Accounting trends are reshaping the financial landscape in 2024.
Accounting has always been a sore topic for business owners, eliciting groans and sighs as they get the ledgers out. In 2024, however, things have begun to change dramatically. Technology and processes in the accounting space have entered a golden age of progress in 2024. After breakthrough technologies like blockchain and AI entered the fray, the future of accounting is in for a wild ride. Today, let’s review some of the latest five years’ biggest developments and accounting trends to get an idea of what lies ahead.
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What are the Biggest Accounting Trends in 2024?
With so much new technology and methodology being tossed around, separating the wheat from the chaff can be difficult. Especially with buzzwords like blockchain in the mix, which have been gravely misunderstood in the mainstream. Nevertheless, business owners and accountants must stay in the loop on these developing technologies. Rapid digitization entered our lives in 2020, and since then, the train has only been speeding up. So, hop on the train with EA as your conductor as we visit all the technological milestones and trends you need to know about.
Blockchain Technology
We’ve all heard about blockchain these days, particularly concerning cryptocurrencies like Bitcoin and NFTs. Unfortunately, these applications of blockchain technology have led to a stigmatization of the underlying ideas. Before we get into the subject, set aside the controversy around NFTs and cryptocurrency for now.
So, what is the blockchain?
Think of the blockchain as a digital list of transactions anyone on the network can view. They can be private, public, or business-only accessible. A chunk of recorded transactions constitutes a block linked together with other blocks in a chain, hence blockchain.
The point of blockchain technology is the establishment of a fully transparent digital financial ledger. Everyone with access to the ledger will always know what transactions are happening and where money is going. If a transaction happens between two parties, both parties will need to authenticate the veracity of this record. There will be no potential for fraudulent tampering in transactional data, as everyone on the chain will be apprised of any activity.
Think of it like an accounting ledger, where anything entered notifies everyone involved. So, if your accountant records a transaction, everyone relevant on the team immediately knows what happened. Everyone has a record of the history of transactions on the ledger, so no sneaky embezzling activity can take place.
The blockchain is particularly useful due to the heightened security it provides. All of the data on the blockchain is stored separately. Each transaction is gated behind multiple security walls and uniquely labeled with a tamper-proof signature known as a hash. For further information on the intricacies of blockchain, check out this breakdown by leading blockchain vendor IBM.
How Relevant is Blockchain Technology in Accounting?
There has been a lot of positive reception of blockchain technology in the accounting sphere. 2021 Global Blockchain Survey Deloitte reports that 81% of respondents believe blockchain technology is broadly scalable and has achieved mainstream adoption. Juniper Research meanwhile reports that the total value of B2B cross-border payments immutably stored on the blockchain will exceed $4.4 trillion by 2024.
Suffice it to say that blockchain technology is no longer a niche technology that crypto fanatics and NFT traders use. It is a legitimately useful and highly relevant record-keeping technology that is changing accounting as we know it. To the point that paper-based transactions and physical assets are going the way of the Dodo. Accounting professionals must familiarize themselves with this technology, and entrepreneurs must start investing in blockchain infrastructure.
In our eyes, this is the number one accounting trend for 2024, and everyone should monitor blockchain developments.
Automation and AI-Assisted Accounting
Automation and AI are the talk of the town in every industry these days. Accounting is no different, with everyone’s eyes peeled for any news on AI breakthroughs. The sheer fact of the matter is that going forward in 2024, accounting will be deeply impacted by automation and AI.
Will AI and Automation Replace Accountants?
To say that these technologies are encroaching on the livelihoods of millions would be a tad dramatic. However, it is undeniable that AI and automation have begun to rapidly take over the more mundane parts of accounting. Some places where automation has taken over are bookkeeping, data collection, data processing, accounts payable, and receivables.
It is best to keep your feet firmly planted on the ground and remain realistic about the situation. Richard Anning, head of ICAEW’s IT Faculty, says as much in a 2019 interview:
“Several click-bait articles out there talk about how AI will get rid of accountancy. But a lot of what is happening now is more mundane, for example OCR (Optical Character Recognition); that’s just about scanning invoices. There is an element of fear, an element of education, but there is also opportunity.”
What Opportunities Do AI and Automation Present for Accountants?
