From shifts towards data-driven strategy to the implementation of new technological tools, the profession has rapidly evolved.
The accounting industry looks a lot different these days than it did 10 years ago. From shifts towards data-driven strategy to the implementation of new technological tools, the profession has rapidly evolved. It seems like there are always changes on the horizon when it comes to the world of accounting and finance. Here are four trends we are tracking right now and what they mean for your business.
1. The Role of Automation
Automation has become increasingly popular in the accounting industry. Although it does not replace the need for a living, breathing accountant, it does save time by automating routine tasks and removing inevitable human-error so that professionals can focus on the specific needs of their clients.
One successful example of automation comes from Coca-Cola Company’s review of their balance sheet reconciliation process. Automation of manual processes freed up 40% of their team to work on other metrics, reporting, and IT efficiencies. Accountants recognized that automation could reduce significant amounts of time, especially in areas such as reviewing information or drafting certain documents. Robotic Process Automation (RPA) has helped simplify tax, advisory, and audit work by using software tools to transform manual steps into more automated processes. The increasing popularity of automation allows time that was once spent on more mundane activities to be allocated to higher level tasks that require strategic thinking and lead to value-added solutions for clients.
2. Taking Business into the Cloud
For sectors across the globe, the cloud has become an integral part of doing business. This simple centralized document management tool can be used to handle the transition to paperless transactions, invoices, and other electronic payments. In saving time by removing accounting transaction delays and making key documents accessible online from virtually anywhere, clients are getting paid sooner simply because their customers are getting their invoices earlier. This time-saver also directly translates to payables going down from one or two months to a maximum of two weeks.
Cloud accounting is especially relevant as the world navigates the COVID-19 pandemic and more teams shift to remote work environments. Using the cloud can improve collaboration and allow for real-time updates between firms and their clients.
3. Utilizing Analytics
In almost every type of professional services firm, the utilization of analytics has become paramount. And accounting is no exception.
There are four general types of data analytics that can provide businesses with valuable insights and better inform their decision making process. Since the type of data collected can provide information on various processes, it’s important to select the right type to meet the company’s experience, ability, and goals.
First, there are descriptive analytics that help accountants understand what is happening. Then there are diagnostic analytics to understand why something happened. Accountants also use predictive analytics to show what will happen. And lastly, there are prescriptive analytics to show what should happen.
Using analytics allows accounting firms to help their clients make smarter, more informed business decisions backed up by data. Whether it is a new tool that assists with forecasting or novel software that helps with continuous auditing, keeping up with analytics is critical for accountants and their clients. The goal is to ensure companies are properly collecting and analyzing data to help them reduce waste and improve their operations. There is so much Big Data that accountants can parse through, and finding a way to maximize that information has become not only helpful but also necessary.
4. The Role of Outsourcing
Outsourcing is a growing trend in the accounting field that allows for the kind of higher thinking required in the new age of data analytics. The potential downside is the cost of outsourcing labor; however, 59% of businesses surveyed actually reported outsourcing in order to save money.
This is possible because outsourcing partners will have the infrastructure already in place to be able to offer their labor at a discount. Struggling businesses right now need to be able to take advantage of all their resources and save wherever they can, even if it means making a short-term investment in outsourcing other skilled workers to improve their overall performance.
The accounting industry is evolving at a fast pace to adapt to new technologies, keep up with the latest innovations, and pivot in the face of a pandemic. If you have questions about any of these emerging trends, Clayton & McKervey can help. For additional information, call us at 248.208.8860 or click here to contact us. We look forward to speaking with you soon.