How Digital Transformation Affects the Future of Accounting

Digital transformation is the integration of technology and digital applications into a business’ processes, with the main goal of increasing operational efficiency, enhancing the experience, and satisfying customers. Moreover, digital transformation creates a huge competitive advantage for businesses in the market.

Accounting is no exception. The future accounting profession has moved far beyond mere bookkeeping and payroll, as well as purchasing procurement. Technologies such as cloud-based data management, process automation, and artificial intelligence are unlocking businesses’ numerous potentials and elevating accountants’ skills. 

1. How digital transformation affects the future of accounting

Leveraging the cloud

“Working in the cloud” is a noteworthy working trend in the future of accounting. Forbes points out that cloud accounting is experiencing rapid growth as new intelligent technologies like the Internet of Things (IoT), Artificial Intelligence (AI) and machine learning permeate the market. Since cloud-based accounting integrates information into a cloud system, accountants will no longer need to keep tons of paper stacks to save business data! A cloud-based accounting system enables instant access to various data resources and computing capabilities. A significant benefit of the cloud-based system is the continual updating of information. It also allows accountants and clients to analyze data and make decisions based on cutting-edge information. According to the Journal of Accountancy, cloud-based technology also monitors information constantly, instead of intermittent analysis, whenever the information is updated to the system.

Various statistics carried out by cloud-based enterprises have proved that by 2020, by 2020, 78 percent of small businesses will be relying solely on cloud technology for accounting. Especially during the time of Covid-19, there is an increasing number of businesses investing money in virtual working technologies. 

An example of a cloud-based accounting system is Shoeboxed. Used by millions of SME businesses worldwide, Shoeboxed helps accountants get reimbursed fast and maximize tax deductions by tracking customers’ expenses and receipts. How does it work specifically? Shoeboxed receives customers’ receipts by mail (with free delivery) or scanned documents (with our mobile apps, available on Apple Store and Google Play Store). Then, Shoeboxed extracts the most important data from customers’ receipts to one organized place for easy and at-a-glance expense tracking. Customers can then view and export their data anytime and organize them in their categorizations. Shoeboxed also ensures that all of your receipts are legibly scanned, clearly categorized, and easily located. Shoeboxed proudly helps customers free their desks and drawers from paper receipts and brings the best solution in document storage for years!

Accounting task automation

A medium to a large-sized company may have to receive hundreds, even up to thousands of input invoices per month. It may take skilled accountants approximately 3 minutes for each operating step, such as reading, putting invoices to Excel tables, verifying information with the General Department of Taxation, synchronizing data on accounting software, and storing documents in the business’s standards. 

With the development of new technologies such as RPA (Robotic Process Automation), AI (Artificial Intelligence), OCR (Optical Character Recognition) in the 4.0 era, the daily, manual accounting operation at enterprises no longer needs human participation. The accountants will no longer need to spend hours and waste energy handling accounting tasks manually, which may cause error and fatigue during peak days. 

Here are some examples of applying RPA in the future of accounting: 

  • Manage Accounts Receivable: Bots can manage customers’ key files and credit approval, purchasing process and collect revenue. 
  • Manage Accounts Payable: RPA helps to transfer incoming invoice information (such as invoice number, received data or amount) from PDF files to SAP web applications and internal spreadsheets. This is a useful application that can reduce the invoice processing time by up to 60%. 
  • Cost allocation: RPA easily combines data from different sources (emails, Excel spreadsheets, Google documents, etc.) into one master file, then upload directly to the ERP system. The software can do these actions in a short time (i.e., under a minute).
  • Financial close & Financial reporting: Financial closing and reporting are decisive aspects of all businesses’ success. Ideally, a well-executed month-end close should be fast and smooth and take about three to four days to complete. Using RPA, in this case, brings businesses a successful month-end close and helps improve organizational performance. By automating all the workflow steps, an accountant can simplify the transitions between each stage of AP, centralize all AP operations, and preserve all payments and approval details together. With RPA, accountants can save time, prevent fraud and reduce errors in doing financial close reporting.

Artificial Intelligence 

Artificial Intelligence (AI) is one of the high technologies that enable a computer to do decision-based tasks previously conducted by humans. AI comes in multiple forms and in many aspects of life. Like machine learning, the more you use AI, the better it gets at data analysis and decision-making. The most common uses of AI in the future of accounting include automating tasks, machine learning, basic task automation, fraud detection, service investment, and deterministic loan approval processes. 

