Accountants have the future on their minds. According to the Sage Practice of Now 2018 report, 83% of accountants said clients demand more from them today than they did 5 years ago, and 67% felt that the profession is more competitive than ever.
If you’re an accounting professional who wishes to remain competitive in 2020 and beyond, it’s vital you understand important accounting trends.
To learn more about the key factors influencing accounting industry trends, we sat down with Paul Franklin, chair for accounting programs in the School of Business and Information Technology at Purdue University Global.
1. Big Data and Analytics
As the technology that’s used for recordkeeping and data entry becomes more robust, business owners are increasingly requiring their accounting professionals to provide greater value through insights and predictive analysis.
This so-called “big data” can provide business leaders with vast amounts of information, as well as analytical tools that can improve decision-making and their overall understanding of their company’s financial health. The shift in how data is processed and used has evolved accountancy into a role that uses advanced analytics for assistance with key future decisions.
“For larger accounting firms, data analytics is especially important on the auditing side of review and decision-making,” Franklin said. “Modern accounting packages can organize the data in such a way that it's easier to interpret and easier to use as a decision-making tool by management.
“I don't think we are going to have computers making our decisions for us, but we can certainly direct the computer to analyze and organize data in such a way that it can be used to make important decisions. Data analytics is becoming a really big deal—a popular way to test the data that you're auditing for a client.”
2. Automation and Artificial Intelligence
Automation is slowly eliminating the need for manual data entry and is saving businesses production hours. Artificial intelligence (AI) is leading this automation trend.
In fact, the big four accounting firms—KPMG, Ernst & Young, Deloitte, and PricewaterhouseCoopers—have already started to use AI in varying ways, ranging from full automation of basic tasks to AI augmentation of tasks for increased employee productivity.
While many of these uses for AI are still in development, the major firms have poured significant resources into putting it to use for tasks such as auditing, extracting key information from documents and contracts, and inventory monitoring.
In areas such as accounts payable (AP), automation is already making an impact in many firms.
- AP automation can save $16 per invoice or more, according to Vanguard Systems.
- On average, AP automation pays for itself within 6 to 18 months, also according to Vanguard.
- 66% of accountants would invest in artificial intelligence, and 55% of accountants plan to use AI in the next three years, according to the Sage report.
Automation and AI simplify work processes, streamline accounting operations, and reduce loss of valuable time.
3. Cloud Accounting for Small to Midsize Businesses
Leveraging the power of the internet allows for more collaboration and sharing of real-time information than would be possible if all data was housed onsite. Cloud-based data services are changing the way smaller businesses scale.
Thanks to cloud services, some service providers will soon be able to access a greater amount of data and infrastructure at a fraction of the cost—especially when they’re smaller in scale. According to AccountancyAge, it’s estimated that, by 2020, 78% of small businesses will rely on cloud technology entirely for their operations.
For the time being, it appears that large-scale firms with massive amounts of data will save by keeping their computing on premises. However, this could ultimately change as cloud technology continues to become more competitive and localized.
4. Outsourcing of Accounting Duties
Instead of going through the process of building an accounting department in-house, outsourcing enables smaller businesses to focus on their primary operations.
Outsourcing accounting can aid these businesses in reducing cost, lowering the chance of fraud, and providing access to accounting professionals whenever needed, but this may not apply in the same way to larger-scale firms.
“For small, not publicly traded companies, I’d say that outsourcing is the way to go,” Franklin says. “However, this is not the case when you get to midsize and larger companies. They want that data kept in-house, not shared.”
5. Social Media as a Source of Talent and Clients
As businesses continue to move more functions online, including outreach through social media, accounting firms will as well. Accounting firms on social media currently possess unprecedented reach to potential clientele, even if business isn’t conducted through this medium.
“Accounting businesses use social media from an advertising and an outreach standpoint rather than a business transaction standpoint,” Franklin said.
By using social media to drive publicity, accounting firms gain potential clients and employees. But it also means potential clients can gather more information about their accountants, which can help people better choose which accounting services they need.
Earn an Accounting Degree With Purdue Global
Accounting is growing and changing. Between technology developments and industry advancements, it’s more important than ever to stay on top of emerging accounting trends.
If you’re interested in learning more about the accounting industry and building a career within it, Purdue University Global offers an online bachelor’s in accounting and an online master’s in accounting.* To learn more about accounting and other business programs, request more information.