Introduction

The accounting and finance sector is as old as business itself. The need to keep track of all the sales, expenses, profits, and losses has been a part of the business from time immemorial. While accounting was initially done with limited knowledge or primitive procedures, modern accounting, and finance are highly complex and easy to tackle at the same time. Due to accounting standards, education, and technological advances, the accounting sector has evolved into one of the most important aspects of a business or organisation. It is not only necessary to keep detailed records of finances for the organisation's operational efficiency but also to abide by the laws of the respective states or countries. As the invention of paper, typewriters, and computers has evolved the accounting sector in the past, the current trends illuminate the future of accounting through promising technological advances. In this article, we will explore some of the promising technologies that might transform the accounting sector.

4 Major Accounting and Finance Trends

Here are four of the most notable trends in accounting today: These trends have the potential to transform the accounting and finance domains shortly.

1. Digitalisation of the Accounting and Finance Industry

With the rise of the internet, computing, and digital technologies, more and more accounting tasks are being automated. This includes time-consuming accounting tasks like bookkeeping, invoicing, and financial reporting, to name a few. As a result, accountants are becoming more comfortable using software and technology to boost productivity in their work. According to a 2020 report by Sage, nearly 50% of accountants would like to use automation. The implementation of automation saves time spent on manual and repeated tasks performed by accounting professionals. The digitization of the accounting sector will make it more efficient, accurate, and cost-effective.

Accounting professionals can use digital technology to automate several routine accounting tasks like bookkeeping, invoicing, and financial reporting. Automatically completing all these tasks will increase efficiency, reduce errors, and lower the cost of doing business in accounting and finance. According to Fortune Business Insights, the global accounting software market is expected to reach $20 million by 2026. The digitalization of accounting will also make it easier for businesses to store, access, and analyse their financial data. This makes it easy to consider the financial health of the organisation, which will lead to better decision-making and improve the financial performance of the organisation. Moreover, this will put an accountability structure in place, which is harder to manipulate without computing knowledge. Several software solutions for the digitalization of accounting make it even harder to manipulate financial data, which will reduce accounting fraud and increase transparency in the organisation's accounting and finance structure.

All these will lead to better collaboration within the components of an organisation. Different departments can easily access the financial data of the organisation. It can also lead to better trust-building with the business' clients as the organisation will have a robust accounting system. Both of these factors will improve communication between several departments within the business and increase customer satisfaction due to transparency and accountability through accounting and finance services. As a result of documentation through digital means, the risks related to compliance are greatly minimised. The documentation will deal with the legal compliance and tax losses of the state or country and make it easier for businesses to operate within the legal structure. Moreover, it will also create a framework for tax payment and reduce the risk of tax evasion.

Using digitalisation in accounting will make it more secure from unauthorised access. Unlike traditional paperwork, which can be stolen or accessed without any authorization, accounting software makes it harder for third parties to access financial transactions as they are password-protected and the activities are logged. With respect to those cyberattacks, both the structural implementation of antivirus software and measures against cyberattacks will greatly minimise the leakage risk. Cyber security professionals and agencies provide sophisticated data security measures to protect accounting and finance information, and accounting professionals try to avoid the social engineering tactics practised by cyber criminals.

Finally, the digitalization of accounting and finance systems will make them highly accessible from anywhere in the world. All companies nowadays are globalised, with multiple branches across the globe. They can easily access their accounting system from anywhere. Due to their connectivity through the internet, cloud-based accounting systems will make it easier for accounting professionals to store, edit, and access financial data for their organisations. This is highly useful for companies that outsource their accounting and finance systems to other countries, agencies, or freelancers. Check out the article - The Impact of Cryptocurrencies on Accounting and Finance.

2. Implementation of Big Data analytics Technologies

The volume of data that businesses are collecting is growing rapidly, and accountants are increasingly being called upon to make sense of it all. This is leading to the development of new analytical tools and techniques that allow accountants to extract valuable insights from large data sets. With the help of big data analytics, accounting systems can now access and analyse large and complex amounts of financial data and identify patterns and trends that will help them predict the future financial performance of their organisation and its competitors. This will help with financial forecasting and improve decision-making regarding the finances of an organisation. Implementation of big data analytics in accounting and finance systems will also make it easier to manage risks. Accounting systems can easily identify potential financial risks, customer behaviour patterns, and potential frauds and take measures to prevent them.

Moreover, big data analytics along with other technologies like Blockchain will improve the transparency of the financial system. With the increased transparency of the financial system of the organisation, stakeholders can easily understand the financial health of the organisation and bring better management tactics to advance the system. Implementing big data analytics in accounting and finance systems will also help management and marketing teams gain insights into customer behaviour and trends. For example, the analysis of customer purchases will help companies identify trending products or services within the business and give preference to them with better innovation. Big data analytics can be used to identify insufficiencies in the system and counter them with strategic management tactics. As a result, analysing the expenses and identifying key areas where companies can cut costs will make the companies more efficient (Source: Masters India). 

