To those less informed, accountancy can seem stale and lifeless. However, new emerging technologies, combined with the impact of the coronavirus pandemic, are set to herald big changes in the world of accounting.
From transformational accounting practices spearheaded by blockchain, to new ways of working in the wake of the pandemic, accountancy is going to see some serious upheaval in 2023 and beyond. Here at Tech.co, though, we don’t just jump on buzzwords and trends – we’ve spoken to leading industry figures and conducted our own independent research, to find out exactly how companies are making changes.
The early 2020s will be remembered by accountants as the time when their jobs truly entered the 21st century, thanks to improved computing operations. It’ll also be looked back on as the time when offices faded into the background, with home offices becoming the center of the accountant’s world.
The four main trends our research has identified are the growth of blockchain, advancement of automation, spread of agile accounting and rise of more widespread third-party involvement.
Our survey also revealed some interesting stats on accounting technology.
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- 59% projected market growth between 2016 and 2024
- $4.1bn worldwide spend on blockchain solutions in 2020
Blockchain is one of the biggest buzzwords in business at the moment. Lots of people claim to be excited about the new tech and its potential, without ever really specifying what that potential is. However, when it comes to accountancy, blockchains could be a serious gamechanger.
That excitement is reflected in the market as well, with more than 55% of businesses saying that blockchain technology is one of their top-five strategic priorities – up from just 43% in 2018. These businesses will all have accounting departments, as well. What’s more, businesses spent more than $4 billion on blockchain solutions in 2020, and the global market for blockchain technology is expected to top $20 billion by 2024 – up from just $315 million in 2015.
What is it?
A blockchain is a digital ledger of transactions that are distributed across an entire network of computer systems. These could be internal networks, private networks, or public networks, as used for cryptocurrencies such as Bitcoin and Ethereum.
Each block on the chain contains a number of transactions that can be viewed and verified by everyone on the network. Whenever a new transaction is added to a block, every participant gets a record of that transaction, as well. In essence, this allows transactions managed on blockchains to be completely transparent.
Currently, banks are getting the most use of blockchain technology, but we’d expect other sectors to catch up quickly.
Why does it work?
Blockchain technologies allow businesses to improve their processes. For example, it will help businesses trust each other when it comes to managing transactions – there’s nowhere to hide from an unpaid invoice if it's on the blockchain.
Similarly, it can also help with record keeping – particularly useful for accountants – because records cannot be forged or tampered with. Plus, each transaction can be verified by multiple different participants on the blockchain.
Blockchain technologies are also super secure. Multiple verifications keep things in order, and each transaction is also recorded with a unique and unchangeable cryptographic signature called a hash.
How should you use it?
Since it relies on independent verification, blockchain could be used in place of traditional external auditing. Blockchain’s visibility means that inconsistencies will be impossible to hide.
Improve your records
Instead of the old-school double-entry system for record-keeping, blockchain will let you write transactions directly into a joint register that is both secure and publicly accessible.
Writing transactions into standardized joint registers would help auditors work through records faster, allowing them to verify transactions using their unique hash keys.
For accountants, the biggest and most important use of blockchain lies in its ability to store and hold immutable records of transactions. You’ll be able to ensure that any dealings your clients or businesses enact can be recorded and stored on the chain. This will help you keep abreast of what’s going on, as well as make painfully slow auditing a thing of the past.
- 80% increased operational efficiency when accounts payable is automated, with a 366% ROI
- 29% of automated technology is used in accounting
Automation sounds scary and gets a lot of bad press. However, the sort of automation you’re likely to come across in the workplace doesn’t consist of robot workers banging away at Excel spreadsheets, typing thousands of words per minute – it’s far less threatening.
In fact, around 29% of high-tech automation is to be found in accounting functions, while 22.8% of businesses are looking to implement some form of automation in the coming years.
What is it?
Accounting automation technology will allow processes or procedures to be completed with minimal human assistance.
