Accounting Trends for 2022
Previously, most accountants’ labour consisted of bookkeeping, data input, and number crunching. Today’s accountant must meet client demands that go far beyond these standard services. Much of the evolution of the accountant’s function and the industry is facilitated by technology, such as accounting software, which alleviates the strain of workload and frees up time for strategic, value-adding duties.
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As a result of the epidemic, client expectations have shifted beyond standard offerings to encompass a broader service menu. They no longer seek only basic accounting or bookkeeping help. Additionally, they seek advice on complying with emergency legislation, leveraging government aid, and calculating leave entitlements and salary subsidies.
Accountants have begun to shift away from traditional service models and toward new technologies to solve these concerns. As a result, 58 percent of accountants believe that prioritising technology can help them provide clients with speedier service. Furthermore, 43 percent say it indicates that their clients’ service and satisfaction have improved.
Recent accounting software trends indicate that 21% of organisations will cut expenditure on finance and accounting software in 2022. As a result, finance and accounting were one of the top ten categories in which technology buyers intended to cut spending during that fiscal year.
The adoption of accounting software by firms is not a new trend. Indeed, accounting software trends indicated that the market was already worth $12.01 billion in 2020. Additionally, software spending is expected to reach $19.59 billion by 2026.
However, one of the emerging accounting trends is the adoption of an enterprise resource planning (ERP) system. By using an ERP, businesses may integrate accounting and financial data with other essential aspects of their operations, such as supply chain, order, and production management. All critical information can be entered into a single application and made accessible across several channels with an integrated system.
Multiple benefits are achieved by consolidating all accounting and other critical information under one roof, which is your ERP. For one thing, it saves organisations money on staff training across many systems and saves employees’ time seeking through information distributed across multiple apps. Second, because teams have a single source of truth, it increases collaboration. Third, information for analytics and reporting is readily available to assist leaders in making decisions (SelectHub, 2021). Despite its many advantages, it is not without flaws. Businesses, for example, should examine the hidden licencing fees of ERP accounting software.
Accountants and chief information officers (CIOs) concur that artificial intelligence software is one of the developing technologies that will define the industry’s future.
There are existing AI implementations, demonstrating that this is not a far-future technology. The epidemic has even accelerated the adoption of AI. Between the pre-COVID phase of 2020 and the pandemic’s commencement that year (Harvey Nash/KPMG, 2020), data indicates an 11% growth in the use of AI and machine learning technology.
Since AI is essentially data-driven, businesses must extract high-quality data. This enables organisations to obtain precise business intelligence, which provides them with a competitive advantage. Companies must implement the appropriate software, cloud solutions, analytics, and business processes.
Accountants frequently deal with confidential customer information, including their accounts, payroll, and taxes. As such, data breaches do significant damage to a company’s credibility and reputation, and may potentially expose them to lawsuits.
What’s frightening is that the pandemic has not affected malevolent actors’ cyberattacks. According to the data, 41% of CIOs have encountered cybersecurity events as a result of spear phishing and malware attacks, on top of the cybercrime challenges they faced before the COVID-19 health crisis. Cyberattacks involving spear-phishing (83 percent), malware (62 percent), and distributed denial-of-service attacks (21 percent) have escalated as a result of the pandemic (Harvey Nash/KPMG, 2020).
Today’s accountants and accounting companies have the challenge of being good data collectors and handlers. They should do it by adhering to security best practises, which include appropriate access and standards, physical security protocols, and backup and encryption. These efforts should be supplemented by personnel security training and a contingency plan in the event of a data breach.
Investing in a solid data infrastructure allows firms to implement cutting-edge technologies. Among these are data visualisation and analytics, which are essential for making sound judgments. The good news is that organisations are increasingly using this technology in their operations. Approximately 39.7% of financial professionals aspire to install or are already implementing data analytics and visualisation solutions.
Accountants’ skill sets will need to adapt as they move from transactional to analytical processing. When asked which essential core abilities and talents their team members should cultivate, 61.7% of finance and accounting professionals mentioned critical thinking and problem-solving abilities. Strong technological knowledge came in second at 40.4%, while data analytics came in fourth at 27.3%.
Historically, accountants were hired to crunch figures. During the epidemic, accountants understood they could do much more for their clients.
According to a recent survey, 51% of accountants believe that newcomers to the field should have business advisory skills such as cash flow and growth modelling. Additionally, the survey discovered that digital abilities are the most critical competency for accountants to possess in the next five to ten years.
These abilities will be advantageous as accountants transition from merely assisting clients through compliance-related responsibilities to advisory roles. Accountants are expected to provide value to their clients. They can accomplish this by being familiar with their clients’ revenue sources and business models to provide appropriate financial recommendations. They must do internal and external analyses of customers, markets, distribution channels, and competitors to assist firms in developing strategies and making decisions.
A wide range of financial activities can be automated.According to research, 77% of typical accounting activities can be automated, with 13% being highly automated, and another 13% being moderately automated. These processes involve complex journal entries, account reconciliations, fixed-asset account maintenance, and allocation computation and application.
28.2% of finance and accounting professionals in financial and business services say most of their accounting activities are automated. Experts say organisations with significant transaction volumes, including banks and utilities, should automate (Deloitte, 2020). Recognising its advantages, business and financial leaders are incorporating automation into their processes.
Financial reporting is the most frequently used method for the public and investors to learn about a company’s performance. Having high-quality financial statements that encourage transparency helps build investor confidence and enables them to evaluate a company’s risk exposure. The pandemic underlined the importance of businesses providing trustworthy financial information. Through comprehensive financial reporting, companies can explain their current state of liquidity, business continuity, and the impact of the pandemic on their entire operations.
Shareholders are increasingly pressuring publicly traded corporations to disclose indicators other than traditional financial statistics. Additionally, investors are becoming increasingly concerned about sustainability, staff diversity, and other ESG (environmental, social, and governance) criteria. Global investors want their enterprises to prioritise environmental, social, and governance (ESG) as an investment criterion as they recover from the pandemic.
Businesses that are just getting started may face the decision of whether to keep accounting in-house or outsource it. Each side has advantages and disadvantages, and picking which accounting service type to use will depend on a variety of circumstances.
According to data, 62% of small businesses in the United States employ in-house accounting personnel. The top three benefits include knowledge of business procedures, flexibility with project staff, and meeting company-specific demands. Additionally, benefits such as improved communication (20%) and direct control of the accounting team (17%) were mentioned (Clutch, 2021).
In contrast, 73% of small businesses with in-house accountants have been in business for less than one year (Clutch, 2021). Moreover, companies with 50 or fewer employees are less likely to outsource compared to businesses with over 50 employees (Clutch, 2019). Small businesses seek the help of outsourced accountants mainly to seek their expertise on complicated issues and guidance on how to meet compliance requirements (Clutch, 2021). With widespread employee layoffs and furloughs due to the pandemic, saving on employment costs is a factor too, with 15% of small businesses saying that they have cut costs on accounting or bookkeeping services (Onpay, 2020).
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