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The Truth Behind Today’s Biggest Accounting Trends

Sep 15th 2016
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When we talk about trends in accounting software, it is clearly tempting to bring automation and data flow management these days, but there’s more to it than that.

Yes, we’re being driven to Accounting 2.0, where accountants are financial guides and yes, accounting firms are pushing for subscription revenue, which leads them right into the cloud. And yes, we’re doing more with less and saving time for clients. All of these things are true.

But the real interesting trend underlying all of this is the shift to cloud infrastructure. The cynic in me always says that this is due to revenue concerns. You drop a desktop program in the cloud, add a handful of features, and turn your one-time $400 purchase into a $150 per-year recurring revenue stream. The reality is, the cloud is just better.

Using shared resources does three things – probably more than three, but people love threes, so here we are – to benefit accounting software users:

1. It speeds up processing and opens up new reporting tools. By calling up the power of an AWS or an Azure, you’re able to accomplish all sorts of tasks that your 2006 Lenovo is going to struggle with. You can use character recognition on receipts, tap third-party resources in seconds, and keep backup files that live on despite local drive failures. Putting accounting in the cloud gives you access to raw power.

2. The cloud brings technology together like spiked punch at prom. Banks are easier to work with, third party add-ons are easier to integrate, and you can use mobile devices to give clients access on the go. This is a winner in my book, but it can make you miserable. Clients can now reach in to wreck things from anywhere in the United States, ask you to look at their books in the middle of the night, and try to fix it themselves. I think the overall value of connectedness is positive, but there are some cons to overcome.

3. Finally, the cloud gives accounting software vendors the chance to make data beautiful again. You may never notice this, but the way we design software for online use used to be driven by database size constraints. To overcome these, software vendors would create workarounds, build weird parallel databases, or have one system in Phoenix and another in Des Moines.

Today’s technology allows us to build well-structured, easily accessible, and quickly manipulated (see point 1) databases. This happens so far behind the scenes that you’d never know it, but the work being done today is going to change the way accounting software works over the next five years. In fact, it’s already begun.

Automation and Data Flow

Layered on top of all this beautiful infrastructure are the two trends we touched on at the start of this whole thing – automation and data flow. The biggest trends in accounting software boil down to how we can manage data with even less input.

Optical character recognition (OCR) is changing the way businesses record expenses, allowing them to simply take pictures of their receipts. This is technology that’s existed for years, but with more access to massive banks of processing power, it can happen in a fraction of the time it traditionally took.

The tectonic shift of all the data we generate is also undergoing automation. We talk about removing double-entry issues to cut down on errors, but let’s be honest – this is data that was sometimes being entered into five different places anyway. Manual entry is the bane of clean data and we’re basically eradicating it from the process.

We’re going to continue spending less time capturing data, less time inputting it, and less time moving it from its origination point to its destination. It’s all going to happen on the back of the cloud infrastructure that we’re building.

Final Thoughts and Concerns

The quality of the products moving to the cloud need to step it up. A lagging, buggy, and generally infuriating user experience can’t be the norm. Hideous facades are overshadowing lots of fantastic options and that has to end.

If we’re going to jump into the world of cloud-based accounting, tapping into the power and accessibility it provides, we have to make the experience for accountants more positive than it currently is. I also think the tech war is going to slow in the next few years and the real user experience war is going to kick off. Then, we’ll start to see more stories of real success.

Replies (3)

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Will Keller
By Will Keller
Sep 19th 2016 13:58 EDT

Hi Andrew- Great article. My favorite line is your last one, that the tech war is going to start tapering off and the user experience war is going to start picking up. FreshBooks is currently releasing their new-and-improved version, I think they're placing a big bet on end-user experience. Xero is currently introducing their new Partner Program and they seem to be making a huge effort to become the partner-of-choice for bookkeepers and accountants. I work with the three biggies (QBO, Xero, and FreshBooks), and it feels like the start of a horse race.

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Replying to WillKeller:
By cbernardBDR
Sep 26th 2016 09:09 EDT

Not to mention the QBO app store. They all seem to be developing strategies to become that "partner-of choice" for bookkeepers. I'm excited to see how these strategies result in shaping the cloud-accounting experience! I both enjoyed the article as well as appreciate this observation in response to the article as it does hit on perhaps the greatest shift I've seen since 2015 with cloud-accounting software.

What are your thoughts on how hosting solutions will fare over time? Hosting solutions also seem to be gaining popularity in the face of rising popularity of cloud-accounting solutions.

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By Sandrina.lindo
Sep 22nd 2016 14:54 EDT

Hello, Andrew good article, thank you for sharing. I believe that you are correct,
relying on cloud-based applications will be more and more a reality, but working "outside the walls of the office" also have significant implications for the future of corporate security, including the cyberattacks prevention. For that reason, I wouls say that security options will also keep developing to better answer to the needs the new trends will bring along. Best regards, Sandrina

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