The last couple of years have been a challenge for people and businesses across the globe. But with brighter days ahead, we’re all looking to the future with renewed optimism.
We’ve talked to our amazing customers, partners, and industry leaders over the past few months to get their thoughts on how we’ll be approaching the year, and the technology that’ll help the accounting and finance community not only bounce back, but thrive.
Here are our 7 predictions for the industry in 2022:
Coronavirus and cloud are here to stay
While waves of infections continue, the only thing it seems we can reliably predict about coronavirus is its unpredictability. Nevertheless in 2022 we will adapt to a world where it becomes endemic. The way we work is likely forever changed, at least to some degree, for most roles.
Small and medium businesses will continue to refine their cloud infrastructure and leverage additional apps to fill functionality gaps. Replacement cycles will begin for those applications that fail to meet needs as industries evolve and pandemic life is normalized. New and replacement technology buyers will seek cloud-based accounting systems that incorporate automation and analytics seamlessly.
These solutions will allow businesses to continue to do things remotely while allowing for hybrid and in person connectivity in situations where it provides the opportunity to be more successful or productive. The uncertainty of the past two years and ongoing cybersecurity threat levels will continue to keep agility and resiliency at the top of the list when accounting and finance leaders consider technology.
Automation will continue to ease the labor crunch in accounting
If it can be automated, it will be in 2022. While the labor shortage drags on, it’s vital to make the most of the staff you have. Focus on investing in upskilling staff to meet new demands and implementing technology that makes your business particularly attractive to new hires.
Automation will be seen not as something to replace human workers, but an extension of the employees you have. It’ll become a more common way to maintain accuracy on projects and efforts that may be less fully staffed than they had been in pre-pandemic companies.
“Talent and staffing is the single biggest issue right now,” says Kevin Cumley, director of the Sage Intacct Accountants Program (SIAP) and one of Accounting Today’s top 100 influential people of 2021. “A shortage of good quality people is driving investment in technologies that automate things that were done manually in the past to decrease the people time required to do the work which improves both efficiencies and capacity.”
Must-have tech for automation in 2022 include:
- Intelligent general ledgers and error/anomaly detection to eliminate inaccuracies and automate consolidations
- Robotic process automation (RPA) to accelerate or cut out repetitive tasks for users, extend staff reach and allow available staff to focus on issues that require human interaction
- Dynamic allocations and consolidations accelerate time-intensive manual tasks and ensure timely financials
Investment in accounting AI will continue to grow (even in industries late to digital transformation)
AI, RPA, and automation adoption are set to skyrocket in 2022, continuing to drive industry transformation. But pandemic-era AI investments we will see this year in the small and medium segment will be tactical and drive ROI from targeted workflow automations and data management changes. From automating routine tasks to putting tactical solutions into the back office, there’s no end to how AI can drive efficiency and boost productivity in 2022 and beyond.
Some typically late-adopting industries set to get on board with automation in 2022 include:
- Retail and wholesale distribution: Retailers and wholesalers will adopt automated solutions for managing inventory and offering self service capabilities in stores, and optimizing multichannel operations with fewer staff.
- HR/payroll: Solutions that add automation to HR, whether it is timekeeping, payroll, onboarding, benefits, time off or compliance, and reduce the need for staff to accomplish these functions 1:1 will be more widely adopted. Turnover has never been higher; driving up the volume of repetitive administrative work. The labor shortage has HR resources directed more toward recruiting and retention of employees, leading smaller teams to automate routine workforce tasks where possible.
- Logistics: With supply chain backups becoming widespread, transportation industries like trucking, shipping and air freight will accelerate the journey to paperless operations and digitize data to optimize logistics and ensure resources aren’t wasted as goods make their way to customers worldwide. This will be necessary to manage rising costs and serve customers.
- Consumer and in-home services: In-home and on-site services are seeing demand grow with work from home and rising housing markets. To better track work, automate invoicing and payments, and help the world’s remote workers be more productive, these industries will continue the process of digitizing their core operations, adding mobile solutions that incorporate automation. That’s the key to increasing revenue while keeping field operations lean.
Outsourcing is becoming more common
An ongoing shortage of qualified professionals has made the economics of outsourcing more attractive than ever before.
At the same time, small and midsize firms that either cannot find the talent needed in their local labor market or want the stability of a larger firm are increasingly looking to outsource all or part of the accounting function.
“For mid-market organizations who may be growing as much as 30% year-over-year, turnover in mission-critical controller and CFO positions can lead to inconsistencies in management, leading firms to seek the predictability of outsourcing to ensure high quality resources in these functions,” Says Cumley.
Analytics, action, and storytelling come together with data automation
We’ve come a long way from just digitizing records for lookup, and analytics is now pervasive and mainstream. While the intelligence we get from analytics is significantly easier to make actionable than the raw data, progress continues to automate and systematize the use of analytics, particularly around data automation.
In 2022, as we seek to gain more insights into our businesses by analyzing past and current performance, being able to put the information into action will be key.
“Automating data flows and bringing sources together will allow us to be more predictive and to look beyond finance,” says Dominic Ballinger, director of financial planning and analysis at Sage Intacct. In his view, there are opportunities to collect data from multiple sources with financial data. Finance leaders’ roles are expanding to include working with other areas of the business, leveraging data to make better strategic decisions and drive profitability.
Advanced data automation helps summarize data and get more insight into the story behind the data when it’s needed. These techniques also integrate analytics data with operational data and systems with the goal of automating the actions that are taken in response.
The new analytics tools that early adopters choose in 2022 will begin to tell a deeper story from multiple data sources, and offer connections to the operational systems that allow action.
Blockchain adoption continues, cryptocurrency is approached with caution
In 2022, accounting and finance leaders will continue the path to adoption of blockchain (distributed ledger) technology within business apps for specific capabilities, based on its merits. Use of blockchain-based cryptocurrency will remain extremely cautious and mainly in the consumer arena, but we will start to see some legitimate use cases appear in the business-to-business transaction space.
- Applications using blockchain (distributed ledger) technology will proliferate.
- Consumer adoption of cryptocurrency will continue, and finance leaders need to watch how this affects inflation.
- Business-to-business cryptocurrency applications will begin to go mainstream as businesses seek to accept consumer payments in crypto and even begin testing check-free business-to-business cases in some industries.
- Investment-grade crypto opportunities will become more widespread.
Jeremy Almond, CEO and co-founder at Sage Intacct partner Paystand said when he spoke at Transform this past November, that “money is now programable software.” While we may not get all there way there this year, the march toward paperless finance operations, the decline in use of paper checks, and the need for better financial data security is surely leading us toward the adoption of more of these block chain-based technologies.
The speed of implementing new accounting regulation will continue to be affected by the pandemic
For the past couple years, we’ve seen a few new accounting regulations published because of regulators slowing the pace to allow businesses to react to the pandemic.
However, as coronavirus becomes endemic, it is expected that there will be some pickup in new regulations, particularly in those areas that have seen growth or innovation resulting from the pandemic.
According to CPA Canada, new accounting regulations will continue to develop around ESG and sustainability standards. In 2021, the IFRS established a new standard-setting board, the International Sustainability Standards Board (ISSB), which is responsible for developing a global baseline of high-quality sustainability disclosure standards to meet investors’ information needs. With that, we expect to see a lot of activity and new standards from this board in 2022.
Other areas you will want to keep an eye out for new regulations in 2022 are:
- Anti-money laundering enforcements
- Assurance standards
- Digital innovations
To continue the conversation around the future of finance in 2022, check out our e-book, CFO. 3.0 – Digital Transformation Beyond Financial Management.