Technology's impact on accounting will not be a passing fad, but one that is here to stay. Read on for the emerging finance and accounting trends for 2022.
The impact of technology on accounting will not be a passing fad, but one that is here to stay. We understand that the aforementioned may look like pretty drastic statistics for the industry, but we want to make a case for a hopeful future and as to why technology is making the role of accounting an even more human one moving forward.
Read on to find out more about the current impact of technology on the industry, specific emerging technology trends, and what else is needed to maximize the benefits of technology.
We think of a typical accountant as one huddled at the back of the office, with his head buried in the books, and audit reports stacked up on the sides. With technology weaving into more and more functions within the accounting department, the role of the accountant is shapeshifting into that of a business advisor.
Then a robot is able to take over the component of repetitive data entry in your scope of work, your business will look to the human accountant to do more judgment-intensive activities to grow the profits. Moving forward, firms may be looking for different skill-sets, like professional skepticism, judgment, and critical thinking skills, in their search for accounting talent.
We know it gets extra difficult for accountants at certain times of the month and year when it comes to reporting. This used to be the case when recording and documenting every transaction used to be so manual, so you’d want to do it in bulk at the end of the month.
Accounting technology has enabled real-time documentation and visibility over financials – from anywhere with an internet connection and an electronic device. The grand responsibility of verifying transactions does not have to fall on the accountant alone anymore when accounting moves into the Cloud.
When all eyes are on the book, your team members are on the same page when it comes to the company’s cash flows. The ability of such software to generate a bird-eye’s view of your cash flows through charts and graphs also allows you to see which areas you need to cut costs and where you can find opportunities.
Spenmo dashboard summarising the transactions inputted by different team members
While accounting tends to be seen as a backend function, how well a business juggles with its account receivables and payables has a direct impact on its customer relationships and subsequently the reputation of the business.
When your cash flows are being managed in a tip-top condition, you can plan your cash ahead of time to pay your suppliers on time. You also get a snapshot at your fingertips of who you need to chase and who you need to pay. Spend management software like Spenmo also allows you to schedule your payments and pay your suppliers in bulk.
Technology has also enabled businesses to tap on a lot more payment options like online payment providers (Stripe, Wise) and digital wallets (PayLah, GrabPay), beyond just bank transfer and cheque-drop which makes it easier for customers to pay us on time.
One of these up-and-coming trends is the use of blockchain technology for audit and assurance. The term “ledger,” which implies a record of transactions, is synonymous across the accounting and blockchain worlds. Where embezzlements and frauds are still a concern today in the financial world, blockchain is only the next step to tightening the security of the accounting ledger – which presently, its security is still regarded as a separate IT function from accounting.
How information moves through distributed ledgers in “blocks”, using money as an example
(Source: Blockchain: Why tax and accounting professionals must get on board, Aug 2017, Thomson Reuters)
When accounting is moved into the blockchain sphere, all entries become distributed and cryptographically sealed which makes it impossible to manipulate or destroy when they are uploaded. Then what is the role of an auditor moving forward?
Technological and policy skills will be at the forefront of what’s required of auditors to validate systems of governance and controls, verify the security and integrity of data within these systems, and operate these platforms or applications (also knowing when they stop operating and intervening when these are down). Leading accounting research, Sage Practice of Now 2020 report shared that 82% of the accountants and bookkeepers agree that they are expected by clients to offer advice on accounting technologies.
The other trend that is gaining traction is the rise of SaaS in accounting and spend management – contrary to investing in on-premise infrastructure and designated accounting/finance teams. With the number of small and medium-sized businesses (SMBs) springing up in Singapore, cloud-based software enables them to leverage a variety of data and services needed at the point of its development within cost-effective means. This, in turn, enables profits through accelerated communication with your internal and external stakeholders, better organization, and improved internal processes.
Remote work for all of us has made checks and balances difficult for accountants to manage, especially so if accounting continues to be executed in a manual way. Consider some of these questions when we look at the impact of technology on the accounting function:
Technology is set to be the panacea enabling effective collaboration and open communication in the future workplace. For instance, cloud-based collaboration apps allow every team member to be on the same page when it comes to the most updated status of the cash flows, and for anyone to flag up any contingencies to the team as soon as possible and in real-time.
Decentralization aside to empower your team, we also recognize that businesses would like to also maintain the confidentiality and/or privacy of some of the sensitive company data away from the employees’ view. A lot of these apps allow managers or administrators to set different access levels and permissions that can be changed like a switch with a click of a button.
Lastly, finance departments have been one of the key targets for corporate data breaches and compulsory training in recognizing harmful emails and potential attacks will be crucial and should be implemented alongside accounting being technologised. With the widespread adoption of technology across the different functions coupled with the accountants’ knack for being detail-oriented in spotting anomalies, accountants can potentially be championed as advocates and educators of cybersecurity within your company.
SPENMO is an integrated spend management platform for business users owned by Digital Services SG Five Pte. Ltd. SPENMO partners with payment service providers licensed (or exempted) under the Payment Services Act by the Monetary Authority of Singapore to provide its users with services that include but are not limited to card-based payment instruments, fund transfers, expense reimbursements, invoice payments, and other business activities.
Is your business experiencing operational issues in accounting? Check out this article to learn how to start automating accounting processes.
Moving your accounting processes to the cloud can save your team hours of work. Learn more about the benefits of cloud accounting in this article.
The accounting department is a vital part of any successful business. Learn more about the different accounting functions and how they help you grow.