Technology continues to revolutionize every industry and accounting isn’t an exception. 2020 introduced a slew of challenges for businesses across the globe and some of the “new normal” trends are here to stay. As an accounting professional, it’s essential that you understand the current trends in accounting, so we have prepared a detailed overview of some of the biggest changes we expect to see in the field this year.
How cloud technology affects accounting
Amidst the global pandemic, most companies have implemented at least some degree of remote or work-from-home environment. Accounting has long since recognized the value and benefits of remote working, but the growing popularity of remote teams has led to an increased demand for cloud-based solutions that allow organizations to operate more efficiently.
A recent survey found that 67% of accountants believe cloud computing would be beneficial for their work in the future. The biggest perk of cloud technology is that it allows data access from any point around the globe, virtually at any time. This data access is not limited to “read-only”, but participants can share, edit, copy or work collaboratively on data files. For businesses specifically, cloud computing can simplify tracking expenses, sales, and inventory, and for accounting specialists, cloud-based systems have an added advantage. They allow the management of huge data sets, enabling teams to perform sophisticated data analytics, which is crucial for modern-day accounting.
While there are certain upfront costs, both in terms of money and time, associated with switching to cloud-based systems, the increased efficiency, sophistication, and ease of access more than just make up for them which is why cloud migrations are one of the biggest accounting changes for 2021.
Outsourcing accounting tasks
Speaking of remote working, outsourcing is another significant accounting trend we’re observing in 2021. COVID-19 brought an unprecedented spike in remote working which in turn triggered one of the most significant accounting employment trends. According to Forbes, currently, more than 34% of Americans work remotely; this percentage might be as high as 40% if calculated weekly.
Traditionally, accounting has been centered around in-house teams, but an increasing number of businesses are looking into outsourcing specific tasks or projects to third parties. Companies, especially small businesses, and start-ups are also interested in outsourcing their accounting need to virtual or remote accountants rather than going down the traditional route. Outsourcing is a fantastic way to take on new clients, provide more or a wider range of services, and fill skill gaps for specific technical projects.
Outsourcing is a remarkably resilient trend in accounting, partly because it supports accountancy firms through challenging times. Working with a remote team or outsourcing specific tasks can significantly reduce costs associated with employee benefits or payroll and offer unmatched flexibility.
Cloud computing is far from the only technology-related change accounting is seeing in 2021. Automation—and specifically artificial intelligence (AI) and machine learning (ML)—provides a number of opportunities for businesses across industries. An increasing number of accountancy firms utilize the power of Big Data (which we will cover in the next point), ML, and AI to streamline outdated processes or automate tasks to free up time and resources.
A recent study by ACCA shed light on just how important automation is for the accounting industry: according to the survey, more than half of C-Suite executives believe automation will shape the future of accounting operations. In addition to automating labor-intensive tasks, AI and ML can harness the power of Big Data to generate forecasting models or complete tax returns with as little as a single click of the mouse. The sheer amount of data available can be fed to a model that can in turn facilitate better decision-making and help accountants provide the best possible service to their clients.
Big Data is certainly not a new trend in the financial sector. In 2021, businesses, including accountancy firms need to be proactive and the first step is utilizing Big Data. Accounts—information such as expenses, purchases, and sales reports—are invaluable sources of information that can be used to analyze the financial health of a company and drive smarter decisions for sustainable business growth.
Big Data is also critical for providing accurate, reliable, and risk-free financial services. Accountants can utilize it to proactively identify any issues while taking advantage of real-time access to the data (via cloud-based systems). This enables you to offer not just risk-free accounting services and consulting, but a competitive edge to your clients. Thanks to sophisticated data visualization tools, you can also harness the power of Big Data to provide new insights, advanced statistical data analysis with real-time data and more variables, as well as financial modeling that can inform decision-making.
Technology isn’t the only accounting change in 2021. The industry is also seeing a range of new regulations or changes to existing such. For instance, a change has been implemented in an amendment in the Definition of a Business (Amendments to IFRS 3): the current regulation clarifies that, to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. There are more accounting changes that are important to stay on top of, but for an overview of the key ones, you can check out the summary provided here [https://www.iasplus.com/en/othernews/new-and-revised/2021/march].
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