Technological evolution has altered how accountants and financial analysts conduct their activities to ensure profitability. The corporate realm is witnessing an explosion of data, and technology dominates accounting processes. Data-driven processes have triggered the launch of the Fourth Industrial Revolution-the age of cyber-physical financial systems.
The Fourth Industrial Revolution has allowed businesses to leverage the power of various technological trends to maximize profits and growth. Businesses across all industry sectors can embrace and implement these trends to innovate their accounting and financial practices.
This article will walk you through the evolution of technology in accounting and finance.
Here, take a look:
THE POWER OF BIG DATA
In 2020, Big data and data analysis have emerged as dynamic tools to drive research-driven financial decisions. It is crucial to note that the role of data is not limited to spreadsheets and financial figures. Accountants are familiar with numbers with decades of accounting practices. Big data focuses on unstructured sets of data that require natural language processing for analysis and examination.
Big data allows financial analysts and accountants to monitor financial affairs and milestones with real-time, data-driven monitoring. Big data is powered by numerous technologies that have ushered the Fourth Industrial Revolution, transforming accounting and financial practices.
For instance, modern-day audit processes digitalize, and data dominate financial insights. Financial analysts rely on data to process trends and financial operations to pull valuable insights and offer clients graphic presentations. Data plays an instrumental role in generating revenue, reducing expenses, and streamlining financial operations.
This digitization has also freed up time by reducing the effort of accountants and financial professionals. They are well-positioned to pursue higher education degrees and specializations to advance their skillsets and expertise. Industry trends reveal that accountants are highly encouraged to pursue online LLM tax degrees to advance their legal knowledge skills.
BOOSTING COMPUTATION POWER
The rapid digitization of financial data has also ushered in significant transformations and advancements in computation capabilities. You see, the overwhelming amounts of data generated by digitization are useless without increased computation power. Increased computation capabilities allow companies and their financial and accounting departments to use and store data effectively.
Prominent tech giants Microsoft, Google, and Amazon provide cloud-based services to power financial activities with scalable software and systems. Edge computing has grown dynamically, and these scalable cloud-based systems ensure superior efficiency and productivity.
The implementation of fifth-generation (5G) cellular networks is the foundation for smarter financial and accounting practices. Shortly, businesses are rapidly inclining towards quantum computing to expand their computing power remarkably.
ARTIFICIAL INTELLIGENCE (AI)
Artificial intelligence (AI) is the backbone of accounting and financial professionals to boost productivity, efficiency, and profit maximization. Companies powered with AI algorithms to reduce the time and effort of repetitive and redundant operations to ensure efficiency with automation. Financial and accounting professionals are no longer crunching numbers. AI-powered automation allows them to focus on processing actionable insights.
In reducing errors and boost efficiency, machines and automation play a significant role. Financial and accounting professionals are increasingly reliant on AI to analyze and process massively huge amounts of data. AI has paved the way for the automation of monotonous tasks, allowing humans to focus on analysis and actionable insights. In simpler words, AI has allowed accountants to enhance their efficiency.
INTELLIGENCE OF THINGS (IoT)
The Internet of Things (IoT) is another dynamic innovation that refers to the system of interconnected systems, machines, and devices. These systems are powered with artificial intelligence, allowing them to operate, communicate, and interact without requiring humans to intervene or oversee. IoT offers numerous advancements and innovations for accountants and financial analysts.
The Internet of Things (IoT) aids financial professionals in tracking and processing real-time transactions and records to maintain error-free ledgers. AI-driven processes allow these systems to identify patterns and issues for speedy resolution. IoT systems driven by artificial intelligence provide continuous monitoring for stress-free and efficient accounting activities, for instance, inventory management and audits.
Blockchain is another transformative trend that has immensely vast potential for finance and accounting professionals. Blockchain has paved the way for distributed ledgers that are innovative and highly secure databases for storing information. Cybersecurity threats are the most significant challenge faced by online businesses.
Blockchain offers highly secure databases to record and process data with superior accuracy, efficiency, and security. Blockchain plays an instrumental role in maintaining and securing financial and accounting records. It allows the creation of smart documents, verifications of credentials and identities, and the protective transfer of assets ownership. Companies are rapidly adopting blockchain. However, industries worldwide still need to address the challenges of regulation and adoption.
In the long-run, blockchain will prove instrumental in boosting security, transparency, cost reduction, and traceability.
The advent of robotic process automation is another significant facet of technological evolution and its implementation across finance and accounting. You see, these robots are capable of attending to redundant, time-consuming, and repetitive tasks. They can process data and conduct document analysis to eliminate the two major tasks within an accounting department.
Accountants and financial experts can now turn their intelligence and time towards pulling actionable insights and strategizing. The focus of financial experts and accountants are on decision-making, data analysis, and client communication. They dont have to spend hours each week to compute, process, and store data. AI-powered tools, blockchain, and IoT have made these innovations possible and continue to advance the finance and accounting departments.