Each new year, after champagne toasts have been made, and last year’s books are (finally) closed, we are afforded a unique opportunity to reflect on what we're leaving behind. It's as good a time as any to look a little closer at current accounting trends and anticipate which ones you'll need to keep on your radar this year.
For many, 2022 will be remembered mostly as the year that "the new normal" began to look much more "normal normal" as many aspects of pre-pandemic life shifted back into position. But if we collectively take anything away from the years leading up to it, let it be that normalcy is never guaranteed and some things simply can't be anticipated. That said, here's what we think 2023 is likely to have in store for the accounting profession and executive leaders within it.
Check out these 6 accounting trends to watch:
Talent Acquisition & Retention Will Remain the Top Issue for CFOs
Staffing a well-qualified finance function hasn't been easy for a while now, and whether you call it a Great Resignation, Great Reshuffling or The Big Quit, the mass exodus of employees kicked off by 2020 lockdowns was significant — and may not be over yet.
An average of four million workers quit their jobs each month in 2022 according to the Bureau of Labor Statistics. Layered on top of the AICPA's Economic Outlook Survey for the fourth quarter in 2022 indicating over 50 percent of all businesses reported a need for more employees and it's clear we've got a tight labor market to contend with in 2023. Again.
The accounting profession is feeling the squeeze particularly acutely. When we spoke to 800 finance executives earlier this year, 81 percent agreed there was a shortage of qualified accounting talent. That's going to make it tough for the 44 percent of executives that said they needed to hire that qualified talent within 365 days.
Replenishing the pipeline will require a new approach. First, we'll have to tackle the challenge of attracting future workers to the profession by rebranding the work of accounting. The current image of accountant-as-bean-counter is not working, and that's fine, because it's not accurate, either. The accountants of 2023 are storytellers. They are strategic. The work of accounting is high-level, challenging and even exciting. With the number of CPA candidates sitting for the exam at its lowest in a decade, it's time to ask ourselves whether students know that. If the answer is no, it's time to decide how we'll make sure that changes.
When it comes to attracting the professionals already in the workforce, companies will have to do three things.
First, embrace (and offer!) remote and hybrid work arrangements if you don't already. It's here to stay, it works and workers want it. So if companies want workers, that's where they'll need to meet them.
Second, provide more meaningful work by reducing the amount of mundane tasks for your best and brightest. Automation and outsourcing are readily available tools for building meaningful work for the modern accounting professional. Let's use them.
Finally, workers are looking for better pay and benefits. Sixty-two percent of Great Resigners applied elsewhere because they wanted higher pay, and 32 percent wanted better benefits, according to research conducted by human resources software company isolved.
Outsourcing Will Continue to Grow in Popularity - Accounting Trends
With the infrastructure for collaborative work built out at more businesses than ever, the need to hire people who are local to an office building is on its way out. What this means for talent-strapped teams and anyone looking to hire accounting talent is that the world is now your talent pool.
As the remote work and inflation rise in tandem, they'll continue to fuel stateside appetites for supplemental offshore and virtual accounting talent. With even internal employees working outside of the office, organizations that have hesitated to send accounting tasks out, too are reconsidering. Remote work provides a level of comfort, while outsourcing reduces costs to protect cash flow in uncertain times.
New way of thinking combined with the accounting talent shortage will mean explosive growth for outsourcing in 2023 and beyond. Accounting talent with excellent experience supporting US companies is plentiful overseas, so trust your accounting to a service provider who specializes in doing it well.
Outsourcing also provides much needed relief for businesses struggling to find and retain talent. While less stateside accountants are sitting for the CPA exam, overseas markets are reporting a surplus of CPAs respective to open roles. Combined with a stronger-than-usual dollar, outsourcing is on the (very rapid) rise.
Companies Will Increase Investments in Automation Technology
For leaders that hope to reduce the amount of repetitive, error-prone mundane tasks to clear space for higher-level accounting, accounting automation will prove indispensable. A recent guest on our CFO Weekly podcast estimated that in finance currently, only five percent of what can be automated actually is.
There's a huge opportunity for that to change as leaders continue to seek out ways to reduce errors and protect their team from burnout. With the right tools and approach, technology that enables automated tasks and workflows will free up brainpower for strategic tasks that require critical thought. In the end, that can help companies deliver accurate, streamlined financial management and allow them to access real-time data for faster decision-making.
Suggested Reading: Artificial Intelligence in Accounting and the Evolution of the CFO
Cybersecurity Will Take Center Stage
Hackers are a creative bunch, and to outsmart them, accounting cybersecurity will have to rise to the top of priority lists in the coming year. In 2022, the global average cost of a data security breach for businesses of all sizes was over $4 million, according to IBM. Meanwhile, global cybersecurity company Kaspersky has been keeping tabs on the market for malware-as-a-service and predicts that the demand for readymade ransomware modules will only grow in the year to come.
In other words, when a bad actor wants to hold financial data hostage, they're increasingly able to skip ahead to simply purchasing malware instead of creating it. With enough money, hackers no longer need to be coders.
Scammers, schemers and bad actors can impact every business and affect anyone, but they can do a lot of damage when they target the finance function directly. Accounting firms are veritable treasure troves of client data — think of all the bank account information and social security numbers up for grabs if they're left un- or under protected. Staying one step ahead will mean adopting a cybersecurity mindset in accounting.
Data-Driven Decision Making Will Be More Important Than Ever - Accounting Trends
As data becomes increasingly available through technological advancements -- and companies gain access to it in real-time -- data-driven decision making is more important and valuable than ever. Gone are the days when gut feelings make decisions. Hard data is helping to drive smarter, more strategic decision making and a company’s ability to collect and manipulate its data is becoming a differentiator.
Companies who have the time and ability to collect data can make smart investment decisions by analyzing product margins, their most profitable sale points and historical data along in conjunction with outside information to make predictions about the future.
There isn't time for companies who want to remain competitive to drag their feet on this one – looking at you, industry-wide slow adoption of cloud-based computing – they need to invest in technology that will collect and cleanse data, hire data scientists and ensure teams are appropriately staffed to make the most of data analyses as soon as they can in 2023.
Accounting Will Move Away From Backward-Looking and Toward Forward-Thinking
Twenty years ago, the idea of "strategic accounting" was just emerging. Today it's table stakes. It’s no longer enough for accountants to simply compile accurate and timely financial statements reflecting historical results; organizations are looking to their accounting departments to help drive growth.
Businesses need accountants who can use data to provide advice and guidance, including possible strategies to increase value and growth. Universalizing systems and moving to the cloud for real-time access to data will help companies adopt new forward-looking outlooks, and so will outsourcing. By freeing up internal resources to focus on higher-end, value-add activities, CFOs can develop growth strategies and leave the lower-level processes and activities to automation and offshore talent.
Ready or not, 2023 is just around the corner. And when it does, we expect these trends to develop and impact accounting and accountants. To hear from CFOs on what challenges they are facing today, check out our podcast, CFO Weekly or keep an eye on our event calendar to join the conversation at our next in-person roundtable, CFO Leadership Live.
About the AuthorFollow on Linkedin More Content by Megan Weis, CPA, MBA