What is the impact of information technology on accounting?

Over the last decade, the exponential development of technology has had a significant impact on how we live our personal lives and how we work. As a result, technology has changed how we manage many different aspects of business operations, and accounting is no exception.

But what impact does technology have on accounting, and which new technologies impact the field?

In this article, we discuss how the following technologies that have transformed modern accounting:

• Cloud-based systems
• Automation
• Machine learning
• Mobile accounting
• Accounting software (including MTD)
• New skills for accountants
• Digital currencies

In essence, the cloud refers to services and software that run on the internet. You might think of the internet as the place for our company website and social media account, but cloud-based services can help accountants work more efficiently.

Many accounting firms are now using Cloud-based systems to streamline all of their information. They make it easy to input and track accounting data and generate reports. Cloud-based accounting software also comes typically with error-checking functionalities.

Wherever you are, whatever time of the day, all you have to do is log on, and you will be able to access your data immediately. Similarly, when clients enter new expense or invoice data, the cloud enables you to access real-time records. 

The rapid advancement of cloud-based accounting supports individuals, organisations and even governments to handle their taxes better. For example, to replace the traditional tax return with digital solutions, the UK government has launched Making Tax Digital. 

Learn more about how Making Tax Digital will affect accountants here.

Nowadays, accounting software can be integrated with invoicing, payment, and payroll systems. In addition, having access to information from various sources enables the software to update accounting records as transactions occur automatically.

In addition, optical character recognition has allowed documents like receipts to be scanned and easily imported into accounting software without having to type them in by hand. The combination of these technologies reduces manual work and saves significant time for accountants.

You can learn more about how you can support your clients better by automating your workflow here.

Machine learning or artificial intelligence means that technology can use prior information and experience to learn and perform tasks. In accounting software, machine learning could help with financial analysis or tax estimates, for example.

Machine learning in accounting will continue to change the accountant’s role and help companies make tough financial decisions. Popular accounting software has already used this technology to check for errors in thousands of transactions and automate routine tasks.

It can also help accountants search extensive financial documents for information and even assess the risks of certain financial decisions.

Mobile accounting apps work alongside cloud accounting software, helping accountants and clients to enter transactions and access data on the go.

We have become increasingly dependent on our mobile devices. Of course, we could argue whether that’s a good thing or not, but there are many benefits to mobile devices that small businesses can take advantage of. Learn more about how technology can help small businesses here.

New mobile applications, like Countingup, for example, are dedicated to accounting functions. The following are just a few of the tasks you can now take care of on your mobile device:

• Create and send invoices
• Capture receipts
• Track your expenses
• Get tax estimates
• Categorise transactions automatically

The above can be done with just a couple of swipes on a screen, and your data is seamlessly backed up to the cloud. You have access to the files and data whenever you need it, no matter where you are. 

You can also use customer management software or CRM on your devices to improve customer support and communication. Better communication makes for better customer service, which in turn can grow your business. Learn more about why good customer service is essential here.

You can build better relationships with your clients through your CRM software and increased connectivity via mobile devices. Learn more about customer relationship management (CRM) here.

Accessing data from anywhere means you can take your office with you wherever you go—no more waiting until you get back to the office to respond to your clients. Clients will appreciate your work even more, when you can deliver critical answers at the moment when they need them. Learn more about what accounting clients really want here.

One by one, accountants are abandoning the traditional pen, ledger, and desk calculator. Instead, you can now use efficient processing tools and specialised accounting software to allow quicker data input and computation. 

Even manually entering information into software is declining as scanning technology makes it possible to simply photograph a page and let the software complete the relevant fields itself.

Precision is crucial in your calculations when doing accounting work, and having all your information calculated by a computer can drastically improve accuracy and reduce errors. Here’s what could happen when you make even a slight error:

• Your client may end up with tax penalties
• You may face disciplinary action
• Your professional reputation could suffer

Accounting software has practically eliminated the causes of these small yet significant errors.

While accountants once entered transactions by hand, information technology has made it possible to record information in real-time, compile data from numerous sources and automate repetitive tasks. 

Reduced manual work has allowed accounting professionals to focus more on giving financial advice and monitoring performance. At the same time, IT developments have helped companies save time, reduce errors and make better financial decisions.

It has also shifted the accountant’s focus from nitty-gritty details to helping clients protect and grow their business. As a result, accounting has become a fast-paced and dynamic profession. As a result, accountants today can spend more time analysing financial data and advising their clients. 

Learn more about how digital transformation can help your accounting business and your clients here.

You can save your practice time on manual admin and help your clients keep organised records with Countingup’s free accounting software. It’s built specifically to help you manage your self-employed and sole trader clients.

The app automates time-consuming bookkeeping admin for your clients so they can focus on running their business—and send you accurate, structured data to work from. 

Countingup’s accounting software is MTD-compatible and full of features for you to efficiently review and manage client accounts with direct access to their real-time organised data. Find out more here.