By Christian Müller, Chief Financial Officer at Moss
The accounting industry is evolving rapidly with the rise of technology, and new research from Moss UK reveals that the industry has its sights on automation as a pathway to a digitised future. Indeed, the survey found that over half (57%) of accounting professionals predicted that the industry would become entirely cloud-based or automated in the next few years as the sector embraces innovation.
Whilst digitisation isn’t a new phenomenon to many accountants, this finding confirms how many are continuing to depart from the analogue processes typically associated with the sector, where manual data entry was the only way to perform accounting. For many, the catalyst is thought to have been the Covid-19 pandemic, where remote working mandates required all industries to reconsider their relationship with digital tools and technologies in order to remain productive at its peak and into its recovery.
Now, the majority of accounting professionals consider digital technology the most critical tool to understand in order to future-proof their businesses. At the same time, encouraging clients to digitise processes and minimise costs has become imperative for accounting practices.
Financial management skills and streamlining company spend have become an increasingly important part of the finance function, but in light of today’s economic challenges – and a looming recession – the two have taken on renewed significance. Historically, however, maintaining accurate data throughout the process of managing spend has proved a sticking point for accountants and businesses alike, as the plethora of payment methods offered – company cards, subscriptions and e-commerce, for example – complicates invoicing.
But here’s where the clouds part and the outlook brightens; spend management – a tool for businesses to make, track, and control their corporate spend – is expected to undergo the greatest technological change of all processes within accountancy. This advancement sets the industry on the path to automated end-to-end financial processes – and the journey ahead isn’t as long as you’d think, with an expected arrival date marked within the next five to 10 years.
What set the wheels in motion?
Both Brexit and Covid-19 impacted accountancy in a huge way for the UK market in particular, but perhaps surprisingly, neither put a dampener on the demand for digital tools. The last two years have seen the uptake of emerging technologies such as cloud computing amongst firms of all sizes, moving from on-premise data storage solutions to cloud-based, which provide better access to insights and analytics. These market trends demonstrate more willingness from boardrooms to invest in the right technology that can take their business to the next level and help them compete – spend management has firmly marked itself among those with most added value.
The untapped powerhouse of digital spend management offers a significant market opportunity for dynamic, ambitious SMEs, since they in particular are looking to leverage the benefits of previously unused data pools to their advantage.
It’s important to acknowledge the way that individuals engage with their personal finances has changed fundamentally, too, along with the shifts in accountancy, banking and financial services. According to the Financial Conduct Authority, the pandemic disproportionately affected those of working age, finding that younger adults aged between 18 and 34 experienced the greatest increase in financial vulnerability.
For many young people, conversations around financial literacy shifted from important to imperative as the events of the last two years pushed a raft of financial concerns to the fore. Now, nearly a third of millennials are using mobile banking apps more often, and the majority use their smartphones as the primary channel of communication with their banks. All this suggests that the shift in how we interact with finance has permeated society on a deeper level; as the workforce becomes more adept and accustomed to managing their personal finances digitally – partially out of necessity – and SMEs and larger firms invest in new technologies to deliver their services.
SMEs taking the lead
SMEs are smaller, more dynamic, and many times more agile than their larger counterparts. They are typically at the forefront of technology adoption, investing in cutting-edge solutions that help drive productivity, optimise processes and enable teams to work smarter. This phenomenon can be seen across all industries, and accountancy is no exception.
As the rate of digitisation continues to accelerate, we’re seeing a growing number of smaller accounting firms implementing innovative new solutions that give them a competitive advantage over larger, traditional accounting firms that are frequently constrained by outdated legacy systems and policies. Indeed, there are important lessons to be learned from these smaller players, and now isn’t the time for larger firms to rest on their laurels. By implementing and investing in the right technology, accountancy firms of all sizes can stay ahead of the game and proactively guide clients on the best use of these IT tools to help manage their finances more efficiently.
Still, none of this is to suggest this won’t require expert planning and budgeting – it requires a willingness to set aside more budget for bringing new capabilities to the business. However, the rewards are becoming harder and harder to ignore. The champions of this new era in finance and accounting will be those who onboard tailored solutions that complement the needs of their workforce.
Spend management – a panacea for accountancy?
Whilst the horizon is jostling with new technologies, each promising to make the image of digitised accountancy a reality, experts predict that advancements within spend management will be amongst the most impactful. We have seen investors taking note of this, with millions being poured into providers offering spend management services in the last year alone, and new unicorns expected to emerge in years to come.
These new solutions aid the digital entry and approval of invoices, streamline the reimbursement of employee expenses, and provide valuable cash flow insights. These services deliver an automated accounting function, and not least improve the day-to-day working life of an accountant. With a variety of use cases, spend management solutions enable businesses to optimise their internal and external operations, freeing up employees’ capacity along the way. In turn, time and energy can be spent on value-add tasks, such as strategic advisory..
Pre-accounting including cost centre and VAT code allocation can be almost entirely automated, whilst real-time spending control helps keep budgets intact up to month-end, meaning that processes that used to take days can now be completed in minutes. By having a centralised platform, accountants and finance teams can have full visibility of transactions and expenses, so getting to the bottom of invoice approvals and accounting mysteries has never been easier.
The appetite for new, agile solutions has never been greater thanks to the shifts in both the technological landscape and the wider social and cultural context experience over the last two years. As a result, customer expectations have too changed, as industries across the board become cognisant to the multitude of benefits that AI-driven technology can offer. As the advantages for accountancy and finance only just begin to unfurl themselves, the industry is well and truly embracing a digitised future, with no chance of turning back.