The world of accounting is undergoing a seismic shift. Against the backdrop of digital transformation, accounting technology continues to advance at great pace. Accounting firms have had to adapt and embrace new tools and practices. While accountants and bookkeepers are continuing to feel their way through new ways of working.
It’s clear that change is underway. But what does digital transformation in accounting really mean? And where is it heading next? As the industry gears itself up for further collaboration with technology, it feels like now is a good time to reflect.
In this blog, we assess the current state of play – and what that means for your firm moving forward. Whether you’re a seasoned digital accounting pro, or looking to make your first step, we hope to uncover where technology can help you.
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The Evolution of Digital Transformation in Accounting
Digital transformation in accounting is no recent phenomenon. It’s been a gradual process that has gained momentum over the past decade, even more so in the last few years. Initially, accounting processes relied heavily on manual data entry and paper-based record-keeping. These can be time-consuming and prone to errors. There are those that have stuck by this approach, though many have diversified and evolved alongside digital technologies.
That evolution is linked to a number of key developments, all of which fall under the broad category of cloud accounting. From automation to data analytics, and more recently artificial intelligence (AI), the landscape paints a different but exciting picture.
Cloud-based accounting software has been a game-changer for the industry. It allows accountants to access financial data in real time, collaborate with team members remotely, and provide clients with up-to-date financial insights. Moreover, automation tools have enabled accountants and bookkeepers to streamline repetitive tasks like data entry and reconciliation, freeing up time for you to focus on higher-value activities. Not only has it improved productivity but has also reduced the risk of human error.
The Rise of Artificial Intelligence and Machine Learning
As mentioned, the most significant development in digital transformation is perhaps the integration of artificial intelligence (AI) and machine learning (ML) in accounting processes. If automation tools were somewhat a starting point for digitalisation, then the industry’s strides in terms of AI present an even greater opportunity.
AI-powered algorithms can analyse vast amounts of financial data, identify patterns, and provide valuable insights. You can detect anomalies in financial transactions, flag potential fraud or compliance issues, and even predict future financial trends.
Machine learning algorithms can also be trained to perform complex tasks such as financial forecasting, cash flow analysis, and risk assessment. These algorithms learn from historical data, improving their accuracy and becoming more reliable over time. This empowers accountants to make data-driven decisions and offer strategic advice to their clients or organisations.
Additionally, AI-powered chatbots are becoming increasingly prevalent in the accounting industry. These intelligent systems can handle routine customer inquiries, provide financial information, and even assist in basic tax preparation. By automating customer interactions, accountants can focus on more complex client needs, fostering stronger relationships and enhancing customer satisfaction.
The Impact of Data Analytics on Business Strategy
Digital transformation in accounting has also paved the way for data analytics and business intelligence. Through advanced reporting and dashboards, accountants can gain a comprehensive understanding of financial data, identify trends, and generate meaningful reports for stakeholders.
Of course, the core value of these tools is insight. Data analytics enables accountants to analyse large datasets quickly, identify cost-saving opportunities, and optimise financial performance. With this level of insight, firms can make informed decisions and develop strategies to drive growth.
The fact that accountants and bookkeepers have readily available financial information means you’re able to access and share business insights in real time, without the need to spend hours trying to make sense of complex data. You’re also able to mitigate risk and proactively identify potential issues.
The Blueprint for Successful Digital Transformation in Accounting
Now we have a clearer understanding of how digital transformation has unfolded in certain areas of accounting, it’s time to see what success looks like. We’ve compiled a list of best practices shared by the most digital-savvy accounting firms out there. If you’re looking to transform or improve your firm’s digital approach, treat this as your ultimate checklist.
- All files are digital, all correspondence is digital, and notifications are too. Post gets scanned and distributed electronically, then shredded or stored (if it absolutely requires a paper record), so that people can then access this information wherever they happen to be. Location becomes irrelevant
- Unnecessary manual data entry is banished, with receipts, invoices and other financial records all automatically fetched and categorised from platforms into accounting software
- Records and files are retrieved, sent, reviewed and signed electronically. Whether that’s for a client approving the payroll, signing off their accounts and tax, or a business owner that needs to approve a dividend voucher
- Accounting workflows are seamless because backend processes are too. Holiday booking, sick days, flexible working arrangements and time-tracking are recorded, processed and approved, and workflows are updated in real-time for embedded efficiencies
- Meetings are increasingly taking place virtually, but when in-person meetings are preferred or required, clients sign in via a visitor’s e-book upon arrival
- The (often) geographically dispersed staff is not only digitally savvy – the fee-earning team members are also proactive advisors, offering virtual FD services and checking in with clients to advise in real time
- Staff in the firm have excellent working knowledge of different brands of business software and apps and can advise clients on which to use and provide training and support
- The business model is continuously evolving to meet the needs of clients and stakeholders, and embrace the latest technical advances the world has to offer
Challenges and Future Outlook
While the benefits of digital transformation in accounting are undeniable, it is not to say the future of accounting will be without challenges. As digital technologies play a more prominent role in accounting and beyond, there will always be concerns about data security and privacy. But there’s no need to let that stop your transformation. That’s because as financial data becomes more digital and interconnected, cybersecurity measures will only become more robust to ensure software continues to safeguard sensitive information.
In terms of your clients, it’s a case of articulating that message and reassuring them that their data is secure. This is where in a world of digital transformation and technological advancement, sometimes the human touch is your most effective asset. You’ll also need continuous investment into educating your team and clients, and providing them with the correct resources.
Digital transformation is an ever-changing objective for so many accounting and bookkeeping firms that requires you to stay ahead of the latest trends and ensure your technology is up to scratch. If you’re curious as to how you can improve your automation, we’ve compiled a short survey that, when completed, provides you with tailored recommendations on how to advance your accounting technology. Click below to get started.