6 Accounting Trends For Small Businesses in 2021
Over the last few years, the field of accounting has seen technology-driven, perspective-shifting changes, and the COVID-19 pandemic has only accelerated this trend. This year, we're seeing automation and data analysis playing a crucial role in the finances of the digital world.
Small business owners who have been able to survive the initial storm need to understand how the new trends are going to impact the financial structure of their companies. Here are six accounting trends every small business owner should know about in 2021.
1. AI and automation
Automation has been a familiar sight in various fields, and now it’s set to improve the productivity of accountants. Artificial intelligence (AI) and automation can be used to learn case-specific tasks and automate resource-intensive, repetitive, and time-consuming tasks.
Automated tasks are streamlined for everyday interactions and it is a good way to prevent human error. A few areas that can be automated are bank reconciliations, workflow optimisation, and forecast generations. By leveraging the power of data-driven AI and robotic process automation (RPA), accountants can prioritise high-value projects, enabling firms to scale quickly.
2. Advanced accounting software
In 2021, accounting software can no longer function simply as an on-site asset. The improvement in cloud infrastructure has pushed companies to adopt flexible, cost-effective, and always-on cloud accounting solutions.
When you’re working with a large amount of data and you need to constantly cross-reference them, you’d expect your numbers to be available instantly. Cloud hosting makes that happen, alongside offering you a seamless, real-time collaboration with different parties. The low cost of deployment is another advantage to hosting accounting software in the cloud. Major accounting platform QuickBooks has a host of options you can make cloud-first. Check out the best QuickBooks hosting providers to understand which one suits your business.
3. Big data
With the adoption of technology comes the ability to analyse a large volume of data. Cloud-based software and AI work with data to understand the relationship between variables, and it is up to the accountants to narrow them down to comprehensible metrics. Accountants must evolve into all-around financial advisors and help clients understand what a particular data set means for their business. Increased reliance on data analysis also puts the focus back on the need to secure internal resources and make the data cybercrime-proof.
Blockchain technology has gone from strength to strength, and in the future, it will play a pivotal role in accurate data tracking. Blockchain facilitates decentralised ledger for transparent tracking of financial data. It’s still in the early stage of growth in the accounting world but financial auditors have started gaining from it. For instance, companies that use blockchain to record their transactions will be able to receive a far more accurate report from auditors than companies without it.
However, blockchain needs to be improved and regulated before its full potential can be enjoyed by accountants. As it becomes more streamlined, accountants will pivot towards validating system integrity and company policies.
5. Digital tax management
Small business owners have had to adapt to the rapid digitisation of tax filing. Accountants will assume a bigger role in guiding customers through COVID-specific policies and the impact of the revamped tax structure. Moreover, the rise of the gig economy and solopreneurs has created a further expansion of tax rules, so accountants will look for unified analytics platforms to update tax reports in a timely manner.
6. Outsourced accountancy
Going forward, companies will increasingly look to outsource a major portion of their accounting tasks to third-party vendors. Small businesses have already started outsourcing to save costs and increase efficiency, and the trend will only get bigger in the future.
The biggest push to managed accountancy services is the realisation that people can now work in remote settings and be equally, if not more effective, in terms of communication and productivity. Since cloud computing and big data will be able to handle most of the day-to-day tasks, small businesses will look to cut down on the labour costs and reinvest in core business operations. On top of that, outsourced accountancy gives business owners an opportunity to leverage industry experts at a fraction of cost.
When the world goes through major economic changes, businesses need to stay abreast of the latest trends to meet the new demands. Small businesses can avoid complacency by actively investing in the technologies that are impacting their business operations, including accountancy. Needless to say, customers will prefer doing business with the ones who have embraced change.