Think about filing invoices and scheduling meetings, rather than developing new tax strategies. In many ways, this kind of automation is similar to an Excel Macro tool — the computer can complete a task as long as the rules are defined and it is clear and repeatable.
Why does it work?
Automating the most tedious processes in your work will have two massively important benefits. First, you and the company will be saving time – time that could be used for other more exciting and thought-provoking work. Indeed, 30% of our accounting survey respondents said that the biggest advantage has been the time it has saved.
The second benefit is vastly improved efficiency. You’ll be able to get tasks done faster, reducing the number of long hours you have to spend in the office at financial year-end. In fact, this saved time can help businesses improve efficiency by up to 80%, and can earn a return on investment of up to 366%. Meanwhile, 15% of our respondents highlighted that the use of technology has improved their productivity.
However, automation projects can be pretty expensive, making them more suited to bigger companies. They also shouldn’t really be carried out in isolation – automation should be a project for an entire enterprise, not just a lone accountant.
“Artificial intelligence and robotics are reducing operational costs and increasing performance by automating complex and repetitive tasks and procedures with extreme precision,” says Thilo Huellmann, CTO of AI company Levity. “These are some of the new technologies that are assisting today's accountants in transitioning to a more critical thinking role.”
How should you use it?
Improve your efficiency by reducing admin
No one likes doing boring work – except for computers. Robotic process automation will save you time when it comes to boring administration tasks, such as scheduling meetings with clients and filing completed reports.
Let your staff enjoy more interesting tasks
By taking care of the most menial jobs, automation gives you the time and headspace to focus on more pressing things, such as giving clients great service. This will likely make staff feel more fulfilled in the work they do.
Replace human mistakes with robotic accuracy
When staff become overworked and burnt out, mistakes happen. With software robots picking up the slack, errors will be reduced, as staff will have more mental space to concentrate on tasks.
You should use accounting automation to reduce the amount of time you spend on simple tasks. For example, you can track invoice progress and automate their approval using some accounting software tools. Similarly, you can use it to validate and verify information that you receive from suppliers and other businesses to make sure that everything lines up.
You should be looking to implement these practices cautiously – you won’t be able to automate an entire department overnight, and nor would you want to. Instead, use these tools to reduce the load on your existing staff, and allow them to focus on the most valuable tasks.
- 54% of CFOs plan to make remote working a permanent option
- 66% of enterprises already have a central cloud team
The coronavirus pandemic has forced many people to work remotely. And you shouldn't expect most businesses to return to the office full time – indeed, 54% of CFOs plan to make remote working a permanent option even after the pandemic has subsided.
This kind of change will transform the demands of our offices, our homes, our computer hardware, and the software tools accountants use to complete their tasks.
What is it?
An agile working setup is not the same as remote working. Agile working means that you’ll be able to work in different locations at different times, whilst still meeting the demands of the modern workplace.
You might be working at home one day, heading into the office for a critical meeting the next day, before heading to a local cafe the day after. Agile working lets you work around your life, rather than trying to shoehorn your life into your work.
Cloud storage is an essential piece of technology for agile working. “It has been very advantageous to have our accounting system on a cloud,” says Rick Hoskins, founder of Florida business Filter King. “It has allowed me to access data at any time from any location, without needing to bother an employee or wait for office hours. Your accounts are also safer in a cloud, as the risk of theft, loss, or damage are highly reduced.”
Why does it work?
Agile working is a great way for businesses to give staff the flexibility they want, whilst also retaining the ability to function as normal. Staff prefer agile working setups – they feel more trusted, but are still able to form strong relationships with colleagues whilst also being free to move around.
How should you use it?
Widen your talent pool
Agile working practices can help your company hire better people from all over the country. You won’t be stuck searching for the same people in the same place.
Support diverse lifestyles
Agile working will mean that your company can keep hold of talented staff even when their circumstances change. Childcare, for example, becomes far easier.
Make your employees even happier
Everyone likes the chance to work at home once in a while, and an agile working setup will make your staff feel happier and more trusted. Agile working can bring some real benefits to your company – staff will be more relaxed, and it’s a great perk to help attract new talent.
