Automation of routine tasks Accounting is often considered the nerdy, boring department compared to other aspects of business such as marketing or operations. Nevertheless, accounting is keeping up with the times just the same. Cloud technology, blockchain, automation, and artificial intelligence are all making waves in the accounting world just as they are in other facets of the economy. These developments aren’t just for large corporate accounting firms, either. Every part of the accounting world can benefit from these technologies, from freelance accountants to nonprofit accounting.
Two big factors are driving the shift to cloud-based accounting software. First, the 2020 pandemic forced companies to pivot quickly to technologies that allow for remote work. Now, companies and employees alike see the benefits that come from cloud-based accounting software. Real-time updates and global accessibility have made cloud-based software the new industry standard. In coming years, we will see more and more companies leaving legacy on premises systems and switching to cloud-based accounting technology.
Second, the continued globalization of the economy has shown employers that great talent lies everywhere. No longer need employers focus on the employee pool in their local area or country. Instead, they can find the exact skillset they need with a remote worker from anywhere in the world. Cloud-based accounting software makes coordinating global teams easy. According to Wave, up to 61% of businesses are either planning or executing a change in their accounting protocols to a cloud-based program, and those that have done so are overwhelmingly satisfied with the change.
Automation of routine tasks
Accounting is full of tiny projects that take up a great deal of time. Routine tasks such as journal entries, monthly invoicing or billing, and monthly closing, can be automated. This can be done either through the accounting software itself, or with additional robotic help. Automating just these few tasks listed here would be enough to save a busy office many hours of time each month for more valuable tasks.
Certain payments don’t lend themselves to automation. Bills with variable amounts can’t always be predicted, and companies may not want to auto-pay them if they aren’t sure how much the payment will be. However, if a company has many subscriptions they pay for every month, those payments will be for the same amount. $8 here and $20 there every month may not be a lot in the budget, but having an employee to manually enter each of those transactions in the accounting journal every month is time that would be better spent on building relationships with clients. Automating easily predictable transactions is a way for businesses to free up time for more useful tasks.
While the initial setup and training costs to get this automation running, the time and energy saved for more valuable tasks adds up quickly. Artificial intelligence
Artificial intelligence, or AI, is automation’s big brother. Not only does AI automate tasks, but it can also learn from its previous tasks. This means that AI can be used for the sort of routine tasks that automation can handle, as well as higher-level jobs. Combing audit papers or financial statements for errors was once a time-consuming job that still required human levels of analysis. Artificial intelligence can now process this sort of financial data at superhuman speeds, cutting review time from days or weeks down to mere hours. AI can also be used to scan documents for specific items such as names, dates, and amounts, and compile these data points into another document. This is another great time saver for audit and tax. Lease agreements, contracts, and other forms can be scanned and the data retrieved almost instantly. No more combing documents for information. This frees up time for analysis and decision-making instead of searching.
Crypto and NFTs
Cryptocurrency and NFT’s, or non-fungible tokens, are both growing in popularity. Despite recent financial setbacks in the crypto world, blockchain technology still has the potential to radically change the financial world. Since the technology is so new, accountants who specialize in blockchain are still rare. Learning this niche knowledge can mean gaining an edge in the profession before blockchain becomes more widespread.
Blockchain technology allows digital items to have unique identifiers. For cryptocurrency, imagine a serial number on a dollar bill, except digital. For other digital items such as art, avatar skins, or Metaverse real estate, the identifier enables the item to remain unique and uncopied. In either case, the item is traceable through all transactions throughout its lifetime.
If you are an accountant reading this, you are probably thinking, “Wow! Transactions that trace themselves? I don’t have to chase down missing payments or invoices? Sounds like a dream!” You very well may be right. Programming AI to track transactions on the blockchain may allow complete automation of accounting for crypto transactions.
For example, a transaction paid for with bitcoin could be entered into an accounting ledger by both buyer and seller. However, the nature of bitcoin means that it has its own “ledger” built into its code. It leaves a digital record everywhere it goes. Accounting software and automation can be built to automatically record these cryptocurrency transactions just from the digital “fingerprint” of the transaction.
As more and more companies search for additional revenue streams, accountants face the challenge of how to account for these items. Digital products such as e-books, templates, and subscriptions often have very low operational or production costs with a very high return. If the company also offers products that have lower margins, accountants must understand that the different revenue streams should be separated on the income statement. Combining revenue from items with low margins and high margins could result in a skewed view of the company’s success as a whole. Separating them into different categories allows for a more accurate perception of the company’s finances as a whole.
The accounting profession continues to shift and change. Accountants are expected to be more tech-savvy, data-driven professionals rather than pencil-pushers and number-crunchers. AI and automation are taking over the rote aspects of accounting, allowing accountants to specialize in what really matters – building customer relationships, high-level analysis, and keeping up with fast-paced technology. Automa8e offers powerful cloud-based accounting software with time-saving automation and labor-saving AI. Contact us today for a solution that will relieve your business of its accounting burden, freeing you to do what you do best.