Virtually all businesses are facing increasing challenges due to the rapid advances in IT and cloud technologies and the enduring disruptions caused by the COVID-19 pandemic. To drive growth, organizations must embrace change, adopt new business models, and develop more efficient ways of conducting business. This is particularly true in accounting and finance.
Let’s take a look at seven trends that will reshape these two key sectors this year.
The cloud is here to stay.
Cloud computing provides access to a growing array of powerful software tools and can lower IT costs. Hybrid cloud systems that blend on-premises and off-premises solutions offer small and midsize businesses greater flexibility and customization. Cloud technology challenges and goals for accounting and finance sectors in 2022 include:
- Embracing additional apps to improve functionality
- Navigating shorter replacement cycles to keep pace with changing business needs
- Adopting cloud-based systems that incorporate automation and data analytics
- Keeping pace with cybersecurity threats.
Automation in accounting is gaining momentum.
The shortage of talent shortage is the primary factor driving technology investments in accounting and accelerating the use of automation. Automation will continue to boost accuracy and efficiency for accounting departments, particularly for understaffed projects. Key technologies that will continue to spread include intelligent general ledgers, AI-powered anomaly detectors, robotic process automation (RPA) to eliminate repetitive tasks, and dynamic allocations and continuous consolidation to ensure faster closes.
Accounting AI investment will continue to increase.
Increased spending on artificial intelligence, RPA, and other automations will drive transformation in accounting. Automation investments by small and midsize firms will be focused on the areas of workflow and data management.
Outsourcing will continue to grow.
Labor shortages have made outsourcing accounting functions more advantageous for small and midsize companies, either because they cannot attract new talent or retain their current staff. Increased turnover in accounting is leading firms to rely on the predictability of outsourcing. The availability of cloud accounting software makes outsourcing easier by automating key accounting processes. Meanwhile, firms that offer outsourced accounting services are investing in advancing their employees’ technology skills.
Analytics will continue to converge with data automation.
Analytics is no longer a new undertaking for many businesses. Investment in analytics will continue to rise this year as companies seek to maximize ROI and tackle operational issues with the assistance of data-driven insights. Advanced data automation will help accounting and financial departments improve performance, boost efficiency, and increase profitability by providing more actionable data to drive insights. Improved analytics capabilities will enable finance teams to be more predictive and provide valuable insights to other teams. Employees will use multiple data sources to build accurate stories behind the data, and machine learning and AI will help them analyze trends and make more accurate predictions.
Blockchain adoption will continue to expand.
The adoption of blockchain (distributed ledger) technologies will continue to grow in the accounting and finance sectors, with particular growth in B2B cybercurrency transactions. Consumer adoption of cryptocurrencies will affect businesses that accept consumer payments in crypto. Although investment-grade crypto opportunities will become more widespread, financial operations will remain cautious about crypto until regulatory structures become better defined. Blockchain will add momentum to the progress toward paperless finance operations.
The pandemic will continue to affect the rollout of accounting regulations.
The pandemic delayed the implementation of accounting regulations because regulators sought to ease the burden on struggling businesses. As COVID transitions to an endemic stage, however, the pace of the introduction of new regulations will increase. Segments to watch include the cannabis, cryptocurrency, and green energy industries. The emergence of work-from-home and hybrid work arrangements may also attract regulatory action.
Take a Deeper Dive
The past few years have been challenging for businesses. To stay ahead of competitors, organizations need to embrace new technologies and reinvent business models. For a deeper dive into the developments that are having a profound impact on accounting and finance, read the white paper “7 Key Trends That Will Reshape Accounting in Finance in 2022.”