The pandemic has forced the business world to change in more ways than one. It was responsible for fast-tracking the digital transformation in business. It is also transforming in leaps and bounds. The accounting division of many organizations started working remotely. Adaptability became the buzzword for sustaining a business.
The year 2021 saw a continual increase in reliance on technology. Many firms updated their technology to adapt to the changing scenario. The accounting trends of 2021, like cloud accounting, accounting software solutions, etc., are going strong in 2022.
We will look into what the accounting trends will be in 2022. These are as per the insights of the financial experts and leaders.
Accounting trends in 2022
Automation of accounting
Automation of time-consuming and labor-intensive tasks helps the accountants to provide more value addition to their services. It helps to reduce errors, improve efficiency, and streamline the processes. The Compound Annual Growth Rate or CAGR of the accounting software market for the period of 2021-2026 is a forecast of 8.5 percent according to the industry reports of Mordor Intelligence. It indicates that automation of accounting is definitely a winning trend. Some popular accounting software is QuickBooks, Xero, Sage, etc. Robotic Process Automation (RPA) in audit will present itself as an opportunity and responsibility, according to PwC. RPA are software robots that are easy to configure and manage.
Outsourcing of accounting functions
The market report published by global industry analysts strategyr.com forecasts the overall finance and accounting outsourcing market to achieve US$ 53.4 billion by 2026, at a CAGR of 5.9 percent. Outsourced accounting transfers the responsibility of certain accounting functions to a third party outside of the business. It is a cost-effective, efficient way to handle complicated, time-consuming tasks. Outsourcing firms provide technological advancements and value-added services at a substantial cost to small and medium businesses.
Cloud accounting is when the accounting software is hosted on a remote server (Cloud)and is accessible through the internet. The prime advantage is the ability to access the data anytime, anywhere. It is less expensive when compared to on-premises or desktop software. The organization is responsible for the maintenance and upgrading of the desktop software. The cost is on the higher side. Whereas the maintenance and upgrading of cloud software or software-as-a-service (SaaS) is the responsibility of the service provider, for which they charge an annual fee.
The CAGR of the accounting software market is forecast at 8.5 percent for the period 2021-2026, as per the Mordor intelligence industry reports.
Accountants to assume a more strategic role
The CEO of International Management accounting, Jeff Thomson, in an article published in Forbes, mentioned that ‘2022 will be the year of management accountant.’ The IMA envisions accountants as strategic planners with a more contributing role in business. Another article published by Accounting Today quotes Mr. Thomson, ‘accountants play two unique roles- as value stewards and value creators.’ To sum up, the role of an accountant is evolving for the better.
The blockchain is a digital ledger for recording transactions, connecting a network of computer systems. It means multiple participants manage the database, known as distributed ledger technology or DLT. Every data has an immutable signature known as a hash. It is secure, time-stamped, and irreversible. The risk of data fraud is practically nil. The big four accounting firms- PricewaterhouseCoopers, Ernst &Young, Deloitte, KPMG- have people working on DLT.
The CAGR of blockchain technology is forecast at 48 percent for 2020-2024. It is definitely a promising trend.
Social media branding
It is the most effective and inexpensive way to communicate with the target customers. The reason is every social media site like Facebook, Twitter, blogs, etc., is easily accessible on every mobile device. Being on social media helps businesses to understand their customers and their competitors. It pays to design a good social media marketing strategy for scalability.
Big data adoption
Big data is a collection of data that is impossible to analyze through traditional tools. Data analytics is one way of using big data in accounting. The nature of analytics may vary according to the need. It can be prescriptive, descriptive, or predictive. Analyzing big data can produce valuable insights that improve efficiency and reduce risks. There are challenges with big data, like security and privacy of data.
Accounting functions deal with a large number of transactions and reconciliations. The remote work possibility was proven practical after the onset of the pandemic. The employees demand a flexible and remote work setting. According to Today, 85 percent of CPA firms will continue to allow remote work settings even after the pandemic. After all, employee satisfaction is also important to improve efficiency.
The one prediction Mr. Thomson, CEO of IMA, has for 2022 is that there will be more uncertainty and risk. The different trends help to mitigate the risks and to face the unknown. Knowing the trends helps the firms to be aware of the many opportunities.
The team at Diligen makes it their priority to support their clients with the best possible solution in challenging times. Their outsourced accounting services have a good team and technological support.