3. Cloud Computing in Accounting

Another trend that is becoming increasingly popular is the use of cloud-based accounting systems. According to a report by Flexi, 58% of enterprises are now using cloud accounting solutions (Source: Finance Online). These systems allow businesses to access their financial data from anywhere at any time and make it easy to share information with other stakeholders. Cloud computing can make accounting systems more efficient, cost-effective, and highly accessible. It allows businesses to access their financial data from anywhere in the world at any time, unlike traditional accounting on paper.

As a result, any board members, management professionals, or even accounting professionals can easily access the financial data to maintain accountability. Accountants can work from anywhere in the world, as we can see in the outsourcing of accounting and accounting freelancing. Cloud computing also enables better collaboration between different teams and departments within the company. It also fosters communication and collaboration between the company and its clients. This will help companies improve communication, keep track of progress, and increase customer satisfaction through the timely delivery of services.

All these will drastically lower the cost of accounting systems on the cloud. As cloud-based accounting systems are subscription-based, businesses can only pay for the services they use. This helps the company avoid buying expensive hardware and software. Moreover, cloud-based accounting services will improve the scalability of the company's accounting and finance systems. In times of increased demand, cloud computing can help accounting and finance professionals scale their ability to provide services. Finally, cloud-based accounting systems are highly secure because they are hosted by third-party providers. As a result, businesses can avoid maintaining and updating their servers, which will save on maintenance costs. As third-party cloud-based companies implement instigated cyber security measures to protect their client data, companies won't have to think about or worry about the security of their financial data.

4. Regulatory Compliance and Accounting

Governments around the world are introducing new regulations to combat financial crimes like money laundering and fraud. This is leading to increased compliance requirements for businesses, and accountants are playing a key role in helping companies meet these new regulations. Regulatory compliance is an important aspect of accounting due to new regulations introduced by governments around the world. In the face of financial crimes like money laundering, accounting fraud, tax evasion, and unethical stock market manipulation, the rules are becoming stricter every day.

Accounting scandals like Enron Accounting Scandal, General Electric Co. Accounting Scandal, and the WorldCom scandal, have only damaged reputation and made regulations stricter. This means that businesses must increase their paperwork to comply with all the new tax and accounting laws. As organisations are required by law to provide more detailed information about their financial transactions, accounting has become time-consuming and costly for businesses, so they must comply with all the new regulations. Moreover, governments have tightened their grip over businesses to ensure that they are complying with all the new regulations, which include regular audits and inspections.

These can be costly for businesses in the future. All these new government laws and legal regulations require businesses to implement sophisticated risk management strategies to avoid potential risks of non-compliance. Companies are required to add extra internal controls, staff training, and auditing, which will only increase in the future. As a result of the complex regulatory requirements, businesses are now turning to new technologies like artificial intelligence, blockchain, and sophisticated software to minimise the operational costs of regulatory compliance. All these technologies can provide businesses with automation in compliance processes, data security, real-time monitoring, and better reporting capabilities with better documentation than the traditional time-consuming accounting paperwork. Check out the blog - From Compliance to Strategic Advisor: How Accountants Can Add Value to Your Business to learn more on the topic.

Non-compliance with regulations also has severe consequences for businesses and organisations, including hefty fines and penalties and damage to their reputation. All these will make it difficult for businesses to attract customers or to raise capital in the stock market or investor circles. Moreover, due to the legal procedures involved in non-compliance, businesses might also be forced to close down. All these can be avoided with vigilance towards national and international laws concerning businesses and finances, especially the ones related to taxes. By using modern software solutions and keeping an eye on the news for new laws and regulations, accounting professionals can help their companies avoid the consequences of non-compliance.

Related Blog: The Impact of Regulations on Capital Markets

Conclusion

As the accounting and finance system is evolving, new trends are continuing to happen inside and outside the industry. Keeping an eye on accounting trends will make you a better and more globally relevant accounting professional in the industry. Due to the explosion of popularity in digitalization, almost all industries and sectors, including the accounting and finance industries, have undergone a massive transformation. Legitimization of the accounting and finance industry has several benefits, including cost savings from automated routine tasks and better productivity from accounting professionals. Secondly, the emergence of big data as a mainstream technology has future possibilities that will greatly transform the accounting and finance industries. Companies can become highly transparent and secure with big data technology and solutions like blockchain.

Cloud computing has opened several opportunities to increase transparency as well. Accounting professionals can now easily access and store the financial transactions of their organisations from anywhere in the world, leading to better transparency. All these will increase trust, communication, and collaboration within the company and between the company and third parties and clients. Finally, there is a growing trend among governments and regulatory bodies to enforce new laws and regulations regarding the accounting and finance industries. While these are implemented with the good intention of avoiding fraud like tax evasion, it also makes companies spend more resources like manpower and time showing compliance with all these regulations. All these trends are expected to transform the industry shortly.

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