It can also be used to help staff deal with lifestyle changes – allowing team members to choose flexible working practices if they have kids or other caring responsibilities, for example. This can be a great way to ensure diversity within your company whilst also maintaining productivity.
- 49% of consumers downloaded more than two apps during the pandemic for food and drink buying
- 44% of operators planned to upgrade their point of sale system last year
It used to be the case that businesses managed all their own affairs. However, thanks to the rise of digital platforms such as Uber Eats, Square, and Shopify, businesses are outsourcing an increasing number of their business-critical functions.
44% of retail and restaurant businesses, for example, were planning to upgrade their restaurant point of sale systems in 2020. What’s more, consumer demand for these services is huge – 85% of consumers have purchased something using a mobile app, while 49% of buyers have downloaded at least two apps during the coronavirus pandemic to buy food and drink.
What is it?
In simple terms, a third-party transaction is a sale or business transaction which involves the buyer, the seller, and another third party. Often, these third parties act almost as middlemen, helping to facilitate the sale or purchase of goods or services.
However, while these roles might traditionally have been fulfilled by insurance brokers, car brokers, or car salespeople, digital technology has seen third-party transactions explode with payment platforms and business aggregator apps.
Why does it work?
Third-party involvement benefits customers because it offers a level of trust that might not be typical of the smaller, independent business they’re looking to buy from. It also makes it far easier for customers to find and interact with businesses.
It benefits accountants, though, because smaller businesses will be able to produce useful information related to sales, profit, and revenue which would exceed their traditional capabilities. Your bookkeepers will be far less stressed, with the apps and platforms doing most of the heavy lifting.
How should you use it?
Use it as an information resource
Through using third-party services, companies gives accountants another source of information about their client’s dealings. More information is always good, and it should make checking transactions easier.
Track client transactions
Third-party services will keep their own records of transactions, which will help you ensure that all your clients' transactions are properly tracked.
Build new systems
Some services offer open APIs, and computer-savvy accountants can connect these to new systems to help track transactions automatically – both improving reliability and saving you time.
Don’t think that these third parties do an accountant’s entire job. There will still be a lot of dedicated work for you, as an accountant, to do in order to make sure your clients meet their obligations. However, it’s also worth recognizing that third parties can also expose businesses to conduct, delivery, and reputation risks – so it’s important not to put all of your eggs in a single basket.
New Accounting Technology
Computers have irrevocably changed workplaces since their very introduction. However, the changes that are set to be introduced thanks to blockchain, automation, the cloud, and third-party providers will signal a new era for accounting.
These new technologies will create a marked improvement for efficiency and productivity, whilst also offering accountants a better balance between their domestic and work lives.
We surveyed 39 accountants from a variety of industries, who told us how technology has impacted them:
- 97.5% said they have been impacted by accounting technologies
- 75% said it made a positive impact
- 60% believe the future of accounting technology is going to be very positive, whereas 40% believe it will be quite positive.
The biggest positives of the new technology included time saved (30%), better productivity (15%), cloud access (10%), data accuracy (7.5%), and fast data retrieval (7.5%).
However, there were some perceived downsides to the new tech, including training staff (30%), increased cost (10%), bugs in the software (7.5%), fewer accounting positions (5%), and security issues (5%).
Verdict: The Future of Accounting
In 2023 and beyond, accountants are going to meet a lot of new challenges.
Third-party involvement will expose businesses to new risks, but also potentially reduce workloads and lead to more reliable bookkeeping.
Agile work practices could lead to more diverse workplaces, as well as allowing businesses to find better recruits in different locations. However, not all workplaces might feel comfortable with committing to remote working in the long term.
Automation won’t see robots replace accountants, but it will lead to some tedious processes being made things of the past. It will also help accountants spend more time working on more important tasks.
Blockchain technologies offer a huge benefit to accounting firms, with more reliable transactions and greater trust between organizations.
2023 is set to be a big year for accountancy, so make sure you’re ahead of the curve.