Accountants who want to stay relevant, now more than ever, must keep up with the latest trends in accounting. Today on the Rules of Thumb blog from MoneyThumb we'd like to share the top 5 modern trends that all accountants should embrace in 2020.
1. Big Data and Analytics
Big data provides accountants with vast amounts of information, as well as analytical tools that can improve decision-making and the overall understanding of their client's financial health. The shift in how data is processed and used has evolved so that now accountants play a huge role in how data is used by their clients. Advanced analytics can greatly assist with key future decisions.
Paul Franklin, chair for accounting programs in the School of Business and Information Technology at Purdue University Global, had this to say about big data and analytics as it applies to modern-day accountants, "For larger accounting firms, data analytics is especially important on the auditing side of review and decision-making. Modern accounting packages can organize the data in such a way that it's easier to interpret and easier to use as a decision-making tool by management. Data analytics is becoming a really big deal—a popular way to test the data that you're auditing for a client.”
2. Automation and Artificial Intelligence
Automation is slowly eliminating the need for manual data entry and is saving businesses production hours. Artificial intelligence (AI) is leading this automation trend. The big four accounting firms have already started to use AI in varying ways, ranging from full automation of basic tasks to AI augmentation of tasks for increased employee productivity.
While many of these uses for AI are still in development, the major firms have poured significant resources into putting it to use for tasks such as auditing, extracting key information from documents and contracts, and inventory monitoring.
In areas such as accounts payable (AP), automation is already making an impact on many firms.
- AP automation can save $16 per invoice or more, according to Vanguard Systems.
- On average, AP automation pays for itself within 6 to 18 months, also according to Vanguard.
- 66% of accountants would invest in artificial intelligence, and 55% of accountants plan to use AI in the next three years, according to the Sage report.
Automation and AI simplify work processes, streamline accounting operations, and reduce the loss of valuable time.
3. Cloud Accounting for Small to Midsize Businesses
Leveraging the power of the internet allows for more collaboration and sharing of real-time information than would be possible if all data was housed onsite. Cloud-based data services are changing the way smaller businesses scale.
Thanks to cloud services, some service providers will soon be able to access a greater amount of data and infrastructure at a fraction of the cost—especially when they’re smaller in scale. According to Accountancy Age, it’s estimated that, by 2020, 78% of small businesses will rely on cloud technology entirely for their operations.
For the time being, it appears that large-scale firms with massive amounts of data will save by keeping their computing on-premises. However, this could ultimately change as cloud technology continues to become more competitive and localized.
4. Outsourcing of Accounting Duties
Instead of going through the process of building an accounting department in-house, outsourcing enables smaller businesses to focus on their primary operations. Outsourcing accounting can aid these businesses in reducing cost, lowering the chance of fraud, and providing access to accounting professionals whenever needed, but this may not apply in the same way to larger-scale firms.
“For small, not publicly traded companies, I’d say that outsourcing is the way to go,” Franklin says. “However, this is not the case when you get to midsize and larger companies. They want that data kept in-house, not shared.”
5. Social Media as a Source of Talent and Clients
As businesses continue to move more functions online, including outreach through social media, accounting firms will as well. Accounting firms on social media currently possess unprecedented reach to potential clientele, even if a business isn’t conducted through this medium.
“Accounting businesses use social media from advertising and an outreach standpoint rather than a business transaction standpoint,” Franklin said. By using social media to drive publicity, accounting firms gain potential clients and employees. But it also means potential clients can gather more information about their accountants, which can help people better choose which accounting services they need.
Of course, the team at MoneyThumb feels one more modern trend should be mentioned, and that is how more and more accountants are using our PDF financial file converters to streamline their processes and make accounting for their clients quicker and easier.