Have recent technological innovations disrupted finance and accounting functions? It’s true that companies can replace manual, low-tech practices with advancements like automation, AI, and cloud-based solutions, often with significant cost and time savings. Additionally, advanced analytics can provide deeper insights into the company’s finances. However, business leaders looking to replace their current software and applications should choose carefully, as the newest shiny thing is not always the best solution for finance and accounting teams.
It is important for organizations to consider the significance of selecting, implementing, and maintaining tools appropriate for their individual circumstances. Outsourcing, which already provides valuable support for routine tasks and special projects, can help bridge the gap between present day and the future by offering knowledge of and experience with technology that may not be available in-house. In this article, we will discuss technology’s role in the finance and accounting function, how it can improve day-to-day operations, and how to address potential obstacles.
What’s New in Technology for Finance and Accounting?
Finance and accounting teams are undergoing a technological transformation that is reshaping many traditional practices. Although the process of adhering to basic accounting principles and standards remains consistent , professionals may refine how they operate by leveraging tools and solutions like the following:
Automation and Robotic Process Automation (RPA): Accounting automation systems and RPA can help professionals perform routine tasks with limited human interaction , streamlining traditional processes while preserving human oversight and governance. Using new technology for repetitive tasks such as data entry, invoice processing, and reconciliation can help reduce human error and enable finance and accounting team members to focus on value added activities. According to BDO’s 2024 Audit Innovation Survey, 56% of organizations have implemented automated data entry, highlighting the growing reliance on tech solutions to enhance efficiency and accuracy.
Cloud-Based Solutions: For some organizations, cloud-based solutions have replaced desktop systems. Maintaining data in the cloud enhances accessibility and collaboration, enabling teams to work together no matter where they are located. Rather than transferring static files, team members can quickly access up-to-date data and reporting, which can improve agility and enhance responsiveness.
Data Privacy and Security: As companies increasingly rely on digital solutions, it has become more critical than ever to develop advanced data privacy and security protocols to protect sensitive financial information from data breaches and unauthorized access. Accounting software often includes features that implement strict access controls, encrypt data, and allow for backup and recovery of data. Strong user authentication and regular updates and patches can also help ensure that programs remain up to date regarding data privacy and security.
Advanced Analytics and Dashboards: Finance and accounting teams, whether in-house or outsourced, may have the ability to conduct advanced analytics and provide interactive dashboards. By using advanced technology, accounting professionals can conduct a thorough analysis of a company’s financial data to provide real-time insights into the company’s financial performance. The dashboards offer executives and other members of the team pertinent details pulled from the company’s data and produced in a manner that can be quickly understood. Knowledgeable professionals may use advanced analytics to help the company identify trends, forecast future business outcomes, and improve strategic decision-making.
Artificial Intelligence in ERP Systems: Companies may implement systems that are not solely AI-based, but most of today’s enterprise resource planning (ERP) systems include AI components. Systems that incorporate AI can become integral to the finance and accounting team, improving their ability to automate processes, analyze data, and use their analysis to help predict outcomes.
Accounting AI agents are revolutionizing the way financial processes are managed by enhancing and streamlining tasks such as flagging 1099 vendors and performing reconciliations. With a comprehensive understanding of accounting principles, integration with clients' accounting systems, and access to vast online resources, these AI agents can offer precise and actionable recommendations for account reviews. When experienced accountants leverage AI tools, they achieve unparalleled levels of accuracy and efficiency, ensuring that financial records are meticulously maintained and analyzed. This synergy between human expertise and AI technology leads to more insightful decision-making and optimized accounting operations.
Staying abreast of technology is more than a trend or a fad; it can be necessary for companies to remain competitive. Finance and accounting teams that embrace innovative tech solutions may contribute to their organization’s long-term growth by efficiently allocating resources.
What Finance and Accounting Functions Can Be Affected by Innovations in Technology?
Although technology can have a widespread effect, certain tasks and projects are more likely to benefit from tech solutions:
- Financial Reporting: A number of methods can empower companies to generate accurate financial reporting in less time, including advanced analytics, dashboards, automation, and AI. For example, automated systems may compile reports more quickly than traditional methods, potentially reducing preparation time from weeks to minutes.
- Month-End and Year-End Close: When performed using traditional methods, a company’s month-end and year-end close may take weeks to prepare. Technology can help streamline these processes, reducing the time needed to complete them. By automating reconciliation and reporting tools, the reduced burden on finance and accounting teams may allow them to focus on other more strategic functions.
- Forecasting: Business planning requires understanding the company’s current financial condition compared with potential future trends. However, compiling all the data needed for forecasting can be time-consuming. Methods like automation, advanced analytics, and AI can improve the company’s forecasting and budgeting.
Adapting to innovative methods of performing finance and accounting functions is rarely easy. Understanding what lies ahead — and when to seek assistance — can help with strategic business planning.
What Obstacles Exist When Adapting to New Technology?
Before a company begins to tackle the challenges of adapting its technology, it is crucial to understand several key factors.
Selection: Selecting the right technology involves assessing current technology and estimating future needs. Today, tech solutions for finance and accounting functions offer a wide range of services and capabilities. It’s important for companies to consider which services align with their needs, goals, and budget. Outsourcing providers can help with decision-making because they provide knowledge and experience that may not be available with in-house teams.
Implementation: Once software has been chosen, implementation and integration with existing systems require careful planning and execution. During the process, deadlines for financial reporting and other accounting functions must still be met, all while continuing to protect sensitive financial data. For some companies, the lack of in-house experience with the new system can hinder progress, making external assistance necessary.
Maintenance: It is essential to establish that proper processes and controls are in place. Companies typically want new systems to be used efficiently. Outsourcing partners can help design and implement frameworks that help ensure systems are used efficiently, as well as providing on-going training for employees.
Guiding Your Company Into the Future
A holistic approach is essential for successfully integrating technology into finance and accounting functions. Experienced professionals who have a clear understanding of how to implement and use these tools efficiently can guide companies interested in adapting innovative technology. BDO meets clients where they are, customizing technology solutions to fit their circumstances.
For more information on how our outsourcing teams can help guide your company into the future, please contact BDO’s Outsourced Finance & Accounting team.