From manual bookkeeping with cash registers to tap and click on mobile devices, accounting has come a long way. New trends are constantly emerging that are paving the way for the future.
In this article, we’ll look at nine accounting trends that will shape the accounting industry in 2020 and beyond.
1. Accounting Automation
This comes as no surprise. With the world embracing automation, the change is evident in accounting and billing, too. And for the right cause.
Traditional accounting has always been a cumbersome, paper-based, and time-consuming task. Even though spreadsheets and computer systems have replaced cash registers, the process remains largely manual.
Besides, human involvement also increases the risk of accounting errors. To overcome this hurdle, bookkeepers and internal auditors are shifting to automated accounting solutions.
2. Increasing Use of Online Accounting Software
Technology has played a pivotal role in revolutionizing the accounting sector. The ongoing digitization has led to the rise of online accounting software solutions. Thus, the global accounting software market has climbed to $11 billion, showed a report by Fortune Business Insights.
3. Cloud-Based Accounting
Accounting software solutions have been out for a while, 1978, to be exact when Visicalc launched the first spreadsheet software. Since then, most businesses have relied on on-premise accounting systems.
But now, with cloud technology redefining business operations, accounting software vendors are also embracing the trend. Cloud-based free accounting and billing software solutions like Moon Invoice are becoming the new normal.
Cloud-based accounting has several benefits. It offers enhanced flexibility, enabling accountants to manage the books anytime and from anywhere.
4. Outsourced Accounting and Bookkeeping
Let’s face it; companies are not very fond of maintaining and managing their books. Even with cutting-edge accounting systems in place, accounting remains a time-consuming task, especially for large businesses. This has led to the increased popularity of outsourcing accounting functions.
Enterprises and medium-sized businesses have been outsourcing their accounting for years. But recently, small businesses have also started outsourcing their accounting tasks. A study from Clutch suggested that accounting is the most outsourced service among small businesses (37%).
5. The Relevance of Data Analytics
The job of an accountant and bookkeeper has evolved from managing finances to acting as financial advisors. Account managers now need to analyze financial data to help organizations make better decisions.
To make informed decisions, accountants need accurate, actionable data. This has shifted the accounting industry’s focus on data analytics.
Though data has been an inseparable aspect of accounting for decades, its role has evolved. Accounting firms now utilize data analytics for efficient tax management, auditing, and risk management.
The rising importance of data in accounting has also catalyzed the use of Big Data. Accountants aren’t only optimizing financial operations, but they’re using Big Data to transform internal data sets to secure critical information.
6. Social Media
Social media in accounting? It might come across as a surprise, but accountants and accounting firms are leveraging social media to grow their business. With outsourced accounting becoming the new normal, accounting service providers are using social media to improve brand awareness and increase sales.
The benefits of social media for business development are evident. Companies across industries have been using social media for years to get and keep clients. Now, accountants have also stepped in, and the use of social media in the accounting industry is set to grow in the coming years.
7. Hybrid Accounting Approach
We’ve discussed how automation is revolutionizing the accounting industry. We have also discussed the changing role of accountants and bookkeepers. But what’s crucial to understand is that despite technological advancements, accounting can’t be completely automated.
It’s easy to automate billing and invoicing tasks with an online accounting software solution. You can even create invoices on your mobile phone with a receipt maker app on iPhone or Android. But what technology can’t do is make decisions. It’s something that’ll always fall into the hands of humans.
As a result, the leading accounting firms are taking a hybrid approach. They’re delegating recurring tasks to automated solutions, allowing human professionals to focus on decision-making and the quality of advisory services.
8. Remote Work
With the use of automated accounting solutions increasing, traditional accountants are at risk of losing their jobs. An article from Going Concern suggested that a large number of accountants are worried about unemployment.
To overcome this hurdle, many accountants and accounting firms have deployed a remote work approach. Thankfully, cloud-based free billing and accounting software solutions have made remote work possible for accountants.
9. The Rise of Emerging Technologies
When it comes to accounting, big data and analytics are a couple of technologies that come to our mind. But apart from these, other technologies are also making their way into accounting. Two big names are Blockchain and Artificial Intelligence.
Blockchain has already made its impact on the accounting sector by lowering the costs of maintaining ledgers. A report by Statista showed that the financial industry accounted for 60% of the global blockchain market. Blockchain has also increased the accuracy and security of data storage and management. And in the future, we can expect to see more of Blockchain.
The role of Artificial Intelligence (AI) is also increasing in the accounting industry. As mentioned, data is an essential fuel for the accounting industry. But with so much raw data, there needs to be a system that ensures accurate data analysis and decision-making. Here’s where AI-based solutions come into play. AI offers significant opportunities to optimize accounting tasks and administrative workflows.
The trends discussed above deduce one thing: the rise of technology in accounting. Whether it’s remote work or the increasing use of online accounting software solutions, technology has played a vital role in revolutionizing the accounting industry. And it’s safe to say that technology will remain to be the biggest force of change five or ten years down the line.
For businesses, it’s crucial to embrace these trends and optimize their accounting and bookkeeping operations accordingly.