As accounting leaders head into 2023, they should do so with a balanced outlook. They should be fully acquainted with the challenges they will face.
However, these difficulties will also present more opportunities, making it worth preparing for and excelling in the year ahead. Here is what to anticipate as finance and accounting teams embrace the digital future.
How Technology has Impacted the Accounting Industry
Accounting teams adopting technology have enhanced agility in pivoting around unforeseeable disruptions such as supply chain issues and revenue interruptions, but what issues are posing the biggest threat to accountants nowadays?
Sticking to budgets, hiring talent with the latest knowledge, adjusting to tax and regulatory changes, and remote work remain some of the towering challenges for accounting teams.
Understanding the Potential Challenges and Opportunities for Accounting Firms
- Cash Flow
In times of economic hardship or anticipated crises, firms often take steps to boost liquidity. They implement cost-cutting measures, defer investments and work towards enhancing cash flow. This focus on cash flow management will continue even in 2023, particularly in dealing with capital expenditures.
- Accounting and Financial Reporting
With new rules, public and large private companies still struggle to manage financial disclosures. Finance leaders are concerned about complying with new reporting requirements for government stimulus programs while ensuring proper documentation, recording, and reporting for audits.
Furthermore, changes related to Environmental, Social, and Governance disclosure requirements are on the horizon, and accounting teams must be vigilant in a regulatory landscape that is constantly evolving.
- AI and Automation
Despite a small percentage of large firms using AI, around 20% plan to implement it. They implement automation to address shortages in labor, automate high-labor tasks and gain access to insightful data.
As more manual work becomes automated, accounting firms require to build new skill sets to apply their proficiency to data obtained from advanced technology. They are taking a more active role in business strategy. The automation of accounting is supported by cloud-based accounting software, Business Intelligence (BI) tools, budgeting, forecasting, data analytics, and visualization tools.
- Payroll Management
Upcoming changes in laws and regulations for payroll, combined with managing employee withholdings across different locations, continue to be significant hurdles for payroll management. Determining taxation on state income with remote work has only amplified this complexity.
Automating payroll processes through cloud-based platforms is a viable solution to alleviate these challenges. They facilitate accurate calculation of earnings, deductions, company contributions, taxes, and paid time off while supporting multiple jurisdictions for taxes, forms, direct deposit, and more.
- Precise Financial Forecasts
Due to the pandemic, businesses have had to contend with the intricacies of financial forecasting. Scenario planning and re-evaluating sales, expenses, and cash are necessary.
Assumptions should be tested, and real-time analytics will aid in forecasting historical trends, current conditions, and best, worst, and likely scenarios. A top accounting tip for startups and small businesses is employing financial statements to forecast business performance.
- Globalization
With companies growing worldwide, accounting departments must adhere to an ever-increasing range of global laws and regulations. Technology has undoubtedly made it easier, but accountants must still navigate the norms and rules that exist at home and abroad.
Instability in local economies, different cybersecurity rules, and changes to tax laws require accountants and technology that are flexible enough to handle these challenges.
- Cyber Security
Stolen employee credentials are the leading cause of cybersecurity breaches. The accounting team regularly receives emails containing invoices with attachments or links that may include malicious malware or ransomware.
As the accounting team is already well-versed in robust internal controls, access, and permissions, they are well-suited to advocating for company-wide cybersecurity. Ensuring that all systems remain up to date and removing outdated software goes a long way in reducing the success rate for malware.
- Talent Management
Companies across several industries are in active pursuit of accounting and finance personnel. Open positions are available in roles such as billing, accounts receivable, and collections to maintain a strong cash position.
Amongst increasing competition, companies’ top challenge is retaining their best employees. Finance and accounting managers are worried about keeping valuable personnel as automation adoption rises. Enhancing skills and expert knowledge to leverage technological advancements will pay off for employees and businesses.
- Remote Work
With remote work becoming increasingly popular in most industries, accounting, and finance are no different. Studies show that 77% of accounting professionals are now keen on working remotely. However, the concept of remote work brings with it some challenges for the financial teams, including a higher risk of cyberattacks.
Therefore, it is vital to properly assess the risks and ensure that established financial controls are adequate when dealing with a remote team. A classic risk assessment framework can be used to identify controls that may expose the company to risk.
Moving Forward
To tackle the challenges of 2023 head-on, the first step is implementing and continually improving cloud-based accounting systems. Top-of-the-line practice management software and advanced BI tools can enhance data analysis and operations.
By relying on a trusted source of data and automating time-consuming and error-prone tasks, accounting firms have more time and better data to weigh in on strategic decision-making and become valuable partners in shaping business strategy.