The transformation of the profession from one on information management to strategy-making is tremendous. An accountant, who was more of a back-end person, has been catapulted to the front
COVID-19 has underscored the fact that the only thing constant in this world is change. Over the years, there has been a huge change in how businesses work and the accounting profession is no different. The transformation of accounting from information management to strategy-making is tremendous, and an accountant who was more of a back-end person has been catapulted to the front.
Technology is a significant contributor to this transformation as it is credited with a number of other changes in the current business trends and continues to change industries. Various drivers have led to this cultural shift towards adoption of technology in the accounting profession like improvements in regulations, demands of clients, generation change and so on. In fact, technology has led to disruptions in the accounting profession that were hitherto unknown and added the much-needed smart zing to it.
Automation, one of the key trends, and an important aspect of technology, has made the systems more efficient and effective and is also responsible for the revolution in the accounting profession. Transactional entries made manually are now being completed by a software. It encompasses more than just data entry and emphasises on the entire lifecycle of the accounting process, starting from recording, manoeuvring and inferring transactional data. This makes financial management a much-reorganised and simplified process and helps managers take faster decisions by making real-time data accessible.
Rising demand for the automation of accounting services has boosted the accounting software industry, currently valued at $12 billion. It is expected to reach approximately $19.6 billion by 2025, clocking a growth rate of 8.5 per cent. Some of the major accounting software companies include Oracle, Microsoft, Intuit, SAP, Sage and so on.
Most of this modern accounting software is based on cloud technology. Gone are the days when accounting services were based locally, using software hosted on computers’ hard drives. Accountants now store and access data from the cloud instead of a local computer system. So what is cloud anyway? It is nothing but another term for the internet. There are many benefits of using cloud-based accounting systems. Automation of accounting and book-keeping processes improves efficiency by cutting down efforts on routine activities. Access to real-time data anytime and anywhere improves productivity and decision-making abilities. It helps in reduction of costs, creates a paperless environment and helps in smooth integration with other cloud-based solutions. These benefits and many more are motivating businesses to shift to cloud-based accounting services.
According to a survey conducted by the accounting software firm, Sage, around 67 per cent accountants feel that cloud-based services have made their roles easier. But though cloud-based accounting has a number of benefits, it is not devoid of drawbacks. One of the biggest risks is the vendor shutting shop. Over the years, it is a known fact that vendors can be here today and gone tomorrow. This leaves the organisations using their services in a lurch. Second, in case of unavailability of an internet connection, the benefit of real-time access to accounting data is lost. And finally, accounting data on the internet is subject to security breaches. Notwithstanding these risks, the Asia-Pacific region is set to witness the highest growth in the accounting software market as the adaptability of modern technology is higher in this region.
An increase in investment in cloud technology and emergence of small businesses are also the contributing factors. China is the largest user of cloud technology in the region, followed by India.
The latest blockchain technology too, will have a major role in revolutionising the profession, by freeing up accountants from regular book-keeping activities and providing more clarity on resources and obligations of an organisation. The Big Four in the accounting industry — Ernst Young, Price Waterhouse, KPMG and Deloitte — are leading the trend towards understanding blockchain for accounting.
Social media marketing has become a necessity in every industry and the accounting profession is not immune to it. The influence of social media can be measured by the fact that 26 per cent of people who click on Facebook ads buy from the same brand. It is crucial for accounting firms to create their identity and develop their niche, establish themselves as thought leaders and industry experts. Social media can help achieve all this for accounting firms and much more. It is one of the important ways of packaging one’s business and accounting firms can create their brands online, improve visibility and awareness using this medium, particularly in an industry where credibility and professionalism are the most important aspects. As companies are focussing on their core competence areas, outsourcing functions like taxation, salary management, training and payroll are becoming one of the fastest-growing areas for accounting firms.
Another important technological wave, Artificial Intelligence (AI), is here to stay and grow by leaps and bounds in the future as it can perform the most complex of functions, without an overhead of monthly salary. An overhaul of the accounting department, leading to structural changes, is a priority for any organisation wanting to embrace this technology as it improves performance and accuracy and reduces expenses.
There are various ways in which AI can help improve accounting function. First, the reconciliation process is faster and devoid of mistakes as AI collects data from different departments, collates and merges it in no time. Second, AI helps in paperless procurements and better vendor management. Third, creditor/debtor management is simplified with the help of digital workflow. In addition, digitisation of accounting records means better accessibility and accuracy of the audit function. And lastly, expense management is smooth with the help of AI, which can also help solve some of the commonly asked questions of users. A survey by Sage shows that 66 per cent of accountants were willing to invest in AI.
So will computers replace accountants in future? No. As automation takes away the routine and mundane job of data entry, the role of accountants would be more strategic in nature and they would be directly involved in advising the firm’s leadership on critical decisions and shift the focus of accountants towards data analytics in particular.
Data analysis and number crunching will provide valuable and never before insights into businesses, helping in improving productivity and efficiency and manage risks better.
For example, accountants can develop analytical models based on consumer behaviour patterns in the market, which can help them produce higher profit margins by identifying suitable investment opportunities. Therefore, the future role of accountants will be to use data analytics and help businesses monitor and enhance business productivity, identify and handle risks and enrich customer experience.
Although automation makes life easier, it is also susceptible to fraud and security concerns. So, accountants will also have to don an additional hat of an internal auditor to check for data inaccuracies. With the advent of these technological innovations, it has become possible for accountants to work anytime, anywhere. Although this trend of remote working had started as early as 2018, the pandemic has started the trend of work from home. Accounting is one such profession which can produce the same excellent results in the home environment as much as in the office setting.
The profession of accountancy has come a long way. It has always been considered tedious and monotonous without much excitement and innovation. The last innovation in this profession was 500 years ago when the double-entry book-keeping system was introduced. But with the rapid use of technology, there has been a paradigm shift and accounting is at the forefront of all technological innovations.
(The writer is Associate Professor, Amity University, Noida)