The impact of technology on the accounting system cannot be denied, especially in the twenty-first century.
Modern technology has been transforming all industries, and hence, it is only natural that it will transform and simplify the accounting industry. Gone are the days when accounting meant you would manually enter the data into extensive spreadsheets and carry out complex calculations. In 2020 efforts are being to revolutionize the accounting industry and introduce a process of automation in accounting procedures as well. If you look at accounting software, it primarily deals with business transactions.
However, for the software to produce the desired results, you will have to provide it with historical data so that the analytics can be carried out. Now putting in data into a spreadsheet manually can prove to be cumbersome and leaves room for human error. However, with the help of automation, you can bypass both these problems and make the entire accounting system simple and easy to use.
Thus, the impact of technology on the accounting system cannot be denied, especially in the twenty-first century. Some of the significant impacts of software in accounting systems in 2020 are as follows:
Cloud-computingAs many software companies are offering Software-as-a-Service (SaaS), carrying put cloud-computing has become more comfortable. Moreover, as this service is provided by a third-party, you can be assured that any issue that you face with your cloud accounting software will be addressed immediately and resolved. The objective of cloud-computing is also to allow you to complete accessibility. You can access all the accounting information of your company anywhere and anytime.
The objective of cloud-based computing is to ensure that your accounting data is safely stored in hybrid servers. This is important because, for accounting, you often need to evaluate present-day data against historical data. For this, you need access to all accounting information of your company with ease. With cloud-based computing, you can easily do so, and you will not be dependent on a single server. Additionally, more than one of your employees can access the same information simultaneously as the information is saved on virtual servers. Thus, clod-computing has made accounting more straightforward and effective.
AutomationOf all the effects of technology on accounting, one of the most important is making the entire process automatic. Technological advances have made the process of entering data and analyzing it automatic to a large extent. Say, for instance, you want to do Human Resource Accounting for your company. Here you no longer need to enter the data manually. With the help of automation, the entire process can be updated in the system automatically every time your employees are paid benefits, wages, or salaries.
The same applies to other forms of accounting as well. You can then merge these accountings to gain an idea of the operational expenses, carry out an audit, create a balance sheet, or get a better understanding of your company's financial condition. Automation has simplified the entire data entry process and, more significantly, reducing the room for human error. Thus, by making repetitive tasks automatic, you are saving time as well. The advances in Artificial Intelligence or AI have made it possible to bring about automation in the accounting industry.
Data mining and analyticsThe objective of accounting is not just to gain an understanding of the financial condition of your company. You can use your accounting results to do predictive analysis. However, for that, you will have to do data mining and analytics. Earlier, this would be done manually by comparing the accounting results of previous years. However, with the advancement of technology and big data analytics, this process has been simplified.
Data mining and analytics can be applied in the accounting industry as well. Here historical data can be compared through various data analytics tools. You no longer have to sit with complex spreadsheets to understand your company's performance over the years and predict its performance in the upcoming years. You can easily do so by running analytics on the previous years' accounting reports against the present.
BlockchainThe importance of technology in the accounting industry is to simplify a complex process and Blockchain technology does exactly that. Blockchain technology is unique because it reduces the requirement for maintaining and reconciling extensive ledgers thereby reducing the workload of your accountant. All information gets stored in the system. This can be updated automatically to the ledger and accessed by your accountant. There is no chance of information or a financial transaction being lost because of a non-reconciliation of the ledger.
Blockchain reduces the workload and also provides an accurate record of asset history. So if your company has carried out a financial transaction, then with Blockchain technology's help, there will be an accurate record of it. Your accountant can easily access this record, and you can be assured that the report developed by your accountant will be equally perfect.
Thus, the accounting industry's primary importance lies in simplifying the complicated process of keeping a record of various financial transactions carried out by a financial institution. It also simplifies an accountant or an auditor's work by reducing the number of working hours being devoted to entering the information in the ledgers.
With the help of automation, cloud-based computing, AI, machine learning, and Blockchain technology, not only is the process of maintaining ledgers simplifies, but also the development of results. Therefore, it won't be wrong to say that technology is responsible for an evolution in the accounting industry.