The ABCs of innovation: 3 technologies transforming accounting and how to use them

As an accounting professional, your clients expect you to help them navigate a fast-changing business environment so they can continue to grow and prosper. The advice many accounting practices provide today include compliance, current tax laws, and how to keep cost structures in line. However, it is also critical to keep up with the current technologies transforming accounting that can impact both your client’s business and your practice.

There are three core technologies – artificial intelligence, blockchain, and the cloud– that are transforming virtually every market.

The challenge is, even though your clients are aware of these technologies, most are not yet prepared to invest in them. Your opportunity as their accounting partner is to educate your clients on the possibilities these new technologies can create for their business.

Let’s look at each technology and see how you can help your clients better understand the potential impact on their business.

Artificial Intelligence

In my opinion, artificial intelligence (AI) is the most over-hyped term in the business world today. However, when used strategically, I have seen it offer organizations incredible opportunities to scale their capabilities in critical parts of their business.

The challenge for the accounting professional is understanding how it impacts their client’s business and differentiating between the hype and reality.

In a nutshell, AI is a cluster of technologies, including automation and machine learning, designed to simplify our lives. Can you think of an area in your professional life that could use some simplification? It is estimated that accountants spend over 70% of their time preparing and gathering data for analysis. Automating some of those routine tasks would not only save time and allow accountants to provide more insight and analysis to their clients, it could also help to reduce errors.

Perhaps the most exciting component of AI is machine learning. Whereas automated systems are often rule-based and are not designed to improve independently, artificial intelligence can allow machines to learn from experience, like humans.

Imagine your accountants sharing their best practices with clients and allowing the accounting automation to work on a problem around the clock. Most importantly, the application is working on real data, not a set of assumptions or guesses based on your client’s business.

Machine learning isn’t a thing of the future. Companies from your favorite streaming service to your social media network are using machine learning to predict your needs.

In accounting, the more traditional application of machine learning includes invoice management, client profitability management, and monitoring maintenance schedules. With new machine learning tools, accounting firms can leverage the experience of their accountants to help their clients make better and faster decisions.

Both artificial intelligence and machine learning can help accounting professionals increase their impact on their clients’ businesses. The shortage of data scientists in the market gives accounting firms an edge in building out their capabilities to increase revenue and profitability within these specialty practices. In my opinion, these new technologies can also help attract the next generation of accounting professionals into the accounting firms.

Blockchain

Blockchain, sometimes referred to as distributed ledger technology, allows an organization to minimize risk by providing increased transparency into business transactions and creating one source of truth.

So, what is blockchain? Imagine having a ledger that your firm, your clients, and their customers could securely access. This ledger would live on the Internet and each of you would be able to make entries, but none of you own the ledger; its completely decentralized.

To prevent fraud, a combination of digital signing and cryptography would be used to ensure only authorized people could add transactions to the ledger. Each new transaction (“block”) would be securely linked (“chained”) to the previous transaction thus creating a blockchain.

This ledger could be used to record virtually any kind of data from anywhere in the world.

Think about the opportunities blockchain could present for your clients, from inventory management and supply chain to global trade and banking.

As blockchain becomes more mainstream, there will definitely be an array of user-friendly apps to go with it. Those tools will provide accountants with an opportunity to talk with clients about how blockchain could improve their operations and cost structures.

The Cloud

The third technology transforming accounting is the cloud. All the capabilities we discussed earlier are not possible without cloud technologies.

Simply put, the cloud allows your data and applications to be stored on the Internet as opposed to being stored on a single computer or a network of computers. This has led to the explosion of tablets and mobile devices that have transformed how small businesses and entrepreneurs get work done, from taking payments in the field to providing easy access to any number of business applications.

When spending time with entrepreneurs and mid-market business owners here in the Midwest, I am amazed at how quickly the discussions turn to how to leverage cloud technology in their growing businesses. In fact, it is not uncommon for them to use their mobile devices during the meeting to communicate with team members located across the globe. I imagine you have had similar experiences working with your clients.

The question we need to ask ourselves is how do we blend our accounting expertise with new technologies to help our clients create a competitive edge?

Conclusion

Today’s successful accountants need to keep up with emerging technology trends and capabilities. Having a strong technology background is the key to succeeding in today’s changing business environment. The article Accountant-vendor relationships: 5 tips for success can help you build stronger relationships with your technology partners.

Don’t think of technology and accounting as two separate arenas. You will be valued by your clients as much for your technology knowledge as for your accounting skills. It’s a brave new world and clients want and need someone to give them solid advice on which way to go with new technology. Is it a fad? Or will jumping in now make sense for the long term? You owe it to your future success to make sure you understand the technology changes and help your clients take advantage of the potential benefits.