In the context of accounting, AI and automation are an incredible quality-of-life improvement for accounting professionals. While several accounting roles are dedicated to handling mundane activities like bookkeeping, they are a fraction of an accountant’s skillsets.
Honestly, accountants have it incredibly rough as it is. They must record, compile, and work with rivers of data regularly. They battle to avoid being swept away and overpowered by these responsibilities daily. AI and automation present accounting professionals with a chance to change everything. Instead of being chained at a desk recording transactions all day, you can flap your wings and take to the skies.
Poetry aside, the point is that AI and automation eliminate the boring parts of the job. They let accountants flex their accounting muscles and give critical advice and consultancy. Accounting in the 21st century has slowly but surely been shifting towards a more strategic than an operational role.
The machines can be left to deal with the invoicing and payment collections. Now, accountants can use all that AI-processed data to help clients strategize. They can advise on business decision-making and take the lead on the accounting project management front.
This allows accountants to become more than “bean counters”. An opportunity to break the stigma and break into the leadership and managerial roles. Rather than AI stealing jobs, AI simply gives you more interesting jobs. That’s how accountants need to view it.
How Can Businesses Leverage AI and Automation in Accounting?
Businesses stand to gain a lot from AI and automation. These technologies will drastically reduce the accounting workforce. Instead of ten accountants in a corporation, there will be at most three, with AI handling the rest. Costs will come down long-term, and the savings will allow for future business investments.
At the same time, the accounting talent pool will grow considerably. Every business will need fewer accountants, leaving more professionals available to meet the labor demand. As we saw after Covid-19, there was a massive shortage of skilled professionals in the workspace. With more accountants in the job market, businesses will have a much easier time recruiting.
Learn more about the challenges and opportunities of AI in accounting with EA’s expert insights.
Remote Work and Third-Party Accounting Services
Our last accounting trend for discussion today is the rise of remote work and third-party accounting services. Businesses are increasingly leaning towards going fully remote on the accounting front. The opportunity to reduce overhead costs with remote work is simply too good to ignore. As for third-party accounting services, they have experienced astronomical growth in the last five years.
As reported by Capterra, 71% of businesses outsource some of their accounting workload to third parties. The numbers are nothing to sneeze at, and indicate a pattern of behavior in the business world. The fact is that in 2024, hiring an accountant in-house is simply not the right move. Businesses stand to gain more than they lose by opting for outsourcing.
Why Are Businesses Choosing Outsourced Accounting Services?
As we mentioned, outsourced accounting services offer far better business cost savings. Offshore remote professionals come at a fraction of the cost of an in-house pro without tangible difference in quality. These firms offer businesses many unique opportunities on top of cost savings.
For one, these firms are firmly established in the accounting sphere. They have access to all of the latest technological accounting infrastructure. They also stay updated with the latest developments in the financial field and are monitored by industry veterans. To say nothing, they are masters of leveraging the latest technological and strategic developments in accounting.
These guys know the ins and outs of using AI and automation. They have regular training sessions to get everyone on new developments. Any new regulation or legislation hits their tables the moment it comes out.
The sheer convenience that a third-party remote outsourced accountant offers is unparalleled. Businesses could do much worse for way more money than hiring a fractional CFO from Pakistan or the Philippines. Whether it is cost or quality, third-party services excel beyond in-house accountants.
What are the Drawbacks of Outsourced Accounting Services?
Of course, there are some drawbacks, such as a communication gap, but in 2024, these have become negligible. Nowadays, everyone has mobile data and access to backup power. Outsourcing firms have the infrastructure to overcome the problems.
The communications gap is a necessary evil and is not as bad as you would imagine. These days, everyone is almost always online for every waking moment. Because of how robust the digital infrastructure is, you have to actively try to sever communications. Short of the internet going down because of a natural disaster, the chances of losing contact with a remote accountant are slim.
As long as business owners do their research and partner up with a trustworthy firm, there is nothing to fear.
Conclusion
A quarter of the way through 2024, these accounting trends only seem to be gaining momentum. Each passing day introduces new technological breakthroughs, and companies like Nvidia are investing hard.
Stay up to date with the latest trends right here at EA! We cover all things outsourcing, accounting, and fintech. Want us to cover something? Head on over to our social media channels and let us know.