Fintech in accounting field


Written by:

Hirotaka Tanaka for Digital Business Research Corp.


The world moves fast, and the accounting industry is no exception. Market demands and intelligent technology are driving the growth of the global accounting services market, and more organizations are now recognizing the potential of accounting software in the business.

In the past few years, the adoption of cloud accounting technology has changed the way businesses carry out their accounting and finance management tasks. Through cloud-hosted accounting software, businesses acquire a faster and more efficient way to manage audits, tax preparation, banking, and payroll.

To best understand the current state of the accounting software industry, we compiled the most relevant data and reports on accounting in general and accounting software statistics. The article also discusses in detail the pros and cons of businesses adopting cloud accounting technology and its impact on their productivity and efficiency.

Key Accounting Statistics for Technology Adoption

1.  Top factors influencing the cultural shift in accounting (Source: Sage)

Marketing Demands: 21%

Regulations: 16%

Generation Change: 13%

Investments to Keep Space: 12%

2.  Key areas where automation technology is implemented in (Source: Intuit)

Accounting: 29%

Marketing: 28%

Sales: 27%

Customer Service: 25%

Operations: 15%

Production: 9%

Others: 3%

3.  Top Skills needed by accountants today (Source: Sage)

Technology Literacy: 57%

Relationship Building: 46%

Business Advisory: 44%

Industry Experience Outside of Accountancy: 43%

Project Management: 36%

 

Accounting Software Statistics

Basically, an accounting software is a piece of technology that helps businesses record and manage their financial transactions. It comes with a wide range of features that make accounting easier for businesses and accounting professionals. An accounting platform often includes accounts receivable, accounts payable, general ledger, payroll, journal, and trial balance features.

Bookkeepers and professional accountants also benefit from accounting solutions by having an efficient tool that makes their job easier, especially when it comes to recording and reporting their clients’ and firms’ financial transactions. Generally, accounting platforms cover various accounting and bookkeeping tasks, such as bills payment, invoicing, and financial reporting. A cloud-hosted accounting solution also simplifies data entry and improves the accuracy of financial reports.

As more businesses adopt accounting solutions for their bookkeeping demand, the accounting software industry continues to witness significant growth with each passing year. Below, you’ll find the latest accounting statistics 2021 that can give you a better idea of where the accounting software industry is headed.

  • By 2026, the global accounting software market will be worth $11.7 million. (Accounting Today, 2021)
  • The estimated value of the US accounting software market in 2024 is forecast to be $416.23 million. (Capital Counselor, 2021)
  • The cloud accounting market is expected to reach $4.25 million by 2023. (Flexi, 2021)
  • 67% of accountants preferred cloud-hosted accounting solutions over on-premise accounting software. (Flexi, 2021)
  • Cloud-hosted accounting software reduced operating expenses by up to 50%. (Flexi, 2021)
  • Latest accounting software statistics reveal that 58% of enterprises were using cloud accounting solutions. (Flexi, 2021)
  • Businesses that switched to cloud accounting have experienced a 15% boost in revenue. (Flexi, 2021)
  • In 2020, 78% of small businesses depend on cloud-hosted accounting solutions. (Sage Practice of Now, 2020)

Technology in Accounting Statistics

In today’s digital era, newer technologies are elevating businesses in new and empowering ways. Driven by emerging accounting technologies, the traditional role of accountants in businesses has now shifted to that of a business advisor. The productivity optimization and automation functions of modern accounting tools have made the jobs of accountants a lot easier. At the same time, they gave birth to new skill sets that professional accountants must have—critical thinking, accurate judgment, and professional skepticism.

Thanks to technologies such as artificial intelligence, big data, cloud computing, accounting statistics software, and innovations in accounting and tax solutions, businesses can now have more efficient ways to access and interpret financial data. In turn, accountants bring in more value to businesses by keeping every organization’s financial goals on track. The accounting profession has also moved far beyond mere bookkeeping and payroll. As a matter of fact, accounting today now plays a strategic role in forward-thinking businesses.

Here are some of the most relevant accounting technology statistics.

