Technology is ushering in big changes to the accounting industry. Through accounting software and online banking, technology has made bookkeeping much easier than it used to be.
So what does that mean for today’s accountants? Although technology can certainly help in accounting, does it replace accountants?
Enter Accounting Software and Online Banking
Software companies understand that every industry is seeking efficiency through automation. The accounting industry is no different.
Software programs like QuickBooks™ have forever changed the way accountants and even many Average Joes and Janes handle their books.
But it’s not just programs like QuickBooks that are changing things. There’s also online banking, which enables us to see the money entering and leaving our bank accounts in real time.
Back in the day, it was all done with paper. Bookkeepers had to collect company receipts and enter everything into a paper ledger. In time, Excel spreadsheets replaced the paper ledgers, but someone still had to manually enter the data.
Not so now. Automated banking and software have taken the manual data-entry step out of things.
Businesses use these programs to save time and staffing costs. Since 2004, the median number of full-time employees in the finance department at big companies has declined 40% to about 71 people for every $1 billion of revenue, down from 119, according to Hackett Group, a consulting firm.
The telecom giant Verizon has reduced its finance-department costs by 21% over the past three years, partially through job cuts. It closed more than half of its 200 back-office locations across the country, built a new hub for finance operations in Lake Mary, Fla., and renovated an existing one in Tulsa, Okla. “The automation is a big factor” in the savings, said Fran Shammo, Verizon’s CFO.
Software has helped Verizon, which had $127.1 billion in 2014 revenue, cut the manual entries its workers punch into Excel spreadsheets annually by a quarter—to 10,500 from 14,000. It aims to cut another 1,400 manual entries by the end of this year for an overall reduction of 35%.
New Skillsets for Accountants
A doom and gloom view of things isn’t appropriate, though. Technology is changing the industry, for sure, but it’s not like robots replacing humans on factory assembly lines.
The technological revolution is touching every aspect of our lives and every industry, including accounting. Today’s accountants need to learn new technologies just like everyone else.
It’s not enough to know the principles behind accounting – although that’s certainly still the most important element – now we have to know how to apply those vital principles to new, constantly-evolving technology-driven environments.
– Brenda Sherrodd, Avitus Group Director of Accounting Services
With the introduction of new technologies, accountants are incorporating the technologies into their skillsets.
[Accountants are being] pushed towards acquiring new skills due to the advancements that information technology has made on the accounting industry. Accountants now have to have a high level of computer and technical skills. These skills have become part of the knowledge, and abilities of the accounting professionals.
In its report the American Institute of Certified Public Accounts (AICPA) cites that, “The knowledge, skills and abilities necessary for the entry-level accountant now include the application and integration of information technology into the accounting process, as well as financial and managerial accounting principles” (Dillon, Kruck, 2004).
From this research, not only does an accountant need to have a broad range of accounting knowledge and a strong ability to apply accounting principles, government regulations and interpret tax laws; they must also have strong skills in information technology, to be able to merge accounting with information systems. These accountants will be in greater demand by the profession (Dillon, et al, 2004).
Accountants Are Evolving
Online banking, accounting software and information systems have forever altered the way accountants track and analyze finances.
To adapt, accountants are learning new skillsets to be able to apply their knowledge of accounting principles.