Ask any old school bookkeeper and they will tell you that the practice of accounting has changed tremendously in the last few decades. Before technology and the internet came along, double-entry bookkeeping and manual payroll were the norms; everything was done by hand. Investopedia has a fascinating history of accounting. Below are several key takeaways from the ever-changing world of accounting:
- Bookkeepers emerged when societies used the barter system and needed to record the agreements they were making regarding goods or service transactions.
- Later accounting ledgers were completed by hand and used either a single-entry or double-entry system.
- Luca Pacioli, a monk, laid the groundwork for modern accounting creating independent records that provided a clearer picture of an entity's financial activities—the financial statements.
- The railroads and the emergence of corporations were the stimuli for the establishment of accounting professionals.
- Always finding ways to improve accounting and AP processes, inventors started to create machines for mathematical calculations. In the 1880s, American William Burroughs invented the adding machine. Early adding machines did not have the critical features of a computer, such as internal memory. However, they enabled accountants to carry out arithmetic with higher accuracy and efficiency.
- In 1978, the accounting world saw the birth of Visicalc. It was the first spreadsheet software that enabled financial modeling on the computer. During the same year, Peachtree Software introduced an accounting software package for the early personal computer. As a result, companies could computerize their accounting at a fraction of the cost of purchasing a mainframe. In 1998, Quickbooks was launched. It soon dominated the market for day-to-day bookkeeping. Today, over 4.5 million companies use Quickbooks, making it the most popular accounting program in the U.S.
- Another shift in the history of accounting occurred in early 2000. The financial world experienced the entry of Advanced-Data Capture: Optical Character Recognition (OCR) and Intelligent Data Capture (IDC) technology, which enables the automation of the accounts payable process.
- A 2018 study by Atherton Research predicted that accounting tasks, as well as payroll, tax, banking, and audits, would be completely automated using AI-based technologies by 2020. And indeed, in the two years since the release of the study, AI has played an increasingly important role in the accounting industry, bringing with it both opportunities and challenges.
As we all know, the current pandemic is quickly changing the landscape of many businesses, accounting included. So many companies are going full-virtual, with others struggling to reopen. If you are considering starting an accounting practice or looking for ways to sustain and grow your current accounting practice, in spite of our shifting world, the following articles from our peers in accounting will help you to make the smartest decisions:
The Shifting Roles of Accountants--This article from CPA Practice Advisor covers how technology has steadily optimized the common roles and tasks of accountants, with some of the largest leaps in technology eliminating those tasks and leaving professionals with more time than ever.
7 Steps to Safely Reopening Your Accounting Practice During Pandemic--This article, also from our friends at CPA Practice Advisor, offers great advice for those of you who are getting ready to try and get back to business as usual.
5 Steps For Switching to a Virtual Tax Firm--This downloadable guide from Accounting Web will help you transition to a full-on virtual accounting firm. This guide by experts at Canopy Tax and the legendary Jason M. Blumer, CPA -- a veteran of remote teamwork -- explains the thinking and processes you should employ to build a resilient and profitable virtual firm.
How to Start an Accounting Advisory Business--Thomas Reuters has this great guide for starting an accounting advisory business. In times of economic uncertainty, clients crave certainty wherever it can be found – and clarity in the absence of certainty. This is the time for your value to be re-established: not simply as the one who can do the rear-view tasks that are required, but as the one who can help look forward to making the right decisions for the future of that business.
The Rules of Thumb blog from MoneyThumb hopes the above-referenced articles will help you get a handle on how to either create a new practice or advance your current accounting practice. We'd like to suggest one other way to help your accounting practice, whether new or current, and that is the use of our PDF financial file converters specifically designed for accountants. Take a test drive today and you will be able to experience how this best selling accounting software from MoneyThumb can make your life simpler and more efficient, whether in real life or virtual.