Technology trends in finance and the impact on the modern accountant
A good way of thinking about the rapid progression of technology is with Moore’s law. In 1965, Gordon E. Moore, the co-founder of Intel observed that the number of transistors on a microchip doubled about every two years as technological process advances, this theory has now been proven correct for over five decades highlighting the rapid technological advancement of the modern world, which has reshaped the business landscape and by extension the finance function.
The internet has evolved from a platform that connects millions of computers, into the network of interactive computing platforms now known as ‘the cloud’. With this we have seen the evolution of cloud accounting. Cloud accounting software is similar to traditional, on-premises, or self-install accounting software, only the accounting software is hosted on remote servers, similar to the Software as a Service (SaaS) business model. Data is sent into the cloud where it is processed and returned to the user.
All application functions are performed off-site, not on the user’s desktop. cloud accounting solutions also allow employees in other departments, remote or branch offices to access the same data and the same version of the software.
Compared to the accountant of 40 years ago, the cloud has changed the shape of how an accountant interfaces both with the information and the business around them. The most significant benefits are around the ease of access, scalability, and the opportunity to share data and collaborate in real time.
Accountants have access to information and can share this with decision makers to help influence decision making with real time finance data. Also, on a more practical level, there are few physical spacing constraints. Beyond this, the automation within cloud accounting software frees up time for accountants take part in more ‘value add’ and business partnering work. Accountants are spending less time doing manual work in spreadsheets, which is fundamentally changing what the role of an accountants is, allowing them to take a much more active and visible role within an organisation.
The internet has become both a centre and a platform for commerce, reshaping payment systems across the world. Changes include moves to phase out cheques and a decline in the rate at which credit and debit cards are used .
Services offered by traditional banks are increasingly accessed online from internet connected fixed and mobile devices; statutory payments must increasingly be made electronically; payment options using mobile phones are proliferating; businesses and consumers have myriad ways to make and accept payments for goods and services
Up until the late 1800’s all payments were made at point of sale before Western Union revolutionised this in 1871 with the Electronic Fund Transfer (EFT). Fast forward to the modern day and digital payments continue to increase in popularity, rewarding forward-thinking organisations for meeting the demands of technologically advanced customers and pushing laggards to modernise in order to remain competitive.
How does this technological advancement affect the modern accountant in the finance function? Firstly, there are various accountancy software packages that now simplify the reconciliation process, saving both time and money.
Beyond that, in a forward-thinking finance function it is likely you will find full automation of transactions in both purchase and sales ledger. The shape of the traditional finance function has been disrupted with businesses no longer needing teams of people to process invoices.
Accountants shouldn’t fear for their jobs however, the finance function is more important than ever. The time and money saved allows those within the functions to focus on more value-add analytical work allowing automation and technology to eat up the more menial tasks. This shift is showing no sign of abating and the modern forward thinking finance function is leaner and more business facing.
Accountants have a valuable role to play in simplifying and streamlining the resulting complexity and fragmentation and reducing costs. Modern accountants will need to acquire new skills to adapt and exploit new money paradigms and methods of exchange and use their experience and insight to innovate current systems and adapt to new and emerging payment systems.
The world creates 2.5 quintillion (1018) bytes of data each day in various forms. The ability to collate, manage and analyse this data in an effective way is essential for businesses if they are to retain a competitive advantage. Fortunately, the technology to enable this is readily available.
Analysing ‘big data’ enables accountants to identify issues proactively. They can base their decision-making more on hard evidence and facts rather than assumptions about their key stakeholders.
Accountants have always had to be analytical and solve problems, but this is becoming more important than ever as they seek to manage the vast amounts of data being generated, and then utilise this business intelligence to help influence decision making. As a technology trend big data means that a finance function can become more forward thinking. It allows accountants to plan for the future more accurately and to more effectively evaluate risk.
It seems clear that these three technologies, along with multiple others, are coming together to create a new and evolving ‘normal’ in finance. Accountants have a significant role to play in this increasingly connected and interconnected business ecosystem. The internet and cloud-based technology resources are reshaping myriad aspects of business.
What is also clear is that that the role of an accountant is not diminished by rapidly progressing technology but rather the role of an accountant is shifting. More than ever a focus on soft skills is required, with a focus on interfacing with stakeholders both internal and external and managing the technology so that it can be utilised to provide information, speed up processes, and ultimately to help business intelligence.
Nothing in the future is certain, but by possessing a growth mindset, being open to new technologies in finance, evolving alongside technology and focusing on developing soft skills the Modern Accountant can stay ahead of the skills curve and fulfil their potential.
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