Gone are the days where an accountant is seen hustling through a pile of sheets with a worn expression all over his face. Everything we do has been transformed to a level nobody had thought of in the past and yet the transformation just seems to be gaining stronger momentum amidst these challenging times of Covid-19. The technological transformations that various industries are going through are only helping them grow bigger and better. Accounting is no different. Information Technology has revolutionized the way we keep accounts and has made businesses more efficient and profitable. Hosted accounting applications and similar latest trends are helping organizations grow by leaps and bounds.
If you are an accounting firm or a business owner looking to remodel your business through the latest accounting trends, then search no more.
This post walks you through the modern breakthroughs in accounting and discusses the most promising and future-proof solution in detail.
AI and Accounting
With the advent of Artificial Intelligence and Machine Learning, automation is no alien term for accountants. The onerous, lengthy administrative tasks such as data entry, bank reconciliation, and invoice capture have all been automated to save invaluable time, which is now being devoted to other important tasks.
Forbes had correctly predicted that the year 2020 will bring automation in banking, payroll, audits, tax preparation, and other such tasks. Forbes also believes it to be one of the most disrupting breakthroughs in the industry in more than 5 centuries.
Some of the advantages that AI brings into accounting are:
- Reduced Workload, Increased Productivity – With AI taking over burdensome tasks, the workload of finance professionals and accountants has reduced drastically. The tasks can now be completed in 80 to 90 percent less time, which gives the accountants an ample amount of time for client counseling, improving the productivity and efficiency of the organization.
- Fewer Accounting Errors – The automated tasks increase the overall quality of operations by reducing the number of accounting errors compared to human accountants.
Given the significant impact of artificial intelligence in finance and accounting, it is not surprising that many organizations have already integrated AI-enabled capabilities into their systems.
Blockchain – The Contemporary Ledger?
Blockchain is a distributed ledger technique that records data digitally into immutable packages known as blocks. Some of the potential benefits of using blockchain in accounting are as follows:
- Removal of Mediator – A bank or a financial institution acts as a mediator in all the financial transactions or asset transfers. Blockchain promises to get rid of the mediating entity, enabling direct transfer of funds.
- Enhanced Security – While the transactions recorded in a blockchain are frequently verified and validated for their authenticity, they can never be altered retroactively. Moreover, blockchain incorporates advanced cryptography along with a string of fail-safes to certify the integrity of the data stored in the blocks.
- Simplified Transactions through Smart Contracts – Smart contracts are computer programs consisting of linked if/else statements meant to implement and automate contractual terms between users. Some of the most strict compliance standards and regulations can be met by simply constructing a smart contract. Smart contracts are also beneficial for trade clearing, proxy voting, payroll, and other functions.
While still a nascent term, blockchain can be a game-changer in accounting and finance, especially with the blend of immutability, reliability, and immediacy it offers. Forbes too believes it to be the future of financial reporting, provided the issues preventing its mainstream adoption are resolved.
The Cloud – An Underrated Paladin
The cloud adoption among industries is increasing rapidly as the global cloud market is estimated to surpass $330 billion in the year 2020 itself.
As the cloud is getting bigger and better day-by-day, Cloud Accounting is also gaining popularity in the accounting and finance industry. It is rightly believed to be one of the most exhilarating things to have happened to the industry in the recent past. Cloud accounting makes the traditional accounting functionalities remotely accessible through any internet-connected device, even a smartphone. Cloud hosting services for accounting software are ensuring businesses get rid of all the limitations that exist with the conventional, desktop-based accounting software.
Following are the ways in which cloud accounting helps your business:
- Data in a few clicks – Present-day tech-savvy business owners are often on the wing requiring to monitor and access their financial data. Cloud accounting has enabled them to see real-time business data such as outstanding invoices, account balances, and much more with only a few clicks on any internet-connected device.
- Reduced price of ownership and increased time efficiency – Cloud accounting services like QuickBooks hosting helps bring down the expenses by eliminating the need to install and maintain costly IT infrastructure. With the entire financial system available on the move, business owners can approve pending payments and immediately send the invoices, increasing the overall efficiency of the organization.
- Improved security – Cloud accounting solutions such as QuickBooks transfer the enhanced security features of the cloud to even the smallest organizations, which often overlook the safety of their data while using traditional accounting services. While the servers are regularly inspected for vulnerabilities, the data transfer takes place through a secured and encrypted connection. With cloud accounting, the businesses also don’t have to worry about data losses as there are data backups scheduled at regular intervals.
- Easy sharing, collaboration, and integration – Sharing of important financial resources has become extremely effortless in cloud accounting. Multiple accountants, advisors, irrespective of their geographical position, can access and work on a single file together without having the need to send the file back and forth via emails. With the help of Application Programming Interfaces (APIs), cloud accounting ensures smooth collaboration and integration with various online services and software to extend the business functionality of an enterprise.
- Less paperwork, happy mother earth – With cloud at our service, there is no need to print invoices, balance sheets, and statements. It is a big step towards achieving a paperless work culture. While there are numerous benefits of having a paperless workplace, conservation of the environment should be a reason good enough for us millennials.
On the whole, the concept of cloud accounting drastically improves the control of an enterprise over its financial processes, replacing the time consuming and expensive operations with cost-effective and time-saving techniques. With the host of advantages it offers, the cloud has the potential to ensure the manyfold growth of your business.