Technology isn’t what it used to be. Once upon a time, it tools decades for new technology to emerge. Today, things are changing at lightning speed, and technology itself makes it easier to create new technology. So, how will all this change the world of accounting?
With massive shifts in the tools and software accountants use to do their jobs, the job itself could be very different within the next five years; less about managing the chart of accounts and reconciling and more about the big picture.
Here are just a few of the ways technology will likely change the accounting field.
Every year, technology gets smarter and smarter. Accounting tools are no longer just an easier way to sort and store numbers. Machine learning and artificial intelligence can analyze those numbers and identify trends and patterns. At a simple level, this is the way accounting software like QuickBooks or Xero will automatically categorize transactions based on learnings from past entries.
At a more advanced level, machine learning can identify patterns and determine what’s normal and abnormal in financial statements. With a little input into materiality thresholds, software tools can use that information to perform flux analysis in a matter of seconds and flag any issues requiring deeper investigation. That investigation, of course, is where accountants come in.
Software only sees the numbers, not the business activities that create them. When the numbers deviate too far outside of expectations, it’s time for a human to look closely and see what’s going on to throw off the financials. Did economic factors impact costs? Was there a shutdown in business related to COVID-19 or some other cause? Did shipping delays have an effect on inventory levels? These causes, and the strategies to fix them, need human insight, backed by the technology to flag them quickly.
As AI and machine learning continue to improve, manual data entry and classification could be completely eliminated in the next five years. That means accountants would be free from the drudgery of filling in boxes, matching up columns, and deciding how to classify expenses one by one. Instead, they would be free to focus on the strategic work of connecting those numbers to the real business activities that drive them. They would analyze data, generated automatically, to find out what the company can do to improve its outcomes. They would be the translators who take that information to the rest of the company and share their findings and recommendations with those less-than-number-comfortable stakeholders on the team.
Remote work went from a fringe trend among “digital nomads” and a few flexible companies to a ubiquitous standard in many industries, and that change happened almost overnight. As of this writing, COVID-19 still has a big impact, and many companies rely heavily on remote work. Due to the efficiency and flexibility of work-from-home, many may never fully return to the office, even if health issues are no longer a concern.
Of course, remote work isn’t without its challenges, especially since it started so abruptly with little time to prepare or put systems in place. Fortunately, technology has rapidly stepped up to make remote work effortless for teams collaborating across cities, countries, and even the globe. We’ve seen the proliferation of partially remote work, fully remote work, and even remote-first companies that are built on remote culture and don’t even have a central office location.
For accountants, remote work has been a fine line. On the one hand, a job that’s based on numbers and reports is simple enough to do remotely. There’s no practical reason to be physically present to do the work. On the other hand, concerns about data security have made many companies leery of sending their confidential financial information “out over the internet” where masked bandits seem to be waiting around every corner. As it stands right now, cybersecurity makes it most likely safer for your accounting information to be stored in the cloud than on a physical server in-house. The most likely sources of a breach are human error and social engineering (like someone responding to a fishing email with sensitive information), not an actual hack of the technology.
As cybersecurity tools and communications apps continue improving, remote work will likely increase even more over the next five years. Not only does this make flexible work possible for employees with different schedules and needs (like families), but it also allows companies to reach a wider pool of talent, hiring the best accountants for the job regardless of whether they live down the street, in another city 1000 miles away, or in a growing city 8000 miles away on another continent.
The beauty of technology is that it always surprises you. Some of the most impactful changes that will take place in accounting over the next five years haven’t even begun to be developed yet. But one thing is for sure, technology will continue to have a huge impact on both the type of work that accountant spend their time on and the way they perform that work and collaborate in the context of the company at large. It looks promising that these changes will make the job not only easier but also more interesting and more rewarding.