Disruptive innovations create new services and markets, forcing established firms to either adapt or find themselves eating their competitors’ dust. The most successful companies adopt disruptive innovations better and faster than the competition and position themselves to adapt to future changes. In the modern world, technology-based innovations are disrupting every business sector, including accounting, where five disruptive trends are revolutionizing the industry.
Data Entry Automation
While data entry automation is largely a done deal, its adoption in small business accounting varies widely across different industries, business sizes, and geographic areas. One study revealed that the average cost of manually processing an invoice is $20, which is five times higher than with automated processing; this difference is even greater for small businesses. Yet many such companies are still behind the curve despite the benefits and easy implementation of data entry automation. Successful companies are automating data entry to reduce costs and free up critical members of their teams to spend more time on other aspects of their businesses. Successful accountants and bookkeepers leverage this trend to provide a host of new services to their clients. In doing so, they’re also learning some necessary expertise when adapting to other disruptive technologies.
Greater Connectivity, Mobile Computing, and the Cloud
Increasing broadband speeds, the widespread availability of Wi-Fi services, the pervasive use of smartphones and other connected mobile devices, and a growing reliance on cloud-based services are compelling accounting industry professionals to adapt. Millennials and other young business people raised with smartphones and tablets looking to save time and money are seeking technology-based solutions to working on-the-go. For instance, they look to video conferencing so they don’t need to use entire afternoons for office visits, or use mobile invoice generators as they’re leaving jobs to get paid as quickly as possible. To adapt, accountants are adding instant messaging, screen sharing, and video conferencing tools to their repertoires, and setting their clients up with cloud accounting systems and apps that integrate with their accounting software. Increasingly, accountants are finding they need such tools to meet with and recruit new clients.
Specialization and Customization
The use of one-size-fits-all accounting software for small business is declining as a wide array of companies offer specialized apps for particular functions, such as payroll, invoicing, or financial statement generation. Many such apps are targeted to particular lines or industries, or allow end users to customize apps to their particular needs. Often, these programs have the ability to seamlessly talk to and exchange data with each other. Businesses are looking for accounting firms that can provide customization of apps to their lines, with studies showing that small and micro businesses want their accountants to be specialists in their industry. Accountants riding this wave offer clients a menu of services and products, and customize these for their clients. After building that base, they’re better situated to offer their clients more detailed analysis and deeper insights.
According to one study, more than 90% of all data available at any given time was generated in the previous two years. As more data comes pouring in, accounting firms that know how to mine this data will be better positioned to use these vast treasure troves to provide their clients with deeper insights and better advice.
Self-Education and DIY
Anyone can easily find endless sources of free educational materials about bookkeeping and accounting on the internet. In addition, tax preparation and accounting software is becoming easier to use all the time, with many modules working in a question-answer format that leads users with no knowledge of accounting where they need to go. The DIY approach, as well as the other disruptive trends facing the accounting industry, doesn’t portend a looming end to the need for professional bookkeepers and accountants. It does mean that accountants and bookkeepers have to continually step up their game and find ways to leverage technology to add value.