7 Ways Digital is Changing Accounting

Digital technologies can streamline processes and create an improved workflow process. But, what changes can accountants really expect in today’s ever-changing digital world? First of all, let’s look at the question a lot of accounting professionals are asking – will technology replace accountants?!

Well, technology won’t be able to replace accountants entirely. In fact, there’s a level of emotional intelligence a human brings to the workplace that a machine simply can’t compete with. Even with the addition of digital technology, the workplace will continue to rely on accountants for interpreting and categorising data.

An accountant’s work includes applying rules, understanding business logic, updating and maintaining accurate records, and setting the standards for which an organisation conducts business. Digital management can help improve many of these functions. The accounting industry has some major opportunities to embrace digital technology and reap the benefits. This article examines 7 ways digital is transforming the accounting profession.

1. Increases Productivity & Efficiency

Technology is transforming the accounting industry by introducing an automated, digital workflow. To start, invoice automation is streamlining the way accountants pay vendors. Using AI, invoices are automatically routed for approval and payment through a digital workflow. Anything that needs attention is routed to the proper individual. Then, the invoice is set up to be paid according to vendor payment terms.

Other accounting departments are benefiting from automation and workflow integration as well. Many accounting functions use multiple systems that don’t integrate with one another to perform tasks. These tasks are time-consuming and kill productivity. But with certain digital technology, the processes can be simplified, and systems can collaborate for the first time. It’s much more efficient to have a system automatically process and interpret data from several locations than to manually pull and consolidate it. The increased efficiency means that more tasks are processed in less time. That gives accountants more time to work on more important tasks.

2. Mitigates Risk with Better Accuracy

Accountants, and auditors specifically, focus a lot of time mitigating risk and verifying the accuracy of numbers. The digital movement enables machines to post and reconcile data automatically, improving accuracy and avoiding human error. Auditors can benefit from knowing that they can audit 100% of a company’s financial transactions. Machines allow auditors to automatically process and analyse data beyond just a sample of transactions. They can then select the important or high-risk data to dig into instead of wasting time on common day-to-day transactions.

Plus, the internal audit team at a company can eliminate the manual work behind auditing expense reports. AI can now read digital or photographed receipts and check transactions to make sure they comply with company policy. Any outliers can be selected and highlighted for further investigation. Then, digital workflow processes can route anything that needs approval. A game-changer for the industry has been blockchain, as it can provide further certainty behind all the transactions. This means that posted transactions cannot be changed and won’t have to be questioned for existence or accuracy.

3. Eliminates Tedious & Repetitive Work

Since machines will be able to automatically process some of the data that accountants routinely enter, some of the tedious and repetitive nature of their work will be eliminated. Some tasks include:

• Invoice entry
• Vendor creation
• Reconciliations
• Credit applications
• Order processing
• Collections
• Payroll processing

Plus, chatbots are able to eliminate the need for some human interaction on FAQs, like questions on due dates, account balances, and account statuses.

4. Reduced Costs

Clerical jobs may begin to shift into analytical positions going forward. If routine tasks are processed digitally, then the salaries associated with those positions could be eliminated. There will still need to be individuals to oversee processes and make high-level decisions, but we may see a shift away from clerical positions. The tax filing process is also seeing a benefit from digital technology. Businesses can use software to calculate taxes, much like you see for individuals. This reduces the costs that are paid to third-party or in-house tax professionals.

5. Shortens the Close Process

The monthly, quarterly, and annual close process can be streamlined with automation. Digital technology can be used to automatically record transactions and reconcile accounts. With that, accounting teams will have accurate financial figures in their hands much quicker. Having financial reports sooner means that business leaders can quickly make decisions and react to any unexpected changes.

6. Reduces Paper Filing

Digital filing processes are quickly becoming the new norm in accounting. Auditors and accountants no longer have to dig through rooms of paper filing. Instead of sifting through papers and manually searching for a document, digital filing generally lets accountants search electronically. As an added bonus, electronic filing requires less physical storage space. With invoice automation and all the advancements in other departments, a lot of the accounting world will likely become paperless in the future.

7. Improves Security

The digital workflow will improve security within accounting by creating a more transparent digital trail. With electronic filing and automated processing, there will be a digital stamp created each time a document is entered or altered. Auditors (or leadership) can better understand which transactions were posted by which employees.

Plus, accounting departments can use digital technology to better restrict their sensitive information to certain employees. A digital workflow can route documents only where they need to go. Then, technology can help you set rules around who has access to which files. In comparison to a filing cabinet stored in a shared area, digital technology is a significant improvement.

Final Thoughts

Moving further into a digital world can be intimidating. The uncertainty can cause accountants to resort to doing things the way they’ve always been done. But the truth is that the digital shift can significantly improve the quality of output in accounting. Embracing digital technology is a must if businesses are to be competitive in the future. These technologies are quickly becoming standard in the industry. Automating tasks and using electronic systems in lieu of their paper counterparts only improves efficiency and accuracy.