As technology grows and develops, there are more and more small business accounting trends to keep up with. As an accountant, it’s important to understand how to take advantage of these changes so that you can provide the best services to clients. For small business owners, you’ll want to look for a trusted accounting professional that can make the most of these innovations.
In this article, we’ll go through 5 trends that you can leverage in 2023. We’ll be focusing on a few key areas that are practical to implement for accounting firms working with small businesses. In particular, we’ll go through accounting automation, neobanks, app implementation, artificial intelligence and the expectation for deeper advisory services.
- It’s time to invest in accounting automation
- The new generation of banking: What are neobanks?
- Sorting through the myriad of small business apps
- Artificial intelligence in accounting
- Advisory services need to offer deeper insights
- Key takeaways on small business accounting in 2023
It’s time to invest in accounting automation
Automation has been a buzzword for awhile now but in 2023, it’s set to take off in small business accounting. There will no longer be a debate on automation. It’s now clear that rule-based tasks should be automated in order to increase efficiency, decrease errors and therefore, improve margins. Accountants should be using automation internally to help small businesses reach their goals.
Not only does automation help internal processes run more smoothly, it helps to improve the service that accountants can give to small businesses. Processes that can be automated include expense processing, payroll, bill pay and bank reconciliations. Automation allows information to be available much faster, meaning turnaround times can be reduced.
Additionally, automation makes it easier for accountants to offer services that they may not have a few years ago. For example, accountants haven’t traditionally helped clients with accounts receivables (A/R). However, by adopting apps that can automate the collection of A/R through sending reminders and tailoring reminder messages, it’s now easier for accountants to take another weight off their client’s shoulders.
What proportion of accounting firms are automated?
According to a recent Deloitte survey of accounting and finance professionals, accounting processes are either largely manual or considerably manual in 75.7% of businesses. However, many professionals are currently or planning to implement technology that helps to automate accounting such as cloud-based accounting solutions (36.2%), budgeting, forecasting and reporting tools (42.1%), and data analytics and visualisation (39.7%).
Accounting firms that want to stay ahead of the curve, and in turn help their clients stay ahead of the curve, need to be considering what processes they can be automating. Automation can help to speed things up, expand the services that can be offered, make communication easier and deliver deeper insights.
The new generation of banking: What are neobanks?
Neobanks are a great representation of the innovations we’re seeing in the accounting world. They’re faster, entirely digital, and are early-adopters of all the cutting-edge tech. What exactly are they? Neobanks are online-only institutions with access to everything you’d expect in a traditional bank (checking and savings accounts, business loans, credit cards, etc.), you just never have to visit a physical store.
Now with such a wide range of banking options, accountants are in the perfect position to become a bank advisor of sorts. By understanding a small business’s needs, an accountant can recommend the most suitable bank. It might become clear that the full suite of services offered at a traditional bank just isn’t necessary for a small business. Neobanks are the perfect recommendation for those who want a faster, less-cluttered banking experience.
What are the benefits of neobanks for small business accounting?
Neobanks are much more nimble than traditional banks and you’ll find they often work with cloud-based accounting software a lot better. For instance, if you were to receive a check deposit with a traditional bank, you might only see the amount and ‘Check Deposit’ appear when the data is pushed into your accounting system. With neobanks, you can find more detailed information as well as a picture of the check itself.
Other advantages of neobanks include their credit cards and loans. With credit cards, you get more functionality, such as the ability to control the types of expenses that can be paid for, and the limits on each company credit card issued. Receipts can automatically be matched to transactions and synced to your accounting solution. With acquiring loans for small businesses, the process is typically much smoother and less complicated compared to traditional banks.
Sorting through the myriad of small business apps
Despite the need for more simplicity, there has been a boom in the small business software available. With many people around the world still working remotely, it’s more important than ever that small businesses can sort through the noise and implement the right apps. Small businesses need everything from cash flow management tools, inventory management apps, CRMs, and more.
The difficulty in this is that all these apps need to be able to effectively communicate with the small business’s accounting solution. Hence, just like with banking, accountants are in the perfect position to recommend apps and even help with software implementation. For example, accountants can help to select the best POS system or e-commerce platform and then connect it to your accounting solution by using an accounting integration.
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Additionally, the apps a small business uses should be easy to navigate between. According to an analysis by Otka Inc., businesses are using an average of 129 apps, and they’re not happy about it. Small businesses should have a simple, yet effective, suite of apps that integrate with each other and help with getting work done.
Artificial intelligence in accounting
For many of us, artificial intelligence (AI) still sounds complex and overwhelming. Fortunately, there are now a range of tools that use AI in a digestible way, improving how the accounting industry can work with small businesses. AI doesn’t necessarily take over jobs, instead, it can help to eliminate mundane tasks and open up more time for more meaningful work.
How can AI be used in accounting?
Most noticeably, AI can help accountants analyse large amounts of data in much less time. The technology can generate accurate data and detect any anomalies in your books. More advanced AI can even help to generate actionable insights and forecasts that can guide business decisions.
AI is also useful in automating tasks for clients. In the past, a huge chunk of time was spent on manually recording bills and expenses. Now, apps allow clients to take a picture of receipts from their phone or directly from the app. It then extracts the necessary data and syncs it to your accounting solution. There’s no longer a need for a long email chain or stacks of papers.
Another interesting development in AI technology in the accounting industry is the growth of pricing tools. Small businesses all have different requirements and data, meaning a one-size-fits-all pricing model doesn’t always work. There are now AI tools that can analyse a client’s data and provide an estimate of its health. If a small business’s data is accurate and organised, accountants can charge a lower fee.
Advisory services need to offer deeper insights
In a recent survey of accounting professionals, 60% reported that advisory would be their key growth driver this year. Traditionally, advisory services would just be financially-based. However, with technology playing such a massive role in generating and analysing financial data, there now needs to be a hybrid approach that bridges the gap between financial advisory and accounting technology services.
Accounting automation, software implementation, and artificial intelligence should all come together to improve the quality of advisory services. Accountants can now build an ecosystem where data flows seamlessly between apps and manual tasks have been automated. Now, there’s more time to focus on providing a wider range of insights, particularly in growth profitability and strategies, and business intelligence.
With more efficient processes, we’re expecting to see a more agile approach to building strategies as well. Technology can allow accountants to more regularly monitor and examine data, therefore providing more chances for new insights. Where a structured approach might take significant time and effort, this more nimble approach can allow businesses to jump on opportunities earlier on.
As a whole, technology can help to improve the entire customer experience journey. In particular, communication between accountants and small businesses can become much more effortless. With data in the cloud and available at the touch of a button, there’s a greater expectation for interactions to be seamless, instant and location-independent.
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Key takeaways on small business accounting in 2023
It’s clear that small business accounting is moving quickly and massive changes will be developing in 2023. We’re seeing that the overarching theme has been tech, tech, and more tech. To really bring the most value possible, accountants need to stay on top of the innovations and use them to guide small businesses in their decisions.