2. The future of accounting jobs with digital transformation

Technology will support, not replace accountants

The global workforce, especially accountants, may be concerned that technology will replace their jobs in the future of accounting. Even the most professional auditor may fear that they will lose their job to AI-powered machines. This is a common fear, however, according to the U.S. Bureau of Labor Statistics, the future of accounting jobs shows positive potentials with the prediction to grow by 4% between 2019 and 2029. 

In the future of accounting, AI technologies such as Machine Learning will support accounting and finance professionals to perform their tasks more efficiently. We can understand that AI supports the human workforce, but doesn’t steal their jobs. 

For example, AI drives straightforward processing, frees accountants from stressful and tiring tasks. In the meantime, they can spend more time interpreting and analyzing data collected by AI, and provide better-consulting services. To explain in a simple way, AI allows accountants to focus on tasks that require creativity, strategy, and ingenuity – features that AI can not really provide yet. So in the future of accounting jobs, manual tasks will be handled automatically and intelligently by AI, helping accountants perform their job in a modern way.

Future of accounting profession: More intelligent, strategic, and creative than ever

As Accounting Today has stated, “as with any evolution, whether Darwinian or technological, those who aren’t willing to adapt risk being left behind.”, accountants must keep moving forward. Future accountants must have the strong technical knowledge and necessary skills to perform the administrative, managerial, and analytical tasks that technology can’t do. For example, when more companies use the cloud-based system, accountants need to be proficient in using the cloud to analyze, manage, and transfer financial data. They can use their uniquely human skill to transform the insight from high-quality data collected by AI and provide more effective, realistic financial planning and reporting. They can also collaborate with peer businesses to leverage financial data to drive innovation, build more resilient and agile supply chains and develop business management plans that promote growth while ensuring continuity.

As automation becomes a major aspect in the accounting sector, all future accountants must develop the technical knowledge and skills to handle tasks that technology can’t do. Accountants may also need to take on an advisory role with clients, which requires them to analyze big data and trends. In this case, a data-driven mind is a key to success in the future of the accounting profession.

See also: The Digital Accounting Era: Five Steps For Accountants To Succeed.

Final thoughts

The future of accounting is undeniably changing with intelligent technology. Future accounting jobs will require accountants to be eager, adapt quickly, and evolve alongside the business. Don’t let yourself be left behind – start your business’s level of proficiency in the future of accounting now with Shoeboxed.

The Digital Accounting Era: Five Steps For Accountants To Succeed

Digital transformation is an inevitable trend that appears in almost every type of business today, and accounting is no exception. Accounting operations are changing significantly to adapt. This trend can be described as the Digital Accounting Era, where traditional operations gradually become obsolete and replaced by modern technology. So what do future accountants need to do to succeed in the Digital Accounting Era? This article will give you the answer to your question.

What is digital accounting? 

Digital accounting doesn’t have a standard definition, but it merely refers to creating, representing, and transferring financial information in an electronic format. Instead of using paper, all accounting transactions are manipulated and transmitted in an electronic environment. 

Digital accounting doesn’t eliminate the role of accountants or reduce the importance of accountants in the business. In fact, it values and empowers accounting professionals by making their work more proficient and effective. AI, cloud-based systems, and accounting task automation have left their marks on accounting practices. 

There are various reasons that more businesses are choosing digital accounting instead of traditional accounting today: 

  • Time and cost-saving: In medium and large-sized businesses, even a skilled accountant may need to spend up to 4 days operating invoices such as reading, putting data to Excel tables, verifying information, etc. These tasks may require hours and a lot of energy to complete. It also can cause error and fatigue during peak days. With the development of new technologies, such as RPA (Robotic Process Automation), most data is automatically handled by digital tools, leaving no room for error and fraud. It is much cheaper than labor cost and helps businesses wrap up these tasks in a shorter time. 
  • Accuracy and scalability: For a long time, manual processes have been a constant in various finance functions. Today, going paperless is the new standard as it is faster, cost-saving, and reduces errors. Digital accounting takes over manual accounting processes, from making statements, reports, invoices, budgeting with an undeniably accurate result. 
  • Easy access to financial information: A cloud-based system gives accountants, businesses, and other related departments the ability to access their data information at any time, from anywhere within an imperative. It means that you no longer need to be at the office or carry tons of paper to access crucial information. It is particularly helpful in managing and analyzing cash flow, making prompt and accurate decisions, and having better control over the input and output of the business. 

