How Technology in Accounting is Transforming the Industry

The role of technology in accounting has been steadily evolving over time but has taken a giant leap forward since the pandemic forced US office workers to do their jobs remotely. Technology has now made its way into every facet of accounting and shows no signs of slowing. 

People working at a computer over business documents with an overlay of sample charts and graphs

In fact, the adoption of technology seems to be quickening across the board among consulting accountants, for-profit companies, nonprofit organizations, and the government alike. (Yes, even the IRS is now using video visits to oversee tax preparers!)

In an interview with Accounting Today Twyla Verhelst, head of the FreshBooks Accounting Partner Program, explained, ​

I've heard it said that the last 30 years of technology and accounting have been taking what accountants used to do on paper and digitizing it. This is a very broad oversimplification of the advance of technology over 30 years, but I think there's some truth to it… Now, of late, we're starting to move away from that and move to creating new things based on what the technology can do as opposed to recreating what paper could do.

Accounting technology has resulted in significant cost-savings, greater accuracy, improved timeliness, reduced fraud risk, better communication, and improved decision-making. These benefits of technology in accounting are the driving force behind everyone from today’s most successful companies to the industry’s most notorious laggards adopting the newest financial software, apps, and integrations. As a result, new technology in accounting is being developed every day and expanding the bounds of how tech can be used in the industry. 

​Needless to say, the impact of technology on accounting has been huge in recent years. Find out more about what the biggest changes have been and where technology is headed next:

Efficiency-Plus
Over the last decade, accounting technology has been primarily focused on increasing efficiency. The goal has been to do more with less time required. Processing more data, managing more vendors, handling more invoices, running more reporting, submitting more complicated tax filings, carrying out more accounting functions with less personnel, and the like. But in recent years, there has been a stronger push to go further – to use technology to accomplish more than just efficient bookkeeping and accounting. Technology these days aims to do better work, not just faster work. Today’s accounting technology can also improve user experience and provide more robust and reliable data than ever before.

For example, today’s accounting software no longer just ensures financial reporting will be done on a predictable schedule to improve timeliness. The best software these days also allows for customizable dashboards to allow accountants to present on the KPIs to senior management that are most important to their specific business. It also automatically flags areas where problems or discrepancies may exist to minimize errors and reduce the potential for fraud.

Use-Specific Technology
While QuickBooks and Xero, among others, still offer full-scale accounting software, a wide array of use-specific financial technology has also cropped up. Software that is specifically designed to handle everything from expense reimbursement to sales tax to payroll now exists, specializing in their own accounting areas to deliver best-in-class niche offerings.

The result is an accounting tech stack like nothing we have ever seen before. It is not uncommon for fast-growing companies these days to utilize an entire web of accounting platforms and apps that are connected via integrations and APIs to meet highly customized business needs. A forward-looking approach reveals more of this to come, with additional niches and use-case scenarios resulting in even more software development along industry lines.

The Cloud
At this point, most accounting software is in the cloud, allowing ease of access regardless of a user’s location. While some accounting software has remained locally hosted (such as QuickBooks Desktop), the trend has overwhelmingly been a move to web-based accounting platforms. There is no indication that this trend will be reversed in the future. On the contrary, web-access is likely going to become even more prevalent, with more platforms being optimized for mobile usage and even created primarily for mobile usage instead of prioritizing desktop/laptop or tablet.  

Replacing Accountants?
So, with everything that accounting technology is capable of these days, what is next? Will it replace humans entirely in the future? No, we can say definitely that technology will never replace your accountant because technology still requires someone to oversee it, operate it, and customize it for unique business needs.

In the same way that a hammer cannot build a house without a carpenter there to swing it, your accounting technology will never run your business without an experienced financial professional there to implement and manage it.  Or, as Michael Higgins explains when discussing how digital transformation will impact accountants: 

As far back as 2015, industry leaders were sounding the death knell for accountants, convinced emerging technologies — particularly automation — would end in death by digital for accountancy as we know it. And as recently as 2019, accountants surveyed by Robert Half on the impact of automation on their profession expressed concerns about being replaced, having fewer opportunities for creative problem-solving and an overdependence on tech in completing daily tasks. Yet, the events between then and now, including the Covid-19 pandemic, have instead shown that accountants, like other professionals, need to worry much more about adaptation than replacement. There's no question that digital transformation has radically changed the playing field. Big data has become a rich resource that needs to be tapped to compete effectively. But for businesses ready to leverage the potential of digital tools, this shift is an opportunity, not a threat.

​If you are looking for an accounting services provider that understands how technology can benefit accounting, please reach out to us! We have a large team of highly experienced accountants to meet your needs. They are well versed in today’s most popular accounting software and are adept at utilizing technology to augment crucial accounting functions.