Is Your Accounting Department Optimized For the 21st Century?

Billions of smartphones with capabilities heretofore seen only in sci-fi movies have entered the mainstream, and customers are engaging with businesses in new and unexpected ways. Artificial Intelligence (AI) is still in its infancy but is advancing rapidly.

The companies that will thrive are those that recognize the speed and urgency of this new digital disruption, retool their business processes and retrain their workforce.

Global Trends favor automation

Today, business increasingly takes place all over the globe, 24×7, and on mobile devices. Global trends strongly favor companies that have embraced automation. These companies realize that they must have the ability to react to customer demands and rapidly take advantage of new business opportunities. They must continuously analyze their customer data and improve their processes based on that knowledge. Cutting edge organizations are starting to explore and deploy new technologies like business analytics and artificial intelligence.

Accounting Departments need to be ready

These trends will have an enormous impact on finance and accounting departments, their processes and the everyday work that their employees do. The accounting software market is estimated to reach $11.8B by 2026 and clients are increasingly more demanding of accounting firms. Accounting teams know that they must change and deliver solutions with intelligence (AI) to mine their data and improve their processes.

If your accounting department still runs on Excel spreadsheets with the inevitable workarounds, you don’t even have access to your most important asset – your business data. Without digital data, you can’t mine it, make decisions based on it, improve compliance, or learn from it.unprecedented speed to meet the demands of the modern enterprise.

Is your accounting team maximizing its potential for the 21st century?

Here are some trends we’re already seeing and suggestions for how you can use them to maximize your team’s potential.

Public Cloud is mainstream

The trend towards cloud-based solutions is accelerating. In finance, cloud-based vendors like Freshbooks and Quickbooks have seen rapid adoption and growth. The trend shows no sign of slowing down – investments in cloud computing are expected to grow by 50% over the next 4 years.

The fact is, cloud vendors, invest far more into security and reliability than the vast majority of in-house I.T. teams. Cloud technology has now matured to the point where your data is likely to be more secure and your systems more likely to be available and updated than on-premise solutions.

But it goes beyond safety – cloud accounting enables teams to become much more flexible. When your accounting department is no longer tethered to their desktop, this opens up a doorway of potential for remote working. A recent study from Gallup shows that remote work can increase employee engagement compared to those who don’t provide the option at all.

Automation Isn’t Coming: It’s Here

Accounting automation empowers your team to focus on what they do best and minimizes time wasted on handling paperwork and communication.

Does this mean your finance department will be replaced by robots? In short, No. Automation increases speed, reduces data entry and improves data quality – in short, it removes the drudgery in accounting and gives your team access to information in real time. But, it’s the human accountants who can now interpret this information faster and provide important business insights.

Take a look at what your employees do every single day – things like your purchasing, sales or internal reimbursement processes. Are these still reliant on Excel or worse, paper forms and email? If so, the first step is digitizing these basic processes.

With manual processes, employees waste time tracking down their approval processes, following up with a manager or VP, and perhaps delaying a critical purchase. Need a signature? It often means printing a form, signing it and scanning it back so it can be emailed on. Errors and omissions mean more time wasted on corrections and unnecessary back-and-forth.

Worst of all, without digital access to your business data, your finance team is already behind the eight balls. How can they provide the business insights you need if they’re busy taking care of the paperwork?

The good news: modern, visual, workflow software makes automating everyday accounting processes easy and affordable.

Automation brings other benefits beyond efficiency – it enables teams to formalize processes. This, in turn, provides teams with:

  • Legal protection in case of financial audits
  • More efficient communication and collaboration.

Automation is here to empower accountants, not replace them. It enables you to run your department smarter instead of harder.

Blockchain is on the rise

Many people automatically associate blockchain to cryptocurrency, and although crypto works with blockchain technology, the blockchain itself is much more than that.

Blockchain is essentially an electronic notary public. It allows multiple participants to write their transactions into a single ledger. Each transaction is electronically timestamped, verified and distributed so that there is no chance of destroying or manipulating it. Using blockchain, companies no longer need to maintain separate ledgers that must be reconciled and verified by auditors.

For accountants, this means speedier and safer transactions, as well as a more transparent approach to transactions between parties. It’s even possible for an invoice to be automatically paid Auditors and can verify large amounts of data in a short time. The costs of regulatory compliance are sharply reduced.

Does this mean blockchain will replace accountants? No, but the blockchain is already changing the way accountants work. You don’t need to understand the gory details of the technology but you should understand how you can use it to your company’s advantage.

Machine Learning enables Enhanced Data Analysis

“Data is the new oil” – CEOs everywhere.

Your proprietary business data is your most valuable asset. It goes without saying that your data must be digital. So, the first step is automation, which we’ve discussed above. Without that, you don’t have access to your most valuable asset.

Once your business data is electronic, your finance team can analyze and interpret it in near real-time and use it to rapidly provide actionable business insights. That’s a significant competitive advantage.

Advances in Machine Learning (ML) raise the stakes even higher. ML essentially “learns” by analyzing historical data, and then builds a predictive neural net (model) that can make smarter decisions in the future. New technologies like AutoML are making it easier to build these models so they’re no longer the province of experienced data scientists.

ML models get better as the volume of data increases and, of course, they can only work with digital data. It’s particularly crucial in the finance & accounting industries which are extremely data-intensive – think for example about car loans.

Compliance is changing rapidly

Managing compliance and regulatory risk used to be the province of lawyers – primarily a reactive task. With the right mix of technology and digital data, compliance is now much more data-driven.

While still in its infancy in the compliance realm, we see this in the financial services industry where computers check huge volumes of transactions instantly to detect fraud and red flag suspicious ones. They’re really correlating data sets to red flag events, not making actual decisions.

In the near future, we’re likely to see compliance evolve to where an automated decision support system powered by AI and blockchain-based transactions can provide a near real-time, 360-degree view of the company’s regulatory status.

What does it mean for accounting? It means less time spent on tedious screening and more time focusing on decision making, addressing strategic compliance issues and, most importantly, ethics. After all, compliance is really about ethics and that’s likely to remain the province of humans for the foreseeable future.

Conclusion

Like every field, accounting is changing rapidly. At first glance, it may seem like the machines are coming for your accounting department.

But it’s quite the opposite – human accountants will always be important. In fact, all of these trends, from blockchain to the cloud to automation software, empower your accountants to become more human than ever.

Think of it this way – doesn’t repetitive data entry sound like a machine’s job? Is manually copying information from one system to another the best use of your accounting department’s time? Or, would you rather spend time on providing valuable insights based on predictive machine learning models and helping to create a responsible and ethical environment that’s naturally compliant.

Ashish Deshpande

Ashish Deshpande

Ashish Deshpande is the CEO and co-founder of frevvo Inc., a leading provider of online forms and workflow software responsible for marketing, corporate and business development. Dr. Deshpande received a PhD from Yale University.
Ashish Deshpande

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