There are several changes in accounting, especially due to volatility in the market demands. These changes can also be a result of changes in the needs of clients, regulations in accounting, and the adoption of a generational approach. Most businesses invest in new trends to stay up to date with the accounting needs of clients. Here are some of the trends to expect in 2021 and beyond.
1. Accounting Automation
More people work remotely today than they did last year and the year before that. Although automation has always been part of accounting with several businesses, it is only gaining more popularity. Automation yields lesser errors and businesses only invest in a few accounting personnel.
Accounting automation relies on computers and network technology. While accounting operations are faster and more efficient, there is a risk that businesses could suffer from cyber-attacks. Accountants and business management have to ensure that they keep their cyber insurance up to date.
Businesses use Big Data to get almost accurate forecasting, and they can also file tax returns within seconds. There are concerns that automation might displace jobs, but businesses see it as a way to run more efficiently.
2. Cloud-Based Accounting
Cloud-based accounting is another result of the popularity of remote working. Organizations can operate efficiently even when the employees are in different geographical locations. Most businesses will still have on-site servers and other computer systems in the business premises. These in-house premises help track sales, store confidential information, and track inventories. The cloud, on the other hand, offers the flexibility that businesses need to support modern remote working.
Through cloud-based accounting, businesses are able to handle huge datasets that enable them to create detailed accounting reports. There is still the risk of a data breach, so companies have to stay vigilant.
3. Use of Blockchain in Accounting
Blockchain is one of the biggest technologies today. Although some businesses still do not understand how to use blockchain in their day to day running, some have already started using it. In finance and accounting, blockchain can help track assets.
Blockchain technology uses a network of computers running independently to record and share and also synchronize transactions. This kind of a distributed ledger technology is not easy to manipulate. Businesses are able to create a chain of trackable transaction records that no one is able to alter. Using Blockchain, accountants will find it easy to perform audits and track down events in a business as no one can manipulate blockchain records.
4. Data Analytics in Accounting
With so many accounting firms using cloud computing, there is increased access to Big Data. This presents a valuable opportunity for accounting firms.
With data analytics, companies can collect insights into the future, identify loopholes and fix them, track the progress of clients, and be able to develop forecasting models. These details inform the decisions that a business takes. Data specialists will be in demand if this trend continues. These are professionals who can analyze and interpret the data from analytics tools.
However, there may be new regulations on how institutions collect, use, and store data. This means that institutions have to review the way they handle client data. Educational institutions such as UWorld Roger CPA also have to adapt to engage accountants in data analytics skills.
5. Accounting Functions Outsourcing
Traditionally, firms have relied on in-house teams to get accounting operations going. However, there is a shift in employment trends. Some firms today prefer outsourcing accounting tasks to third parties. This way, the organization will have its hands free to take on new clients. There is a looming world debt crisis, and with outsourcing, businesses will cut costs and survive the crisis.
A business avoids paying full-time employees and employee benefits. As more accounting firms compete, other companies will find outsourcing easy. Further, the popularity of remote collaboration business models makes it easy for companies to outsource accounting tasks.
There were several trends seen in 2020 and these trends might continue into 2021 and beyond. For instance, businesses might continue utilizing social media and artificial intelligence in their accounting operations. From all these trends, one thing is clear; businesses are digitizing their accounting operations. Businesses are also looking at reducing the cost of operations by embracing technologies that make accounting more efficient.