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3 Biggest Trends in Accounting Technology for 2016

Feb 4th 2016
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Talk to any business owner and they'll tell you that two things matter in life: how often people buy from them and how much they spend. They might use terms like “customer satisfaction” and “brand advocacy,” but what they need is simply for more people to buy more expensive things more often.

The world of accounting software is just like the world of retail in this regard. What accounting software companies and accountants want is to sell more things and to keep us coming back for more. In 2016, those two ideas are going to drive most of the change we see in the market.

At SleeterCon last November, I had a chance to see the newest and greatest little tricks coming down the pipeline, and they're all designed to make your life easier while keeping you closer to software companies.

I'm actually upbeat about this year in accounting technology. The space has lagged behind many of its colleagues, with change taking its sweet time to sweep through. This year looks like it could be the year accounting finally gets things in gear and starts to take itself a little more seriously.

With all that in mind, here are the three biggest trends in accounting technology for 2016.

1. Cruising altitude will now be in the cloud. It would seem three years behind the curve in any other industry, but 2016 is going to be the year that accounting starts to move, in earnest, into the cloud. At Capterra, we did a bit of research on this last year, and we found that nearly four out of 10 accounting software users are in the cloud.

That's insanely low. We're talking about a time in human history when you can take a picture of a check with your phone to deposit it in your bank account. A time when you can pay $15 for two doughnuts simply by swiping your card through a tiny piece of plastic attached to an iPod. A time when … you get the point.

The main drag on the move has been providers' lack of robust options in the cloud. Cloud-based offerings were always secondary to local installations, paling in strength and flexibility.

Now, we're seeing companies like Intuit make drastic moves to get more and more people into the cloud. Back in 2014, QuickBooks announced that in March 2016 it's discontinuing its sync manager for desktop. While not explicitly spelled out as a move toward QuickBooks Online as the primary product, that's the subtext I got.

Putting information in the cloud makes business sense. Intuit can charge users a recurring monthly fee, which businesses love. Your accountant can access your files more easily, saving you and the accountant time. You can access your accounts from anywhere, making it easier to enter expenses and revenue while on the road.

This shift has been a long time coming.

2. Computers will be doing the reading, from now on. If you're not familiar with optical character recognition (OCR), get ready to make a new best friend. OCR is the technology that makes that scanner in your office useful for things besides photocopying.

OCR is technology that turns images into readable and editable text. That means you can take a picture of your whiteboard after a meeting and have a document with all the handwritten notes typed out, produced in minutes.

For accountants, OCR is the technology that finally kills the hand-entered receipt. Until now, you've sent your accountant a huge envelop of receipts with a note that says something like, “Hope you can read, haha.” Then your accountant pours him or herself a glass of scotch and tries to figure out what “dnt uz fr dog fud last time +52” could possibly mean.

Seriously, your bad handwriting is killing these people.

Anyway, OCR ends that nightmare, by uploading the receipts you get right into an online accounting platform, pulling out all the relevant text and data along the way. There are a couple of big players in this space, including Receipt Bank, Expensify, and Hubdoc.

Over 2016, expect to hear more about this and for it to take less and less time to process documents. The technology has already made leaps and bounds, but there's plenty of room for process improvement.

3. It all ends up in the same place. On that note, 2016 is the year that everything tightens up. There have been a lot of gaps in the accounting market for a long time. Payroll was kind of over there, and invoicing was a bit off to the left, and if you had credit cards, well, they trickled in halfway through the month.

Now, if a package doesn't come with some sort of invoicing system built in, we think something has gone wrong. This year, we're going to see more components of the financial ecosystem start to be integral to basic accounting packages.

For the few tools that don't make it into the core system, we'll see tighter integrations with third-party systems. Those systems will be harnessing the power of – you guessed it – the cloud and OCR.

These integrations do two things. They:

  1. Keep you invested in the software brand you've chosen.
  2. Give your accountant more tools.

That gives him or her more time to focus on helping you save and make money.

Final Thoughts
Silicon Valley wasn't built in a day. These are trends that will continue through 2016 and on toward 2020. If I make a trend list over the next three years that doesn't include more accounting in the cloud, I'd be shocked.

Still, these are the areas where we're going to see the biggest changes this year. Luckily, while everything is being driven by more money and more customers, everything also points toward less work for small business owners. So far, 2016 is shaping up to be a solid year.

Related article:

What Accountants Can Expect in 2016

Replies (3)

Comments for this post are now closed.

By robertbanker
Feb 15th 2016 15:44 EST

Hi Andrew,

You seem to be very upbeat and optimistic about accounting software in the cloud and that Intuit is making a lot of headway in the field.

I assume that you are just contemplating the future, without real hands-on experience in the field of on-line accounting.

The truth however is much different than what you may assume.

I've been using Intuit QB desktop version for about 15 years. The program was getting better than one would think it could. Of course it had some major glitches with every major change, but that was fixed with an update relatively quickly. You could view multiple reports at once if your screen was large enough. The system updated itself as soon you hit the Enter key on the keyboard. It was and still is a bookkeepers dream to own a copy. If you knew what you were doing, it worked for you in every aspect of accounting.

QBO is far, very far, from ever getting close to the ease of the desktop version. As a matter of fact, everything I mentioned so far in relation to Desktop, cannot be said for QBO. Besides the fact that the layout and ease in QBO is inferior relative to Desktop, it is next to impossible to get the same system speed, unless you have ultra, ultra hot high speed internet.
I would not even accept a customer that uses QBO. My time is too precious and the output of QBO is way too slow. I do not recommend changing to cloud based accounting any time in the near couple of years.

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Replying to robertbanker:
By AccountRespond
Aug 8th 2016 09:36 EDT

I absolutely agree with Robert. QBO is inferior to QBD. QBD was making head way before QBO showed up. Now, as an accountant, we are forced learn a new program because Intuit and other Cloud programs out there are marketing their systems to our customers. We aren't, they are. QBO is not as robust as QBD, and I cringe whenever I find a client that wants to use either of those cloud systems.

What these companies did, they did wrong. We as accountants want the cloud, but we don't want they are offering, our customers do. So, who are intuit and Xero really marketing? Who is the customer segment, us (Accountants) or our clients? Accountants are being forced to accommodate, when it should be the other way around.

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Replying to AccountRespond:
By Victor Lopera
Oct 21st 2016 12:18 EDT

I don't agree with you.

In fact, I think that cloud accounting is the future like accounting software was the future back in the days.

Accountants were really reluctant to do accounting in a software. They thought that they would loose track of everything because it wasn't written on hard paper. But hey think about all the time, the ink and the paper that was saved!

Same thing here for cloud accounting. Eventually no more paper receipt, accessibility from everywhere, no more misreading, no more go and get the documents from the clients meaning an automatizations of all the accounting processes, a globalization of the accounting services of course and a major cut on accounting firm expanditure such as salaries and a cut on time consuming task.

In the end it is indeed a win/win situation but for sure we'll have to ask ourselves if giving up the relation accounting-client that exist actually to a virtual relation is the best way to go.

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