21st Century is an era where businesses need to transform by cyber-physical systems and enable many technological trends to develop and thrive. Chief Financial Officers (CFOs) need to carefully evaluate how can these emerging technologies be used strategically, to achieve organisation's business strategy.
In a recent survey by Robert Half Management Resources, 41% of CFOs believed that innovations in accounting are rapidly progressing so it is all the more critical to keep up the pace. Becoming familiar with the most prominent trends minimises the struggle with increased efficiency and a more streamlined approach to managing corporate finances.
Technology has made it possible to process any amount of data faster. Undoubtedly, the adoption of 5G mobile network technology will be the backbone of a brighter world. In my opinion, corporates must seriously consider adopting technological innovations, based on suitability to their line of business, if they have not yet started working in this direction. Some of the significant ones are:
1. Cloud-based Accounting: Within last ten years or so, I have closely watched how cloud computing has completely transformed the way we were doing our work. As a result, more and more corporates are leveraging cloud computing and switching to cloud-based accounting solutions to stay current and competitive in the future. One of the most prominent advantages of today’s finance professionals have from cloud-based accounting tools is the access of financial data from anywhere anytime.
Cloud applications now-a-days are handling everything from payroll and invoicing to taxes and benefit payments. Financial information is getting updated in real-time whenever any change occurs, and are managed from a user-friendly administrator dashboard. Switching accounting processes to the cloud also helps remove a considerable burden from company’s IT department by shifting the responsibility for software management and updates to the cloud service provider. This can be cost effective also when companies don’t have to carry a fleet of IT technicians for their ERP software management.
2. Accounting software integration/automation: These days, accounting and finance operations rely on different tools, such as specific software solutions to manage customer invoicing, payment processing, handling payroll, tracking inventory, and managing various financial reporting. Integration between all required software can automate the information sharing between them and add efficiency to the overall process.
One example can be integrating ERP with tax software to import seamlessly any complex accounting data for filing of returns to tax authorities. In contrast to manual entry, the accuracy will increase manifolds with this integration. Customised integration solutions are proving to be a boon to CFOs where efficiency and accuracy was always a huge concern in the past. Alerts can also be set up to call immediate attention to any errors.
3. Optical Character Recognition (OCR): Any finance department can manage business finances more efficiently by integrating the right accounting software, but it cannot guarantee more productivity of accountants by reducing the manual entries required to record various financial transactions.
The Optical Character Recognition (OCR) technology is assisting businesses to automate and accelerate manual entries. Companies must invest in OCR-based solutions to record financial data quickly and accurately. OCR software can simplify the process by capturing printed financial information such as receipts and invoices and translate the text into digital files. I have seen many large organisations in the oil & gas field, including my previous company, which are dealing with thousands of invoices daily, using bar codes and PDF scanning to effectively and quick recording of invoices, thus saving considerable time.
6. Artificial Intelligence and machine learning: Conventionally, accountants have put in extra time and efforts to analyse and report historical financial data by calculating various financial ratios detailed reports. Now, Artificial Intelligence (AI) is making it easier to accelerate and simplify various data-related tasks – bookkeeping and transaction coding.
As per recent research conducted by MIT Sloan, it was proven that 85% of the respondents agreed that AI would allow companies to obtain and sustain a competitive advantage in the industry. In summary, AI can significantly help accountants to be more efficient.
Hard copies of ledgers, sub-ledgers, excel files, and hand-written or scanned financial statements have all been translated into a digitised system capable of presenting individual transactions into financial reports. This provides transparency and visibility which can allow easier report generation leading to improved decision making.
8. Robotic software: According to Accenture, robotics can reduce the cost of operation by 80% through the use of robotic software may differ across different type of businesses. Most businesses would need customised robotic software to perform a variety of transactions such as entering financial data, saving the financial data in relevant formats, generating reports, and performing tax operations – quickly and accurately.
Robots don't have to be physical entities. In finance, robotic process automation (RPA) can handle repetitive and time-consuming tasks such as document analysis and processing, which is abundant in many large organisations. If robotics automation can take up these mundane tasks, accountants can spend quality time on strategy and also on advisory task.
9. Next generation mobile apps: No business can keep their financial data secured without implementing a robust mobile security plan. Therefore, mobile apps need to be customised for helping in cloud computing and for focusing extensively on data security. The app also needs to include certain features that should enable authorised employees to access sensitive financial data without compromising by eliminating emerging security attacks.
10. Remote access: Remote access is one of the tremendous boons in fact, I would say a blessing to modern accounting technology. In this challenging era of Covid, when most organisations are asking their employees to work from home, CFOs and finance staff is no longer required to be physically in the office to input or analyse data or update tax information or run complex month-end adjustments or publishing management reports. Everything is now on the press of a button.
In conclusion – the human touch: Today's CFOs must recognise the value of all the above solutions as well as other emerging accounting technologies, it would bring to the organisation. They also should understand how they can implement and utilise the right combination of systems, resulting in a stable financial state and improving corporate growth. Modern accounting technologies should be chosen based on efficiency, scalability, and security, to provide just what CFOs need to ensure financial results are accurate, budgets are monitored, results are accurately forecasted to assisting in strategic thinking and decision making process by executive management and board.
Overall, the trends in accounting technologies keep changing from time to time. Each new trend emerging in the accounting world is making conventional accounting processes either redundant or making them more challenging and requires businesses to switch to the latest technology innovations. Businesses must keep in place a robust strategy to monitor and adapt the emerging trends and technology innovations timely and proactively.
* The author is chief financial officer of MAN Energy Solutions Qatar. He is also member of the Board of Governors of Institute of Internal Auditors, Qatar chapter.