Accounting practices have remained the same for the last 100 or so years. Quietly going about its business, churning out exactly what is needed by the industry and no more. Emerging technologies and tools are transforming every aspect of businesses, from marketing to human resources; it thus stands to reason that the accounting industry is standing on the precipice of change.
Accounting software is not a new idea. Programs such as Pastel and QuickBooks have been around for some time, but recent changes and innovations in business models are driving the need for change in this industry toward a more advisory and intuitive business model.
Rob Nixon, CEO and founder of Panalitix, predicts that business advisory services will comprise 80 percent of revenue. Instead of compliance services monopolizing accountant’s time, they can add value by utilizing changing technologies.
Various drivers of change are responsible for this impending shift in business accounting. Here are five trends driving the transformation.
Into the cloud
The emergence of cloud computing, remote tools and ubiquitous connectivity has redefined how businesses function. A recent survey found that 75 percent of executives reported using at least one cloud based business application. Managers can have their fingers on the pulse from anywhere, and logic prescribes that in this environment, the accounting framework must follow.
Cloud based software allow companies to have outsourced accounting and nominalize costs and reallocate these resources elsewhere. Cloud technology allows stakeholders to access business data in real-time, and make instantaneous, informed decisions.
Manual data entry is becoming a thing of the past. Software enabling importation of documents, electronic documents, and online solutions has revolutionized the way information is handled. By allowing computers to take over this aspect of accounting, this has resulted in far greater efficiencies and better use of human resources. Instead of crunching numbers, accountants can be putting this time toward business-centric solutions and value-adding predictive analyses.
Automatic work flows, not only result in superior processing speeds, but allow for real-time reporting and snapshot business analysis. This allows for proactive instead of retroactive responses and ultimately better service delivery. Automated data entry also removes human error from the paradigm and is more cost-effective to the tune of a 50 to 70 percent reduction, according to accounting technologist Louie Balasny.
The DIY Movement
The evolution of accounting software and the tools it offers has driven many organizations to attend to their own accounting needs. Affordable software and user-friendly tools have been the primary drivers of this change, pushing accountants to the fringes.
Data processing and checking can be performed by supercomputers rendering statutory compliance a commodity and essentially usurping the accountant’s role.
Machine Learning and AI
Traditionally, accountants would sift through figures and make predictions based on past information. Technological advances with intricate algorithms and machine learning have taken these predictions to the next level, allowing real-time insights and prescriptive decision-making.
These insights add value to the business model and promote a client-centric approach.
Customization is key
Customers’ increasing demand for specialization is putting pressure on the marketplace to deliver customized solutions in all aspects of technology, including accounting systems. Modular packages and tailored pricing options are required from all software solutions, as customers only want to pay for what they need. Subscription offering is appealing to companies who want to spread their accounting costs over time, as opposed to a large outlay up front.
On that note…
These drivers are redefining the accounting realm as we know it. As businesses move to new software solutions and slowly realize the potential of these value-driven and innovative tools, we will see a shift in both customer focus and business models. It’s not just a case of embracing new technology, but transforming brands, services and marketing in line with the customer-centric exemplar. The time is ripe for making use of valuable interpreted information, instead of just producing sheets of numbers to draw inferences from.