5 Disruption Trends in the Accounting Industry
Modern technology and tools developed in the past few decades have had great transformation impact on just about every little aspect of business and trade as we know it today, including marketing, management, HR, e.t.c. But accounting, which is a very important aspect of any business strayed well far behind the others when it came to adapting with and adopting technology and was somewhat still stuck with its archaic processes and methods. But slowly and surely, accounting and accountants also jumped up on the technology bandwagon and came up with innovative and powerful accounting software and tools, which has changed the accounting industry for good with technology’s disruptive influence.
Before we get into the finer details of disruption in the accounting industry, let us first understand the basic influences of industry disruption in general.
- Complacency — If organizations or businesses get complacent and abate on previous accomplishments, outsiders then get the opportunity to come in and stake a claim in the industry.
- Frustration — Frustration coupled with complacency creates friction, which again creates opportunities that outsiders can exploit.
- Lack of Automation — If tasks which can be easily automated are still done manually, then its apparent that the business or organization is not losing time, a very precious commodity.
- Innovation — As more and more startups enter the marketplace, bringing and emphasizing on innovation, puts immense pressure on already established companies to pursue innovation of their own or purchase said startups to assimilate their innovation.
Here are the basic drivers of disruption in any industry and if two or more factors are applicable than it is widely considered that an industry disruption is not far away. Now when we look at the accounting industry, these basic disruption drivers are quite apparent, and this just goes to show that a huge disruption in accounting is imminent and inevitable.
Let us know examine a few disruptive trends that are currently steering the accounting industry towards change.
With the modern age, many service-based industries have become more and more customer-centric. Now aided with internet, cloud technology and remote accounting tools like hosted QuickBooks, CPAs are now able to connect with their clients in a more personal and worthwhile manner. It also offers a myriad of benefits which are now gradually being implemented by accounting professionals all over the world. Not only does proper implementation of technology offer greater collaborative opportunities but also enables accountants to act as financial advisers as well as financial overseers.
Accounting genius Brett Bennett says that, “Online technology is giving us real connectivity with our clients and their team. It means we’re having completely different levels of discussions regarding their farms. We can collectively discuss scenarios and business plans, and our clients recognize that value.”
Automated Data Entry
Automation is the most influential disruptor in the accounting and bookkeeping industry. Data entry automation is a huge step forward for accounting as it significantly eliminates human errors. This has resulted in manual data entry becoming more and more obsolete. With modern technological applications like automatic data processing, digital documents, and accounting software like Intuit’s QuickBooks, many organizations and enterprises have even able to take data entry as whole out of their daily business operation. This is a very attractive solution for companies and businesses as it helps deliver greater efficiency and also allows the company to utilize its human resources better.
As stated by accounting technologist Louie Balasny, “The greatest disruption will result from automation of data entry and workflows. This alone leads to three major changes. One, faster processing which translates into real-time reporting and more timely financials. Two, increased accuracy with less human error. And three, significant reductions in cost on an order of magnitude of 50 to 75 percent”.
This disruptive trend is hugely popular among Small & Medium sized Businesses (SMBs). As Cloud computing and accounting software, and cloud hosted applications gain more and more acceptance amongst SMBs, owners are gingerly to adopt the DIY approach to accounting. There are numerous online tutorials and videos, webinars and other relevant content on the internet which allow SMB owners to become capable enough to handle their accounting and bookkeeping needs.
Jonathan Poston, an influential accounting industry professional, from BooksSetup.com had this to say about the disruptive trend of the accounting DIY approach. “This act of moving accounting online doesn’t precipitate the end of accountants. However, what does push accountants to the margins is how inexpensive and user-friendly the new online accounting software is”.
Machine Learning & Insights
Accountancy is generally accompanied with data intensive tasks and accountants are usually well equipped to sort through immense volumes of data and delivering predictive insights according to the actual financial data of an organization or business. But as technology takes giant steps forward, advanced technological applications like machine learning and artificial intelligence are now enabling accountants to derive instant financial statistics with real time applications for both the client and the business together.
As we all might know that now is the age of specialization and in the accounting industry, specialization is demanded in the form of bundled service packages which cater to certain specific needs of the clients. Businesses now only want to pay for services what they require, which has led to the change of pricing structures and service packages across the industry. This disruptive influence has put enormous pressure on the marketplace and judging by the way things are going right now, one can easily assume that accounting solutions and services will soon become à-la-carte in the future.
So there you have it! Disruption of the accounting industry is all but inevitable as technology and technology assisted accounting solutions now seem to have the reigns. However compared to other industries and business aspects, accounting is still lacking behind the other in terms of technology and modernization. But all of these disruptive influence will soon be assimilated as the entire accounting industry is emphasizing more and more on automation and modernization.