The accounting industry underwent significant changes in response to COVID-19, and technology played a crucial role in enabling businesses and industries to transition to remote work. Accounting firms made decisions regarding technology adoption based on the need to collaborate remotely, visibility across work and tasks, integration across multiple systems, and internal communication with clients. While some work habits may return to pre-COVID, technology adoption has and will continue to reshape the accounting industry permanently.
Top 4 Advancements in Accounting
Navigating Cloud Migration in Accounting Firms
The rapid shift to remote work in 2020 has significantly changed how many businesses operate, including accounting firms. One of the most notable changes has been the increased need for cloud migration, which has become more popular. Cloud migration provides accounting firms with solutions that enable communication across remote teams, convenient and secure data management, and improved data backup with remote servers. While the benefits of cloud adoption are clear, it is essential to consider this change's potential drawbacks and realities to make informed decisions about how to approach cloud migration.
Benefits:
Cloud migration provides accounting firms with solutions that enable communication across remote teams, which is especially useful for remote work arrangements.
The cloud allows for convenient and secure data management, ensuring authorized personnel can access essential data anywhere.
Improved data backup with remote servers prevents physical damage to hardware and irreversible damage to data.
Cloud adoption provides firms with cost-effective scalability compared to on-premise systems that require tedious server overhauls.
Drawbacks:
Cybersecurity remains a pressing challenge, especially with the cloud and its numerous contact points.
Rushing through cloud migration with proper training for protocols and procedures can prevent networks from being exposed to attack.
Confusing cloud-native and cloud-enabled solutions may result in a backward step disguised as a forward step.
Realities:
Cloud migration is an increasingly necessary change for accounting firms, given the rise of remote work and the need for secure and convenient data management.
However, it is essential to approach cloud migration cautiously, ensuring proper cybersecurity measures and protocols are in place to prevent data breaches.
Understanding the differences between cloud-native and cloud-enabled solutions is essential to ensure the correct answer is chosen for the firm's needs.
Redefining Accountants Toolkit in the Digital Age
Modern accounting professionals must adapt to the new digital reality and acquire new skills to remain competitive. This section will explore the redefined accountant toolkits' benefits, drawbacks, and realities.
Benefits:
Accountants with data analytics and accounting technology skills are in high demand, which means they have more job opportunities.
Innovative technology like Artificial Intelligence and Machine Learning can help accountants generate data-backed results more efficiently and with fewer errors.
Using technology in accounting can lead to reduced manual labor and increased productivity, allowing accountants to focus on more complex tasks.
Drawbacks:
The accounting industry may face a significant skills gap as digital natives and seasoned workers with less digital exposure work side by side.
Firms may need to invest significant time and resources into training their staff on new technologies and digital tools.
Adopting new technology may be challenging for some accountants who resist change, making it easier to realize digital transformation's benefits fully.
Realities:
Accounting is becoming more digitized, and professionals must keep up with the latest tools and technologies.
Digital literacy is becoming an increasingly important skill for accountants, and those needing it may be disadvantaged.
Firms that invest in digital training and provide their accountants with the necessary tools and resources to succeed will be better equipped to compete in the modern marketplace.
As more firms embrace remote work, having a solid tech stack becomes increasingly crucial. However, integrating systems without proper consideration can result in costly mistakes.
Benefits:
By assessing the tech stack, an accounting firm can identify areas where automation can improve efficiency. This can free up staff to focus on more complex tasks, reduce the risk of errors, and ultimately increase the amount of work that can be completed in a given period.
By streamlining data and connectivity, an accounting firm can ensure that its data is accurate and up-to-date. This can help prevent errors, reduce the risk of compliance issues, and improve decision-making abilities.
An accounting firm can leverage technology to provide better client services. For example, it can use data analytics to provide more sophisticated financial analysis or forecasting services or use cloud-based accounting software to provide real-time financial information to clients. This can help the firm differentiate itself from competitors and attract new clients.
Drawbacks:
One of the main drawbacks of implementing integrated systems without fully understanding how to capitalize on their integration is that it can lead to ineffective use of technology. A firm needs the expertise to fully utilize the integrated system to avoid investing in technology that doesn't provide the expected benefits.
Implementing new and integrated systems can be expensive, and the costs can be significantly higher if the implementation is not well-planned or executed.
Realities:
The pandemic accelerated the shift in accounting from reactive technology to proactive, intelligent solutions. While there are good and bad aspects, optimizing your firm’s tech stack and digital capabilities is not too late.
Leadership teams play a crucial role in ensuring successful tech adoption throughout their teams. This can be achieved through information and onboarding sessions, consultation processes, and clear communication.
Virtual Staffing
As businesses strive to become more efficient, virtual staffing has become increasingly popular. Accounting firms have embraced this practice as it provides access to a global talent pool and reduces overhead costs. However, just like any new integration, virtual staffing also poses challenges that must be considered.
Benefits:
Virtual staffing allows accounting firms to hire the best talent from anywhere in the world rather than being limited to local candidates.
Hiring remote workers can reduce overhead costs for renting office space, utilities, and supplies.
Virtual staffing can provide greater flexibility in work schedules, leading to increased job satisfaction and retention.
Drawbacks:
Virtual staffing can complicate communication, mainly when dealing with complex accounting issues requiring face-to-face interaction. Read our recent article “Hiring Remote Staff - 5 Points to Consider While You Interview”
Virtual staffing requires technology, which can lead to technical difficulties and downtime.
Virtual staffing requires transferring sensitive financial data, which can lead to security breaches and data theft. Working with premium partners like Entigrity is highly recommended as we prioritize the security of our client's data and have recently achieved SOC 2 compliance, adding a layer of assurance for our clients.
Realities:
“Virtual staffing is not a panacea” While it can bring numerous benefits to an accounting firm, it is not a cure-all for all organizational problems.
To be successful with virtual staffing, accounting firms must hire the right people with the right skills and work habits.
Virtual staff needs to be trained and developed to be effective, and they need to be given ongoing support and feedback.
The accounting industry has undergone significant changes in response to COVID-19, with technology playing a crucial role in enabling businesses and industries to transition to remote work. Cloud migration, redefining accountant toolkits, assessing the tech stack, and virtual staffing are among the changes accounting firms have made to adapt to the new digital reality.
While these changes have brought several benefits, including improved efficiency, reduced costs, and access to global talent, they also pose potential drawbacks and challenges that must be carefully considered. Leadership teams play a vital role in ensuring successful technology adoption throughout their teams, focusing on providing the necessary training and resources to stay competitive in the modern marketplace.
Entigrity™ is a trusted offshore staffing partner to 600+ accountants, CPAs, and tax firms across the US and Canada. Our flexible and transparent hiring model gives helps firms of all sizes to hire staff for accounting, bookkeeping, tax preparation, or any other task for 75% less cost. As a firm 'run by accountants, for the accountants,' Entigrity captures the hiring needs of accounting firms most precisely, providing staff that works directly under your control and management; still, you are left with the least to worry about compliance, payroll taxes, overheads or any other benefits.
