The role of technology in modernising accounting practices

As in many areas of life, technology has played a massive role in revolutionising accounting practices. It’s almost hard to believe that in the relatively recent past, companies of all sizes were manually calculating and inputting their financial data, with a vast amount of resources going into repetitive tasks such as creating and sending invoices, paying bills and preparing tax returns. Thankfully, those days are behind us, and technologies such as cloud and artificial intelligence have transformed accounting practices, bringing huge efficiencies and enhancements.

How has technology impacted accounting?

From optimising workflows to saving time and offering deeper insight, the short answer is that technology has massively impacted every aspect of modern accounting. More specifically, there are a few key areas that have led to major modernisation, such as:

Automation

Cloud-based accounting software has modernised accounting practice in many ways, but the ability to automate those repetitive but essential tasks that make up a large part of business accounting has perhaps had the biggest impact. In fact, software has streamlined the entire accounting process, from data entry to delivery, eliminating the need to enter the same information into multiple spreadsheets manually. By reducing the time spent on manual tasks, there’s more opportunity to focus on value-add activities, so software can even positively impact your bottom line.

AI

In addition to enabling automation, artificial intelligence also impacts accounting in other ways, particularly when analysing financial data, generating reports, and identifying patterns or anomalies that could suggest accounting fraud. These services can help businesses save money and improve the accuracy and timeliness of their financial reports. 

Accessibility

Technology is also making it much easier to keep track of your business finances from any location. Cloud-based accounting platforms can be accessed wherever there is an internet connection, and multiple people can view the same live data simultaneously. As well as meaning business owners can access key information in a time and place that suits them, it also reduces the opportunity for mistakes to creep in as everyone can be confident they’re looking at the latest numbers.

Accuracy

The accuracy of financial records is also enhanced with technology. Many software platforms will link directly to your business bank account and be API enabled to communicate with other apps you use, such as payment platforms. Again, this contributes to more joined-up finances that offer greater accuracy and insight. While software has significantly reduced the number of errors creeping into finances, it is often more easily rectified if one does occur, as it will only need updating in one place. Software can even alert you as you’re making an error.

Decision making

While many of the impacts of technology on modern accounting focus on physical improvements, one less tangible but arguably just as important enhancement is the fact that it can significantly aid the decision-making process. By having all of your financial information in one place, by being able to search for specific information and by being able to generate and access reports more easily, software helps you to make decisions with confidence. Being able to compare profit and loss reports over the years quickly or to assess how your cash flow changes each quarter can also help you to identify trends and opportunities to boost revenue, cut costs or try new things.

Security

Finally, the enhancements in security afforded by accounting software shouldn’t be underestimated. Although you can access your data anywhere, you can also be confident it is protected. In addition to restricted access and user authentication, data encryption, server protection, and offsite backups are some ways software providers ensure data security.

To discover the benefits of accounting software for yourself, sign up for a free AccountsPortal trial.