How technology will change accounting in the next five years

By Floqast  

Technology will change accountants from data historians to business strategists and consultants. 

As much promise as technology and accounting has shown in recent years, new solutions on the horizon offer plenty of optimism. As businesses and accounting teams evolve to meet expectations here are the ways the profession will change in the next five years. 

Cloud will be where your system and data live 

By 2028, the only server-based systems will be legacy systems that are too old to migrate. Everything else will be in the cloud, or at least in a hybrid model. ERPs of the future will be more modular, with functionality and reporting that come from SaaS applications that you can practically plug and play.  

With the move to the cloud, we’ll also have greater computing power and systems that can easily scale up or down as needed. This will be more cost-effective because you’ll only pay for what you need, not what you thought you needed a year ago.  

Data, data, everywhere data 

We’ll need that additional storage space and computing power because accounting and finance teams won’t only be looking at the numbers from their accounting systems but will integrate those numbers with big data from all parts of their organizations.  

This won’t be just the information that’s currently collected but poorly integrated, such as data from operations, sales, and customer behaviors.  It will also include real-time data from the Internet of Things: warehouses, delivery vehicles, and the products in the hands of customers themselves. To that stew of company-specific data, we’ll also add in market trends, unemployment rates, and perhaps even weather patterns and current infection rates for the latest pandemic. 

Data analytics will be your new superpower 

Leveraging data analytics means accountants will move from being historians to predictors and prescribers. It’s not enough to collect data and dump it into a spreadsheet. We’ll need to tease out the insights and trends hidden in those numbers. This will be beyond the capabilities of Excel, so we will need to bring in data analysts and data scientists. We’ll also be using additional forecasting and analytic tools that leverage AI to find patterns so we can solve problems before they get big. 

Automation will make data entry obsolete 

Touchless transactions will be the norm, as RPA tools extract data from invoices, contracts, and other documents to feed information directly into our accounting systems.  

Even today, automation is moving up the corporate ladder from low-skill data entry work to extracting data from complex contracts and creating the journal entries and disclosures needed for GAAP financials. This will take work off our plates so we can do the work humans do best: thinking, collaborating, analyzing, and innovating.   

Artificial Intelligence to augment yours 

AI will become even more embedded in ERPs, accounting systems, and other software tools we use, as well as in the systems of businesses. Today’s AI handles relatively “simple” tasks like matching transactions in bank recs and kicking out anomalies. By 2025, AI will resolve many of those anomalies and even propose alternatives to the humans monitoring those transactions. And when you need an answer from your system, you’ll be able to use natural spoken language to communicate. You might even be able to create financials just by describing the transactions, as this demo of GPT-3 shows.  

Blockchain will be something we use, not talk about 

Blockchain has been called a solution in search of a problem, but according to Grant Thornton’s latest CFO survey, 31% of companies are already implementing some kind of distributed ledger technology. Surprisingly, that’s more than those who say they’re using AI and RPA (28%), as shown in the figure below. Only 19% have no plans to put blockchain to use within five years. The CFOs who typically participate in this survey are from companies with revenue between $100 million and $20 billion, so maybe it takes a big budget for blockchain.  

But according to Forbes, blockchain initiatives are underway in companies from Amazon to Walmart worldwide. I predict that by 2025, we’ll be using blockchain in accounting, but we might not know we are. It will be embedded in logistics and supply chains, under the hood, so to speak, but working to keep important information unalterable and traceable.  

Tech will change who works in accounting 

The role of the finance function is changing, as this graphic from a recent report from EY shows. Finance will transform from a cost center to become “a fact-based decision center.” 

With that change in purpose, the makeup of teams in accounting will change. We’ll use more tech and fewer humans, which is good since we’ve been struggling to find accountants to fill out our teams for years.