For example, Shoeboxed is an expense & receipt tracking platform that helps accountants get reimbursed fast and maximize tax deductions. By receiving customers’ receipts by mail or scanned documents, extracting the most important data to one organized place for easy and at-a-glance expense tracking, Shoeboxed allows customers to view and export their data anytime and organize them in their categorizations. This is by far the most effective way to organize and store businesses’ financial data for years to come. 

  • Data security: 

Data safety is a top priority of many businesses when cyber-attack continues to rise. Digital accounting software has extra security layers, such as authorized access, two-factor authentication, and regular backup. This brings businesses better protection to their financial data. 

  • Convenience and improved productivity: 

When an accountant is free from doing time-consuming, energy-wasting tasks, he can spend more time developing strategy, analyzing data collected by technologies, and focusing on tasks that require creativity and ingenuity.

As digital accounting has remarkably changed accountancy and brought various benefits for businesses performing accounting operations, it is more important than ever for future accountants to adopt digital accounting. Digital transformation requires accountants to have creativity in accounting tasks, stay ahead of the curve and constantly search for new solutions. Strong knowledge of modern technology helps you adapt and stand out in an era where technology takes over traditional accounting tasks. Chief Financial Officer (CFO), finance leaders, and accountants will need to be greater at planning strategically, organizing, foreseeing, and adequately channeling their financial processes.

However, it is simple to start your digital accounting journey with a clear plan. 

5 steps for accountants to succeed in the digital accounting era

1. Learn and practice technologies simultaneously

During the pandemic, we have seen that technology is one of the most rapidly growing sectors. Many businesses depend their lives on the development of technologies. Many business owners had to figure out a way to cope with the pandemic – going to digital transformation is one of the most effective ways. According to researchers, the accounting sector is greatly affected by the Fourth Industrial Revolution in general, and the digital transformation trend in particular. You will be in a great position if you have the necessary skills to support this rapid transformation and master new technologies. On the other hand, lack of digital skills will also become a weakness once opportunities in this sector become narrowed, and the demand for traditional accountants and auditors will decrease. Therefore, every future accountant needs to emphasize data management, system monitoring, and consulting skills to beat other competitors. 

2. Be able to analyze and present data effectively

It is important to know the way around technology, but it is even more important to make the most out of the financial data with the help of digital transformation. Changing the way you generate, analyze, and present data can be challenging because you need to think and work in a different way. However, if you keep your mind open and always stay innovative, you will soon get adapt. 

Especially in the time when digital transformation takes over most of the manual tasks, accountants will be free to discover and develop themselves more with the strategy and creativity in accounting – things that digital accounting can not provide yet. 

3. Cultivate strong critical thinking and communication skills

Future accountants need to ask the right questions and tell powerful stories to help people make accurate decisions. A combination of an inquisitive approach, powerful storytelling, the ability to leverage technology, and a deep understanding of business support, will help you achieve a firm position at any business. 

Just leveraging technology is not enough – you also need to integrate it with your existing knowledge and experience. While learning new solutions to your daily tasks, you should make a list of your expectations. Add what matches the task requirements or the software tools to your list and narrow down your final options. This way helps you not to be overwhelmed by the ocean of information. 

At the same time, you need to enhance the ability to observe, analyze and predict the data and information that digital transformation provides. This ability helps you to make accurate judgments for the business or conduct decisive strategies.

4. Be willing to discover and learn new technologies

Among all the necessary skills for a successful future accountant, agility is perhaps the most critical. Agility is about how flexible you are for a new organization, a process, or even a new change. Embracing agility means considering learning as a continuous process throughout our career. It would be best to remind yourself that the more you learn, the better you adapt to this evolving world. When you are agile, you are also more well-prepared for new opportunities. Signing up for digital courses, subscribing to technology newsletters, or simply taking notes on new knowledge when surfing Facebook… the way you learn is unlimited. 

5. Seek opportunities in tech-based companies

Tech-based companies know that technology is the future, a long-term investment. Working with digital technology helps many processes reach greater effectiveness and efficiency and drive you to the greatest results. When applying to tech-based companies, you will have a chance to observe and have hands-on experience in the smartest and most efficient way. You will also have access, be trained, and practice with the most modern software, helping to free employees from daily manual tasks and boring routines. The environment at tech-based companies is also extremely open and creative. This is an effective way to keep yourself innovating every day.

Final thoughts

Digital transformation has significantly changed the way that accounting works. With evolving customer expectations, technology development, stiff competition, and a higher demand for high-quality laborers, future accountants need to constantly learn, innovate and cultivate the most modern technology to stay on top of the game and succeed in the era of technological accounting.

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