The accounting profession has evolved significantly since its inception nearly five millennia ago. Before, accountants used manual bookkeeping methods to maintain financial records. These systems typically involved painstaking tasks like recording expenses in handwritten ledgers and filing paper receipts.1 The age-old stereotype of accountants sorting through endless cabinets of financial information wasn't always that far from the truth.
However, recent advances in accounting technology have made it easier than ever for professionals to digitize their bookkeeping practices. What used to take weeks now takes minutes, eliminating tedious tasks and allowing accountants more freedom, responsibility and time.
Accounting apps, software and other innovative tools offer many benefits for accountants. Technology boosts efficiency, improves accuracy and saves time.2 But it can be challenging to determine which tools you should implement into your daily routine, especially if you’re new to computerized accounting systems.
Let's explore the role of technology in modern accounting and its many applications in the workplace.
Examples of Accounting Technology
Technology in accounting has developed rapidly in the past few years, but businesses have used digital tools for decades. In 1983, for instance, Intuit released QuickBooks, a popular accounting software that tracks financial transitions and generates reports.3 Many businesses continue to use QuickBooks today, but new technologies like robo-advisors, cloud-based systems and blockchain have altered the accounting profession in many ways.
Here are some technologies that have had a significant impact on the accounting landscape in recent years.
Traditional accounting software is installed on individual devices. In contrast, cloud-based solutions are hosted by third-party servers. Accountants use web browsers to access these applications, and all of the data is automatically backed up in the cloud.4 This can also be referred to as cloud computing.
Cloud-based accounting tools have several advantages. First, companies can save money by paying a subscription fee for these services instead of investing in expensive IT systems and paying teams to maintain them. These resources also quickly scale up or down to accommodate businesses’ changing needs.4
Additionally, authorized users can access cloud-based software from any device and any location, giving accountants more freedom. For instance, professionals can use this technology to collaborate with remote colleagues on mobile devices and send digital invoices to clients.4
Software vendors have developed a multitude of different accounting programs over the years. Some examples include FreshBooks, NetSuite ERP and A2X. These tools can help perform a variety of tasks, such as:5
- Generating financial statements
- Managing inventory
- Paying taxes
- Processing payroll
- Recording financial transactions
Accounting software has many advantages over manual bookkeeping. These applications give businesses more control over their financial records, improve data accuracy and keep data secure. Additionally, many tools have analytics and financial forecasting capabilities, which help businesses better understand their past and future performance to make more informed decisions.5
Robotic process automation (RPA) uses software to perform routine accounting tasks without requiring human intervention. For example, accountants can use RPA to automatically generate and scan invoices, detect variances in financial records and respond to vendor inquiries. This technology reduces the amount of time accountants spend on repetitive processes, such as manual data entry, and decreases the risk of human error.2
Machine learning uses algorithms to create models that automatically process and analyze enormous volumes of data. These models independently learn from experience, so they continually refine their performance as they gather information.
This technology enables accountants to collect, manage and process vast data sets that would be impossible for humans to analyze manually. For instance, machine learning models can quickly analyze millions of financial transactions and make predictions using real-time data.
Researchers have also designed machine learning models that detect fraudulent financial statements. While these tools are still in the early stages of development, accountants may use them in the future to audit individuals and organizations more efficiently.7
Software, statistical techniques and other tools help businesses interpret and identify patterns in complex data sets through analytics. Accountants and other financial professionals can gather meaningful insights from analytics to formulate new business strategies and make data-driven decisions.8
Analytic tools have many practical applications in accounting processes, including:8
- Advising clients: This technology allows accounting professionals to assess clients’ data and provide personalized financial advice.
- Assessing risk: Accountants draw on analytics to predict potential outcomes of business decisions and mitigate risk.
- Forecasting: Accounting firms can predict future financial trends and recommend ways to improve the organization’s performance.
- Performance monitoring: Accountants use analytics to evaluate key performance indicators and employees’ productivity.
- Problem-solving: Analytic tools reveal underlying factors contributing to complex business problems and enable accountants to develop effective solutions.
Data visualization platforms like Excel and Tableau summarize large data sets in charts, graphs, maps and other visual formats. These visualizations let you quickly evaluate information, identify trends, and spot outliers in the data. They’re also more accessible to broad audiences than complex statistical analyses, so accountants can use these graphics to convey their findings to clients, managers and stakeholders.9
As the name suggests, predictive analytics attempt to predict the future using data. This type of analytics uses historical data and past outcomes to generate informed forecasts about future events.10
Predictive analytics have many useful applications for accountants. For example, professionals can use this method to forecast upcoming expenditures and create an accurate budget, and accountants can estimate future sales and identify areas where the company can expand.10
Artificial intelligence (AI) powers many accounting programs. This self-learning technology imitates human thought and enables accountants to aggregate and analyze vast quantities of data. Additionally, AI automates repetitive tasks, such as data entry and filing tax returns. Thus, AI saves time and lets accountants focus on responsibilities that require critical thinking and creativity.11
AI has seen a tremendous technological revolution in just the past few years, with the release of Open AI's ChatGPT and Google's Bard tool.
New cybersecurity advances help accountants keep sensitive financial data safe and secure from cybercriminals. For instance, password management protection and stealth log-ins prevent unauthorized users from accessing credentials and accounts. Also, cloud storage and intrusion detection systems help protect client information from data breaches.12
Harness Accounting Technology With an MS in Accounting
Exciting new technological developments are reshaping the accounting industry. Learn how you can leverage the latest tools by earning an Online Master of Accounting from William & Mary. You’ll receive mentorship from world-class faculty with years of leadership experience and extensive networks in the accounting industry. Additionally, you’ll prepare for the CPA exam by taking rigorous courses on essential topics, including accounting analytics and information systems, advanced corporate finance and financial reporting.
Contact an admissions outreach advisor today to learn about our application process.
- Retrieved on August 8, 2023, from smallbusiness.chron.com/set-up-accounting-software-16414.html
- Retrieved on August 8, 2023, from ncbi.nlm.nih.gov/pmc/articles/PMC10072017
- Retrieved on August 8, 2023, from thetechedvocate.org/what-is-quickbooks
- Retrieved on August 8, 2023, from sciencedirect.com/science/article/pii/S1467089521000154
- Retrieved on August 8, 2023, from semanticscholar.org/1f16/b6bf70e0da0b94fb5596877e6dce03866663.pdf
- Retrieved on August 8, 2023, from papers.ssrn.com/sol3/papers.cfm?abstract_id=3879634
- Retrieved on August 8, 2023, from scholarspace.manoa.hawaii.edu/items/3b759ec1-b60a-4530-800b-f61bfd0a211a
- Retrieved on August 8, 2023, from njcpa.org/article/2023/05/18/data-analytics-in-financial-reporting-enhancing-decision-making-in-accounting
- Retrieved on August 8, 2023, from tx.cpa/docs/default-source/communications/2020-today's-cpa/july-august-2020/tech-issues-guide-to-data-visualization.pdf
- Retrieved on August 8, 2023, from inaa.org/how-can-accountants-use-predictive-analytics/
- Retrieved on August 8, 2023, from njcpa.org/stayinformed/news/blog/post/njcpa-focus/2022/11/28/artificial-intelligence-the-death-knell-of-accountants
- Retrieved on August 8, 2023, from ncacpa.org/blog/7-tips-for-accountants-on-how-to-manage-cybersecurity-threats-2