  • 57% – accountants who believed that technology literacy is the most critical skill for future accountants. (Sage Practice of Now, 2020)
  • 46% – accountants who believed that relationship building is the most critical skill for future accountants. (Sage Practice of Now, 2020)
  • 44% – accountants who believed that business advisory is the most critical skill for future accountants. (Sage Practice of Now, 2020)
  • 43% – accountants who believed that experience outside accounting is the most critical skill for future accountants. (Sage Practice of Now, 2020)
  • 46% – accountants who believed that project management is the most critical skill for future accountants. (Sage Practice of Now, 2020)
  • Digitization was one of the key drivers for the growth of the accounting industry, according to 15% of accountants. (Sage Practice of Now, 2020)
  • According to 56% of accountants, accounting technology increased their productivity. (Sage Practice of Now, 2020)
  • Accounting automation returns the investment in up to 18 months and saves up to $16 per invoice. (Vanguard Systems, 2020)
  • AI improved business operations and helps in automating tasks, according to 22% of accounting firms. (Sage Practice of Now, 2020)
  • 50% of accountants plan to use accounting automation solutions. (Sage Practice of Now, 2020)
  • 45% – accountants who want to automate data entry and number-crunching tasks. (Sage Practice of Now, 2020)
  • 40% – accountants who want to automate accounts payable processes and invoicing.(Sage Practice of Now, 2020)
  • For 35% of accountants, upgrading their accounting technology helps in increasing retention rates and keeping pace with their clients’ needs and expectations. (Sage Practice of Now, 2020)

 

How Blockchain impacts the accounting field

Blockchain is a technology that records data through a system that cannot be changed or copied. This creates a digital ledger that grows longer with each transaction.

It is most used for cryptocurrencies like bitcoin, since the unchangeable ledger prevents counterfeiting without reliance on a centralized administrator.

 

To get more technical, the blockchain is composed of a list of “blocks” — each block carries transaction data, a timestamp and a cryptographic hash of the previous block for authentication and security. Blockchain was invented in 2008 by the pseudonymous Satoshi Nakamoto, although similar protocols had been proposed since the early 80s.

With more companies exploring blockchain business opportunities—including the blockchain audit trail—many accounting firms have undertaken blockchain initiatives to further understand the implications of this important and versatile technology. Audit and assurance professionals should stay abreast of developments and continue to learn more about blockchain business applications, blockchain in accounting, and blockchain audit technology.

 

Blockchain has the potential to enhance the accounting profession by reducing the costs of maintaining and reconciling ledgers, and providing absolute certainty over the ownership and history of assets. Blockchain could help accountants gain clarity over the available resources and obligations of their organisations, and also free up resources to concentrate on planning and valuation, rather than recordkeeping.

Blockchain is a replacement for bookkeeping and reconciliation work. This could threaten the work of accountants in those areas, while adding strength to those focused on providing value elsewhere. For example, in due diligence in mergers and acquisitions, distributed consensus over key figures allows more time to be spent on judgemental areas and advice, and an overall faster process.


How blockchain impact on Accounting field

Artificial intelligence is all around us even if we do not necessary think about it. Every time we search Google or ask Alexa a question, we are utilizing a form of artificial intelligence. The technology has radically altered processes like buying an airline ticket and booking a hotel.

 

What does it mean for the accounting and finance industry? Unfortunately, that is not exactly understood, but, just like other industries, we know it will have a profound impact. For example, auditors at Deloitte, one of the major accounting firms, are using artificial intelligence to sort through contracts and deeds during an audit. The computer does a risk assessment and flags potential problems.

If you want to understand what artificial intelligence might mean to the finances and accounting industries, you first need to become familiar with machine learning. Artificial intelligence is teaching computers to solve problems. Machine learning is a subset of that field.

Arthur Samuel, who coined the term, defines machine learning as giving “computers the ability to learn without having to be explicitly programmed.” In other words, machines teach themselves. For finance, that can be huge. The financial problems at a large manufacturing plant are completely different than in a software company. Machine learning allows the machine to learn the operation over time and create systems to improve the process.

Under this scenario, artificial intelligence is used to digest and analyze large volumes of data and make adjustments based on that data. It’s a more sophisticated version of a spreadsheet where the formulas are updated over time. The process has the potential to radically change accounting and finance.

One of the main ways that artificial intelligence can help the financial and accounting industry is by reducing human errors. Much of the standard data-entry practices that are common-place in accounting could be replaced with machines. Machines could manage invoices and low-level bookkeeping tasks. The machine would reduce the chance that numbers were entered incorrectly, which can cause major problems to the entire accounting operation.

 

While some might be concerned that the move would eliminate jobs, it could help the profession. It frees up accountants and financial professionals to work on higher-level aspects within an organization. Financial professionals will have more time to focus on strategy and improving the operation. They will be able to provide insights into how to make business practices run more efficiently.

 

August 03, 2022