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. Hindsight brings the lessons learned for the year into sharp focus, and we can approach the next big thing a little wiser. Maybe a little more confidently, or even, cautiously, too. What are the accounting trends to watch for this year?
January 2021 seems even more exciting – and perhaps a little humbling – to evaluate not just the year but the decade reset itself. The end of the aughts gave us a lot to think about (including how to pronounce "aughts") and there's a lot of nostalgic reflection in the end of 2020, with even more hope and trepidation for a new decade.
It's so important to remember that market predictions can be slippery. There is no magic formula or special talisman that can guarantee the outcome you anticipate – not that every CFO, controller, or accounting professional hasn't fantasized about one at some point – but a healthy dose of grounded critical thinking and a decade's worth of lessons learned can sometimes get you close.
Accounting Trends #1: Accounting Talent Will Continue to Be in Short Supply
With baby boomers retiring in droves from your accounting firm and millennials preferring higher meaning in their work, fewer and fewer accountants are available to fill the jobs available today, let alone the double-digit growth that is expected to occur in available positions over the next decade.
In 2019, The American Institute of CPAs Economic Outlook Survey showed that 43 percent of CEOs, CFOs and Controllers indicated that they currently have too few employees, a growing trend. A survey we recently conducted at Personiv supports these findings, with 85 percent of accounting executives wishing they had more time to do strategic work and only 19 percent feeling like they could easily find talent to share the load.
It's not all doom and gloom – there are solutions to be had if you're willing to approach the problem of talent scarcity from new angles. Flexible work arrangements attract baby boomers and millennials alike. The former may have left the office but not their desire to contribute to the workforce behind, while the latter is increasingly demanding a higher quality of life through work-life balance.
Download the Report: Finance & Accounting Talent Market Outlook - An F&A Leadership Survey
Outsourcing can create a talent pool to manage low-end transactional processes as well as higher-end, knowledge-based processes. Accounting talent with excellent experience supporting US companies is still plentiful overseas, so trust your accounting to a service provider who specializes in doing it well.
Increasing the share of your automated processes can free up overtaxed talent that's wasted on rework. It can knock out repetitive, highly manual low-end tasks, and existing team members can use it to streamline their workflow.
Accounting Trends #2: Automation Will Gain Even More Momentum
Speaking of automation, the trend to automate continues to gain momentum and technology is making it possible for even the smallest of businesses and business owners of all sizes to jump on board.
Accounting automation simply means that the capturing, manipulating, and interpreting of transactional data is done by software - with less dependence on manual transactional entries being done by people. The right machine learning software and tools can help companies deliver accurate, streamlined financial management and allow them to access real-time data analytics to make better decisions faster.
I am in no way implying that accountants are about to be replaced by robots. Automated accounting software simply helps businesses and financial professionals to do their job more efficiently. Automating repetitive accounting functions gives accountants the freedom to focus on being the critical advisors that help steer the organization to new heights.
Accounting Trends #3: Cloud Computing Will Increase in Popularity
Cloud accountancy computing is only getting more popular in the Finance and Accounting realm. According to Accounting Today, “More and more firms and their clients are moving from in-house to the cloud, and this trend shows no signs of slowing down.” These platforms cost less, offer more flexibility and can be accessed from anywhere at any time.
Perhaps even more interesting is the convergence of cloud computing, big data, and automation, with more and more automation capabilities being built into cloud-based accounting platforms for increased efficiencies. At the onset of cloud computing, F&A was slow to get onboard to security concerns, but cloud-based platforms are more secure than server-based platforms. Companies should consider cloud-based accounting platforms such as NetSuite, Xero and QuickBooks Online.
Finance Trends #4: Data-Driven Decision Making Will Be More Important Than Ever
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 where 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 help with data entry 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 2021.
Accounting Trends #5: The Accounting Industry Will Move Away From Backward-Looking Processes and Toward Forward-Thinking Results
Twenty years ago, the idea of "strategic accounting" was just emerging, today it is something that is expected of many CFOs and accounting departments. 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.
Large and small businesses need accountants who can use data to provide advice and guidance on the implications behind the numbers and possible strategies to increase value and growth. Universalizing systems into a "single of the truth" and moving to the cloud for real-time access to data will help companies adopt new forward-looking outlooks. So will freeing up resources to focus on higher-end, value-add activities by outsourcing lower-level processes and activities to automation and offshore talent.
Finance Trends #6: 2021 Has a Recession Looming on the Horizon
I know it sounds ominous, but there's value in realism, here. According to a survey conducted by Duke University’s Fuqua School of Business, "Fifty-six percent of CFOs at U.S. companies said they are preparing for a recession." Bloomberg Economics' recession tracker indicated in December that the likelihood of a recession within the next twelve months at 29 percent, up two points from the months before. Trade tensions, bubble-like market behavior, and the cyclical nature of economic highs and lows mean we'll likely see Bloomberg's prediction trend further upward. CFOs who have steered a company through a recession before likely see the writing on the wall. That more than half of all finance chiefs expect the U.S. to be in a recession by the end of 2021 simply cannot be ignored.
I hope I'm wrong here, but inevitably times will get tough for almost any company. Responding to this threat will mean heading it off at the pass: companies need to cut debt, lock-in low-interest rates, conserve cash and look for opportunities to save resources.
There are plenty of challenges to face head-on in the coming year. Some of them loom a little larger – like a potential recession – but each is an opportunity to work from a strategic, proactive place of leadership. We shouldn't allow them to cloud the exciting possibilities that the industry's evolution toward high level, technologically-enabled solutions that have never been as accessible as they are today.
Knowing what may lie ahead, and even when to outsource accounting, is just another chance to prepare for and reap the benefits of what can be a productive and prosperous new fiscal year.
For more details on how humans and automation work together for top accounting efficiency, contact us to discuss our FAO program.
About the AuthorFollow on Linkedin More Content by Megan Weis, CPA, MBA