The new year is upon us!It’s already a few weeks into2020,andit’s time to focus on the challengesahead.New trends are emerging in almost every branch of business, and accounting is no exception.Keeping track of your finances isa driving factorto your organization’s success. Staying current with the latest technological advancementsin the accounting world willhelp your business keep up with competitors andthrive long into the future.
Here’s a look at some of themostimportant advancementsto be aware ofin 2020.
The growth of automation and AI
Automation is makingits mark inmany fields, and it has already made its way into the accounting realm.It’s one of the biggest advancements thataccounting has seen since the introduction of double-entry bookkeeping.You can automatemundane tasks that takeyouawayfrom other importantaccountingactivities.Workflow rules, bank transactions, payment reminders, and recurring invoices and billing arejust some areas where automation has proven its worth.Another kind of technology that is shaping the future is AI or artificial intelligence. While automation is based on programming rules and makes softwarerun without human intervention, AI isdata-driven and is more concerned with making software smarter. AI is achieved throughmachine learning (ML) algorithms. The main advantage of adopting AI into your accounting system is to reduce errors and achieve near-perfect accuracy. Businesses that use AI in their accounting will be able to provide real-time data insights and more accurate financial reports than those that do not commit to AI.
However, since automation is relatively new, andmachine learning algorithms take time toperfect, there is no accounting system that has achieved100% automation and accuracy.With better algorithms,we can expect automation and AI toplay an increasinglyimportant role inaccounting in the years to come.
A more efficientO2C cycle through automation
Order to cash, or O2C, is thesalesprocessfrom the creation of a sales ordertoreceiving payment.Businesses must manage their O2C cycle efficiently to stay ahead of their competition, and this is one of the areas where automation canhelp.Employ automation at anyor all levels in the O2C cycleto cut down your expenditure on resources and reduce manual intervention. Automation can help you sort and process sales orders, send them for approval, and convert approved documents into invoices.Onceconfirmed invoices are received and paid for by the customer, the paymentand status of the corresponding invoice will beautomaticallyupdated inyour accounting software.
Although many businesses have already adoptedautomation to take care of their O2C process,some are still apprehensive.With automationtechnology becoming more reliable every day, we will see a steady rise in the number of businessestrusting it tohandle their O2C tasks.
The adoption of blockchain
Blockchain, in simple terms, is a distributed ledger. It’s used tomanage fund transfers and finances in a more advanced way than traditional bookkeeping. Everytime a transaction is created, it’s time-stamped and linked to the previous transaction. This latest transaction becomes the next“block” in the chain,hence the term“blockchain.”
In today’s financial transactions, the bankoftenacts as a middleman between the sender and the receiver.Distributed ledger technology aims to remove this middle entity, allowing users to make transactions directly.Data can be updated only by participants in the system, and once added, the data cannot be erased.This brings enhanced security and accuracy to the system because every data entry becomes anauditable record.Distributed ledger technologyis also transparent because transaction data is stored on thousands of servers across the globe.Anyone with access to the network will be able to see the changes in real time.This makes it almost impossible for one person to gain control over the network. Blockchain is stillnew, and it will be years before it’sfully adopted by businesses for accounting. However, it will be no surpriseif we see localized blockchain adoptionand usage in the nearfuture.
Comprehensive fraud detection
Fraud is one of the biggest and mostimportant threats that the accounting industry has to address ina digitally evolving world. Fraud can include banking fraud,suspicious invoices,duplicate payments and more. It can deal a severe blow to your businesssuccess and productivity even if you aren’t responsible for committing it. It also leads torevenueloss, and you could end up shelling out a lot of money to settle legal cases. The best defense against fraud is detecting it early. Today’s accounting softwarehelps you create digital approval workflows.It also hasdocument management toolsbuilt inso you can filter duplicate documents and weed out potential fraud.
Machine learning is another advancement in technology to counter fraud. Machine learning algorithms cansave investorsfrom painstakingly analyzing financial data to detect fraud. Machine learning techniques like neural networks and support vector machines (SVMs) allow organizations to combat financial malpractice more accurately than traditional data analysis. They can process large data sets in a relatively short time and weed out dubious documents based on previous learning. Although machine learning is more efficient and time-saving, it still has a long way to go before being completely adopted by businesses to fight fraud.Even still, it’s predicted tomake a big impact on how your organization tackles accounting scams in the future.
Accounting softwareand mobile bankingintegrations
Bankingserviceshave seen rapid development in the last decade. More businesses have started using online banking, and the dependence on brick-and-mortar brancheshas diminished considerably.Bankingservicesarenow being offeredthroughmobiledevices, and integrated bankingtechnology is emerging.Accounting and banking are no longer separate entities.Most modern accounting solutions offer bankintegration,making accountreconciliationsimpler and faster.In the future,as moremobile accounting appsconnect with mobile banking apps,business owners might no longer depend on their computers.They’d be able toaccomplish their banking tasksright from their smartphones.
Online collaborationtools and remote work
In today’s fast-paced world,your organization’s success depends on how quickly you can get things done, and working asa teammakes it easier. One of the most useful functions of modern softwareisremote collaboration.You can work easily with all the members of your team and coworkers in different business departments.Online collaborationtools will put an end todepartmentalsilosand increase productivity. It will also help youorganize and prioritize tasks better, complete projects faster, and savehuge amounts of time and money.Involveyour accountants, too.Collaborationtoolswill allow business owners togive accountantsaccesstoorganizational data so they canhandle the company’s accounting processesfrom wherever they are.
Better ROI and conversions using social media
In the past decade, social media has evolved to become the easiest and fastest way to know what’s happening around the globe. It has been such an influential factor that it’s practically unavoidable for today’sbusinesses. There are billions of people on social media at any given moment. Creating a digital presence for your company will greatly improve your chances of getting recognized and remembered by potential customers. Social media marketing is primarily used for brand awareness and sharing content.It helps segment audiences, identify leads, and reach out to them effectively.This gives potentials a greater chance to consider and evaluate your product, leading to more conversions.
Today, accountants of top accounting firms swear by social media as a marketing strategy because it’s quick and efficient. In the future, more businesses will jump on the bandwagon of social media marketing to capitalize on better conversions and increased ROI.
Decentralized accounting operations
Cloud-based accounting needs no introduction to established businesses. But if you’rejust starting out, you might need some clarity. The cloud offers on-demand access to computing, data storage, and shared resources over the internet. With the cloud, you don’t have to worry about storing your data on physical drives or losing stored data. The cloudisalsosuperior to on-sitesoftware platformsdue to faster deployment, timely updates, and better security.
Moving your accountingoperationsto the cloudallows for better resource sharing, easier access to financial data, andmorerobust security. Cloud accounting softwareis also scalable,making it easy for yoursystem toseamlesslyadapt to the growth of your business. The main advantage of the cloud model is that users can access their accounting data from anywhere theywant and at any time.An internet connection and a compatible device are all you need. In the future, accountingoperationswillbecome decentralized as more companies start usingcloud-based applications for their businesses.
The takeaway
Technology is advancing, and successful businesses adapt to these changes. With that in mind, it doesn’t pay to be in the dark about accounting trends. Technology like automation, artificial intelligence, integrated platforms, scalable and collaborative software, and digital media are big influencers for the accounting world. As we go further into 2020, it’s in the best interest of your business to learn about these advancements and leverage them to keep your accounting processes efficient and reliable.
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