Emerging Financial Accounting Trends
Technology is synonymous with development and modernizing the business landscape. Even in the pandemic state, Technology growth helps to transforms systems and processes, converting manual tasks into automated functions to operate businesses more efficiently and effectively. Latest accounting trends mainly revolve around this growth of automation and high-tech systems covering various accounting process that are being automated like approval workflows, bank reconciliation, journal entries, inter-company consolidation, revenue recognition, lease accounting and depreciation.
The financial accounting trends are not just about processes, digital transformation, and standards but also about the people in it. In 2021, the attention turned towards a greater focus on the hopes and aspirations of those in the industry affected by pandemic and concern for talent retention.
Accounting is undergoing significant change as we move forward. We summarize below the various financial accounting trends that are now part of any business and will shape the accounting system in general:
1. Outsourced Finance and Accounting Functions:
Businesses are now Outsourcing Financial Accounting Advisory Services and focus more on their limited resources. Accounting Service providers helps them to save employment costs like payroll, taxation, salaries, benefits, and training expenses. Most business processing outsourcing (BPO) companies use latest accounting software and deliver accounting, analysis and reports on a real time basis. Outsourcing financial accounting services also give access to skillsets, technology and expertise to companies which would not affordably replicate by hiring new headcount and investing in own infrastructure.
2. Automated Financial Accounting Processes
Automation of repetitive accounting tasks is being adopted as this eliminates confusion and minimizes errors. Most companies invest in automated solutions and bots to arrive at data-driven decisions more quickly. Since the process relies heavily on computers, the management invest in measures to avoid fraud and compromised security.
3. Cloud-Based Accounting
Most companies have adopted the trend of remote working through cloud-based software which allows teams that are physically dispersed to collaborate and accomplish critical financial processes like month-end close from anywhere with a computer and an internet connection. Tools like Video calling, Zoom, e-signature, file sharing, drop-box are all helping cloud based accounting to work efficiently.
4. Artificial Intelligence (AI) & RPA
AI is new field and is also impacting the finance and accounting process in general. Accountants are taking advantage of businesses using AI and Robotic Process Automation (RPA) to large data, automate repetitive and mundane tasks and focus on high value activities.
RPA shines when running discrete, simple, high-volume tasks that would usually require little human supervision like invoice processing, entering sales orders, processing refunds, and automating customer service responses. Further, during the financial close, balances need to be validated, Inter-company reconciliation completed, records must be consolidated, journal entries need to be adjusted, financial data is gathered to be disclosed, and then the adjusted financial statements must be prepared. There’s a lot of risk for error in these activities, and that’s where the hidden value of RPA will come in.
AI can be applied to complex areas like Lease Accounting & Fixed Asset where all relevant information can be gotten quickly through AI rather than look from the underlying records and Accountant can focus on decision making.
5. Data Analytics, Forecasting & Visualization Tools
The Finance functions are now becoming more analytical. This is due to the fact that Technology & Automation help push the accounting and finance department from data collation and transactional activity to proactive and analytical. These tools also equip finance professionals with the strong critical thinking and problem-solving approaches due to vast data at disposal for analysis.
6. Leadership role of the Accountant
With Automation and AI on transactional work, Accountants must rely on the so-called soft skills, leadership, team management and strong emotional intelligence to deliver results. These skills, paired with industry related knowledge and training will help the accountants to leverage insight from data analysis and the financial expertise and help management.
Choosing to use virtual CFO services can give your company an advantage over others. That’s because specialists working for this kind of a service provider will not only have mastered their technical skills, but also be well-known for developing the skills needed to effectively manage teams and build strong relationships with clients.
7. Data Security
Data breaches continue to be a bigger risk than ever and finance departments continue to be the leading targets. The breaches can be of identity theft, stealing of personal data or credit card information. In addition, spoofing (email disguised to appear to come from a known and trustworthy source) is also a common security threat. Training in these areas is crucial for accounting teams and help management is strengthening the cybersecurity for the organization.
In addition to the above, there are other growing trends in Regulatory Compliance, Accounting Standards, Changes in Tax policy on one hand and Gender equality, Talent diversity and upskilling, Hybrid working and Job movement are also gaining trends for new normal. The above trends will continue to gather more momentum and the year 2022 onwards will continue to allow Accountants to showcase their talent to adapt, resilience and indispensable role in the business.
SBS Global is an ISO 9001:2015 & ISO 27001:2013 certified company serving since 2007. SBS Global offers a comprehensive range of Accounting, CFO Services, Compliance (i.e., Company Secretary services) & HR Services catering to the needs of Small & Medium Organizations across industry sectors to meet their changing needs & expectations. Our team includes employees having industry & domain expertise who have insights drawn from years of professional experience.
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