Accounting and Practice Management: Trends and Challenges for 2020
The accounting and practice management industry experienced many revolutionary changes in the last decade, all thanks to technological innovations like machine learning and artificial intelligence, blockchain, and cloud applications. These cutting-edge technologies not only addressed burning issues in the industry but have also changed how accountants work and collaborate.
The year 2020 marks the beginning of a new decade. A decade where research and investments in cutting edge technologies will only continue to grow, so, accountants must continuously learn and modify their strategies to keep up with the pace of these innovations.
This post talks about some technological innovations that will continue to grow in 2020 while highlighting key challenges that require your attention.
Top accounting and practice management trends for 2020
Cloud-first strategy
According to Gartner, the public cloud services market is forecast to grow 17% in 2020 to a total of $266.4 billion, which means all future software enhancements will only be on the cloud.
Why do you need cloud accounting practice management software?
Scalability
Many business owners struggle with challenges such as lack of complete visibility of data, limited storage capabilities, and lack of agility and flexibility in their businesses. The cloud addresses these challenges. Companies can store every minute details without worrying about load or capacity planning. The cloud also understands that growth is not linear and allows companies to choose a configuration that suits their budgets and requirements.
Flexibility
The cloud relieves accountants from long and tiring paperwork and gives them the flexibility to lead a more location-independent lifestyle. Payments and transactions are more convenient and transparent as accountants move to a paperless office. Firms also have the flexibility to choose the updates and features required for their business without disrupting customers.
Costs Savings
The cloud offers a pay-as-you go subscription model, relieving accountants from hardware procurement, hardware & software installation, licensing, maintenance, and document management costs. This cost-effective model ensures easy integration with existing applications and offers a safe and secure environment for all transactions.
Data Security
Cloud accounting and practice management solutions come with multiple levels of security to ensure the safety, security, and integrity of all transactions. The cloud also reduces the risks of data loss, security breach, or hardware failure. A wide range of security features, such as multi-factor authentication, login and password management, and bank-level encryption ensures secure transactions and business continuity.
Contextual Collaboration
Collaborating with clients is no longer a challenge. The wide range of applications, tools, and resources offered by the cloud allows accountants and clients to work in accordance anywhere, anytime.
Automation and Artificial intelligence
We are entering an age of automated data entry and code-free accounting. Many companies have embraced Machine Learning and AI and have automated time-consuming tasks such as bank reconciliations, invoices, and bills. Embracing these futuristic technologies enables accountants to become more efficient and become data-driven financial advisors for their clients.
Changing Role of Accountants
Not just technological innovations, the past decade has also transformed the role of an accountant. Using cloud technologies, accountants are now assuming the roles of virtual CFOs and financial advisors.
Modern accountants offer varied services like:
Monitoring financial landscape to identify and report anomalies
Evaluating strategic decisions and investments
Managing payroll, ledger, books, monthly reports, contracts, customer invoices, etc.
Developing tax and financial strategies
Leveraging industry knowledge to device t benchmarks and best practices
More on how to become a virtual CFO here.
Practice Marketing Automation and Social Media
Gone are those days when social media was unprofessional. Modern accounting firms are tapping the full potential of these platforms for various activities such as knowledge sharing, demonstrating thought leadership, hiring, and connecting with all stakeholders.
While Twitter allows accountants to receive the latest updates on trending topics in the world, LinkedIn facilitates lead generation and skill enhancement. So, being active on these platforms is a win-win for both business development and personal learning.
The trend of marketing platforms for accountants is also quickly catching up in accounting circles. These platforms offer many cool features like email automation, chatbots for customer support, proposal and email templates, conversion metrics, revenue, and goal trackers for a complete hub experience.
Outsourcing of financial functions
Many startups and small business owners now prefer outsourcing their finance functions for focusing more on their core products and services. Outsourcing of financial functions helps them to save many costs. Unlike large corporations, smaller businesses are also willing to store their data on the cloud and avail financial services as and when required.
Blockchain Technology
Blockchain has become a buzz in the industry. The Big 4 accounting firms already have dedicated teams hustling to make blockchain in accounting more affordable and accessible.
Blockchain continues to steal the limelight because it offers:
Improved accuracy in accounting
Lower maintenance costs of ledgers
Complete visibility of assets and liabilities
Immutable distributed ledgers
Challenges to expect in 2020
Continuous learning
Accountants must become continuous learners. Learning new skills such as data-sciences and analytics, blockchain, email automation, etc. helps accountants to maintain sanity during these ever-evolving times.
Hiring and engaging skilled accountants
Accountants with niche skills like cloud accounting, analytics, and data visualization are in huge demand, and it is quite challenging to hire and retain them.
Cybersecurity
Financial information always tops every hacker’s list. Accountants are now under tremendous pressure to ensure the safety and integrity of their information as well that of their clients, partners and associates.
Implementation of Tax Cuts and Jobs Act
Everything from deductions, depreciation, expensing, tax credits, and other tax items that affect businesses are being impacted by the new Tax cuts and Jobs Act.
Some excerpts from the TCJA:
| Deductions | Changes under the new TCJA |
|---|---|
| Limits on deduction for meals and entertainment expenses | The TCJA generally eliminated the deduction for any expenses related to activities considered entertainment, amusement or recreation. However, under the new law, taxpayers can continue to deduct 50% of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. If provided during or at an entertainment activity, the food and beverages must be purchased separately from the entertainment, or the cost of the food or beverages must be stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. Notice 2018-76 provides additional information on these changes. |
| Temporary 100 percent expensing for certain business assets | TCJA temporarily allows 100% expensing for business property acquired and placed in service after Sept. 27, 2017 and before Jan. 1, 2023. The 100% allowance generally decreases by 20% per year in taxable years beginning after 2022 and expires Jan. 1, 2027. The law now allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions. |
| Changes to cash method of accounting for some businesses | The TCJA allows small business taxpayers with average annual gross receipts of $25 million or less in the prior three-year period to use the cash method of accounting. The law expands the number of small business taxpayers eligible to use the cash method of accounting and exempts these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts. As a result, more small business taxpayers can change to cash method accounting starting after Dec. 31, 2017. |