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How technology will change accounting in the future

12 Mar 2024

20:20 Innovation aficionados will know that Tech-Talk is our dedicated space for discussing accounting technology. That said, the wider question of how technology in accounting will change our industry is for everyone.

Accountants and tax professionals are continually adapting to increased digital technologies and new accounting software. This article explores how technology will change the accounting industry in the future.

Read on for an in depth analysis from digital technologies expert Billie McLoughlin. If you are an accountant in practice or industry and would like more information about becoming a 20:20 Innovation member, why not book a free 30-minute demo with our team today.

Why are accounting firms slow to adopt new technologies?

Ok let's tackle the elephant in the room here. Accountants like you are traditionally extremely busy! How can a time-poor, overworked, stressed accountant or tax professional take time away from traditional skills to be more digitally savvy?

Many people's stereotypical image of an accountant is of someone buried under paperwork. From ledger books to HMRC documentation and client receipts. The reason the accounting industry as a whole is often slow on the uptake for new technologies is because there is truth in this perception.

Many firms still rely on legacy systems despite wholesale advanced technologies being readily available. In fact, according to a report by the FCA (Financial Conduct Authority) in 2021, more than 90% of firms fall into this bracket.

Think about your own position. Are you someone who still thinks that using a spreadsheet qualifies as being abreast of technology in accounting? Like it or not, the industry is undergoing a sustained period of change. Technology is one of the main drivers. If you're one of many accounting firms still reliant on outdated software and systems then consider how difficult it might become to meet the challenges of the future.

Accountants discuss cloud computing

Does technology change accounting firms' working practices?

In short, it should. The pandemic was a catalyst for revolutionising the way accountants work. Whether that's how we process sensitive financial data through to cloud based software because we couldn't get into the office!

There are a few key things to remember when you consider the future of accounting and how technology will shape our industry:

Technology will sustain accountants, not replace us

There are so many technological advances that are having a positive impact on accountants’ working practices. Automation is allowing accountants to eliminate tedious tasks, AI and machine learning is shaping the way we process data and use it. If technology is used properly it eliminates the risk of human error and helps streamline operations. Manual bookkeeping will finally become a thing of the past!

Two finance professionals discuss robust cybersecurity measures

Technology empowers accountants to add more value to clients

The accounting profession is still very much about people and their financial transactions. What technology offers is twofold. Firstly, increased productivity which means more time to spend with your clients. Secondly, utilising digital tools such as predictive analytics allows accountants to provide more in-depth insight for clients’ financial data.

Most cloud based accounting software can provide data analysis and valuable insights such as key performance indicators for the most complex data sets. That means you, as the accountant, can give your client tangible, data-driven decisions and advisory services.

Enhance the way you analyse data

Data entry can make most of us shudder. Data analytics, however, can be hugely beneficial to your accounting firm. Accounting professionals have access to technological innovations that can help with:

  • Data visualisation
  • Critical analysis
  • Digitising record keeping systema

All of this helps accountants with opportunities to present information in creative ways. Imagine the benefits to your client, who can see data presented in numerous ways to suit their learning style. This type of service can give your practice a competitive edge.

Technology is evolving our skillset as accountants

Look at yourself professionally. Do you have the breadth of skills to tackle the changing landscape? You don’t have to understand robotic process automation or natural language processing (yet!) but a solid understanding of cloud-based systems and an appreciation that artificial intelligence could be useful for your time management will really help.

The more open you are to change and the more you embrace lifelong learning, the better you will serve your clients’ needs.

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Artificial intelligence in the accounting industry

Artificial intelligence (AI) is making waves globally across a multitude of industries. The rise of ChatGPT and similar systems is creating an explosion of interest and speculation as to the role of humans in a new AI-powered digital era.

Artificial intelligence in accounting

For accountants, there is Ai (and Generative AI) being embeded within software we currently use and if we want to explore further there is power in AI that can be instantly unleashed! Consider what AI can do for your accounting firm straight away:

Automate repetitive tasks

AI can easily help with saving time on data entry and processing financial information. For pre-tax preparation you could ask AI to categorise expenses and reconcile accounts or find anomalies in data. That means you get to spend more time helping with critical thinking and business decisions for your client.

As stated above, with some new improvements in accounting software like Sage, Xero and QuickBooks, there will be virtual assistants that learn from your day to day actions and suggest tasks it thinks you need to do, in some instances offering to them for you.

Improved revenue forecasting

With the right prompts, you can get AI to analyse historic data, market information and previous financial statements to accurately predict future revenue. This would allow you to help your clients with revenue planning and future budgets.

Processing unstructured data

AI can extract information from unstructured data, which we commonly deal with! Paper or digital documentation like contracts, emails, notes and files can be crawled in seconds. The helps with things like AML and compliance.

There is also use cases for summarising huge amounts of text, or drafting responses on large email threads. Where this may not necessarily be found in accounting technology, this is a great demonstration that AI is being widely used accross all industries.

AI enables accountants to better detect fraud

Ok so maybe it’s not quite as cut and dry as that. AI can help with fraud detection by being able to process real time data and look for patterns in that financial data. Any abnormal transactions can be flagged as potentially fraudulent. If you’re a large firm dealing with a blue chip client with vast data sets, manual detection would be almost impossible. This is where AI can help.

We are seeing this being introduced in some systems and more data analaytics tools will come to market to support this over the coming years,

Does technology and accounting software come with new regulations?

Accounting software is now a really important part of your compliance. Think about HMRC and their ambition to be more digitally advanced. Making Tax Digital (MTD) is the continued digitisation of tax an you will have to embrace technology to adhere to new regulations.

A lot of accounting firms like yours will no doubt be preparing for April 2026 when MTD for ITSA comes into play. Tax professionals will be looking at technologies like digital tax management systems to help with the transition to MTD.

Accountants face a lot of challenges when it comes to technology and the future of accounting, regulatory compliance is just one of them.

It's also a good time to take stock of your current security systems. Ensuring you have 2 Factor Authentication (FA) and create a culture where the team can challenge any suspicious activity.

Two female accountants using a computer based recording system

How can I be more digitally savvy in the accounting industry?

It doesn’t matter whether you’re a digitally savvy new recruit or an old war horse, there are many ways you can adopt and embrace technology to improve your performance.

Fundamentally, technology is there as a tool to help us. Your own solution could be as simple as managing payroll via a tool that can batch-process payroll data for multiple clients. It could be that you begin to explore AI and how things like Co-Pilot, Python in Excel and ChatGPT can be integrated into your working practices. Any decision you take has to be about increasing efficiency.

Given that we are facing an uncertain period of financial instability as well as new regulations and increasing digitisation, the accountant and tax professional who is willing to start working on future technologies and digital tech is far more likely to handle this better and gain a competitive advantage.

Accountant using cloud accounting platform

Can 20:20 Innovation help accountants with technology?

20:20 Innovation work with more than 1,200 accountancy businesses in the UK and we provide a niche technology forum, Tech-Talk, to help accountants with efficient and informed decisions around technology.

If you would like more information about joining 20:20 Innovation why not book a free 30-minute demo with our team today or call us on +44 (0) 121 314 2020.

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