for Your Business?
Leveraging accounting software offers a competitive advantage to businesses. Here are the top benefits of accounting software that make it a must-have for your business.
- Automation and enhanced management of accounting operations.
- Streamlined accounting processes and overall enhanced business performance.
- Elimination of manual error and increased accuracy.
- Improved client and customer experience.
- Real-time access and updates of accounting data.
- Easy tracking of financial transactions.
- Enhanced operational speed and time-saving.
- Better and timely tax and compliance management.
- Conservation of human and other resources.
- Comprehensive data analytics and automated reports generation.
- Cost reduction due to enhanced productivity, efficiency, and resource conservation.
- Easy data storage and routine backups, preventing data loss.
- Enhanced data security of confidential financial business data.
- Enhanced scalability for steady business growth.
What’s Next
Accounting is a collection of financial operations in businesses, including tracking income and expenditure, recording financial transactions, statutory compliance management, and sharing relevant financial information with all the stakeholders of a business. Flawless accounting is critical for the survival and healthy growth of a business.
Technology and software play a remarkable role in enhancing accounting performance for businesses. Companies that leverage such technologies in accounting, including blockchain, IoT, cloud computing, RPA, big data analytics, and more perform far better than their competitors. Modern accounting software and accounting practice management systems utilize these technologies and tools to offer advanced features to cover and manage all aspects of accounting.
Adopt these trending technologies through the top accounting software for your business and witness smooth operations and steady growth.
