How Technology Will Change Accounting in the Next Five Years

All professions experience significant change when advances in technology enter the picture. However, technology is affecting few professionals as significantly as accountants. 

The old-timey introduction of computers and accounting software transformed the accounting profession. And today’s accounting work is far different from what occurred a few decades ago. 

Pencils, green bar paper, and printed ledger books are dusty relics these days more likely to be seen in a museum than in an office. 

Significant changes coming for accountants from technological advances aren’t finished yet, either. 

Embracing change and preparing for it can make your accounting department healthier and in a prime position to work more efficiently.

How has technology improved accounting?

Certainly, accountants haven’t embraced new technology just for the sake of being trendy. (Although we all know accountants love being extremely fashionable in all aspects of their lives.) 

Accountants embrace new technologies because they provide advantages. Computers and accounting software represent a better and more efficient way of doing business.

According to the London School of Business & Finance, technology dramatically improves the accuracy of financial books versus doing them by hand. Accurate calculations in accounting software are a guarantee. One mathematical error higher up on the balance sheet doesn’t compound by repeating itself lower on the balance sheet when accounting software is doing the math.

Accounting software also simplifies the process of organizing data for audits and reports. It instantly gives the decision-makers at the business the financial information they need, leading to more efficiency throughout the organization.

How will technology affect accounting in the future?

As artificial intelligence becomes more prevalent, it will significantly affect the accounting world, according to Maryville University. Some of the technologies that are on the horizon for accountants include:

• Further automation: Accounting software allows for the automation of many previously labor-intensive tasks. Prepare for more such automation, including things like preparing documents for tax time, managing the chart of accounts, and running payroll.
• Cloud software: Accountants rarely will need to manage and troubleshoot on-premises accounting software installations. Software running in the cloud will become the only option, allowing for continual updating of information and software versions.
• Blockchain: Accountants are going to need an understanding of blockchain technology. With accounting ledgers, blockchain constantly updates logs without worrying about corruption. Blockchain is at the heart of cryptocurrency, too, which accountants need to understand.
• Customer service: Customers will begin expecting real-time financial updates from their accountants. Technology allows for up-to-the-minute calculations that ensure accountants and their customers always deal with the freshest information.
• Higher-level analytics: As technology automates many of the time-consuming tasks accountants had to do on their own in the past, accountants should have more time to analyze the numbers. Accountants can help their clients by providing predictive analytics based on the accounting results.

What does technology mean for the future of accountants?

You may have noticed this already in your accounting department, but it feels like fewer people are entering the field of accounting. It’s becoming a ghost town – if potential new hires are not already ghosting you.

The data backs up such feelings. According to Controllers Council, the shortage in the number of accountants entering the workforce has multiple explanations, including:

• Older accountants are retiring earlier, and there aren’t enough students backfilling those jobs.
• More students are seeking advanced, specialized accounting degrees, meaning fewer general accountants are available for the workforce.
• Concerns over technology making the job obsolete are causing fewer people to try to become accountants.
• Some younger professionals may be steering clear of an accounting degree, seeking a job that seems more thrilling.

With fewer accountants available, technology is one way to fill the gaps. By using technology to automate certain types of work, businesses do not need as many accountants on the payroll.

Rethinking the future of accounting

With these challenges in mind, the International Federation of Accountants (IFAC) has some ideas for helping accounting departments have more success.

Expanding their roles in the organization

Rather than focusing on traditional daily accounting tasks, accountants can use their training to serve in valuable support roles in other areas of the organization. 

For example, accountants may serve in more of an advisory or strategic development role, deciphering the accounting results for other executives. 

Applying their skills and knowledge to help make real-time business decisions can give trained accountants new and valuable roles in the company.

Changing training methods

The IFAC believes that professional organizations and educational institutions need to change the training for accountants. 

Rather than relying on a university setting to teach the accountant everything required for a lifetime of employment, educational opportunities must be ongoing. With constant training, accountants can learn skills that encompass any new roles they may need within the organization. 

Fundamental skills that have been at the core of accounting education for decades may be far less important going forward. 

Technology can handle the day-to-day work of the accountant. Instead, training should involve giving accountants a broad toolkit for handling multiple roles beyond fundamental accounting training, including financial analytics and business intelligence skills.

How can I be ready for accounting’s future?

When you think about the history of accounting and bookkeeping dating back several thousands of years – and when you compare that to the monumental changes technology brought to accounting in the past few decades – it’s clear that technology is massively and permanently changing accounting.

To be ready for even more changes, educating yourself about advancements is essential. Trust that some of these advancements will be disruptive. Rather than resisting such change, keep an open mind. Roles for accountants may change quite a bit in the next five years. 

Automation of traditional accounting tasks may mean you need your pencil less often. But it doesn’t mean accountants will have a lesser role within the business … far from it, actually.