- Donna Lim
5 Innovations that will change the Accounting Industry
Note from Donna… The tax season is just about to end and 90% of our clients have been sent off to their tax professionals. I am deep in my learnings about the Profit First ways. I recently ran into a new college graduate that is looking for some writing experience. I have agreed to let Larissa Summers write some articles to give her some exposure and help her build a portfolio. Please enjoy this article about the accounting industry and the changes happening.
Accounting News: 5 Innovations that will Change the Accounting Industry. From the outside looking in, the accounting industry seems like an industry (aside from changes to the law) that will remain static for the rest of time. This belief is false as accountants, software companies, and engineers are innovating all the time. These changes can sometimes be subtle but are often smaller pieces of a larger accounting revolution. The speed at which these innovations are developing and changing the landscape of the industry is only increasing. Every accountant and business owner ought to be aware of what is changing to make informed decisions. I have compiled a list of 5 accounting innovations to keep your eyes on.
Cryptocurrency may not be new; however, the world of cryptocurrency is the wild west of finance. It often feels like there are new companies every day, and new ‘Cryptocurrency crash’ every quarter. I believe that cryptocurrency has proved its resilience as an idea for today’s market. It’s clear that it’s not going away anytime soon. It’s incredibly important for any savvy business owner to know that when cryptocurrency can be freely traded as easily as fiat currencies the finance system will completely change. The value of cryptocurrency lies in its freedom from political leaders that may make wrong choices that lower the currency’s value. It’s more interesting innovation; however, is that the blockchain makes money fraud and counterfeit impossible, which provides increased clarity and trust when using it for tender.
2. Banking as a Service
Imagine that you are an airline company, and your business is in decline because of consumers inability to afford expensive trips. You decide to create a credit line and give loans for consumers to go on these trips and pay for them later. This is the basis of banking as a service, and while the airline example is old news, there are many new types of businesses adopting this model. For example, mobile app developers are attempting to recreate the success of Tencent’s WeChat and introduce it to the west. An app like that could change the face of finance as the company issues thousands of loans across the country. Accountants need to be ready, a client of yours may opt to start their own line of credit and provide banking as a service.
3. Machine Learning
The process of machine learning is best explained by example, let’s begin by imagining a school. This school has a teacher and students which need to meet a minimum standard by the school board. To ensure this standard is being met, the board gives a test to the teacher and says, “next month we will give you a different variation of this test, make sure the students pass that test.” The teachers write up variations of the test they were given and assigns them to the students every day. In the case of machine learning, instead of testing the student every day the teacher gives the students a million tests every second. In Intuit’s case, the tests are created by compiling thousands of bank statements submitted by their userbase and recording that information to make a “perfect student.” All accountants should be aware QBO is using the information entered into files to create an accountant that someday replaces bookkeepers. As such accountants need to focus on what they can do that a robot cannot, for example: translating financial reports and giving budgetary advice.
4. Artificial Intelligence & Data Entry Automation
Speaking of artificial intelligence, Intuit isn’t the only business offering automated data entry. Services like Pilot, Countsy, Netsuite and others also provide the means for accountants to automate data entry. These robots have been set up in a similar way to Intuit’s machine learning, however with their own methods of refinement. Accounting firms have begun to use these services in place of data entry clerks as a way to increase accuracy and efficiency. This trend spells the end of many entry level accounting jobs, and further emphasizes a shift in the accounting industry towards services that robots cannot provide.
5. Cloud Computing
At this point, everyone is aware of the “cloud” and most businesses use the cloud for storage purposes. However, cloud storage isn’t the only way to use the cloud for your business. Cloud computing is the method of having a computer, tablet, or mobile device connect to a server and leverage that system for its processes. The benefits of this could be increased RAM, processing speed, password management, security, and a variety of services. With an increase in internet speeds across the world, cloud computing has become a viable option for any type of work. A knowledgeable business owner can leverage the security of cloud computing to gauge a new employee’s trustworthiness without having access to critical information. Additionally, any worker can connect their mobile device to a monitor, keyboard, mouse, and the server and have a workstation without needing a computer. This allows for workers to virtually commute from anywhere in the world at any time. Cloud computing is the way of the future, and soon office environments will no longer have a computer at every desk.
There is a concept in technology: The public will be introduced to last decade’s innovations. These innovations might not be the cutting edge, but they will be the innovations that shake up the accounting industry this decade. Innovations like this have already changed Wall Street and other universal financial institutions. Accountants need to embrace these changes, or these changes will pass them by.
Written by Larissa Summers