Accounting has come a long way since its Mesopotamian beginnings. From counting goods with clay to tapping computer screens with artificial intelligence (AI) software, accountants have redefined productivity in the 21st century, thanks to digital accounting.
With the rising need to establish a more efficient tax system in the modern world, digital accounting was created to convert financial data into electronic form. Not only does it increase efficiency, but it also maximizes accuracy beyond any human accountant can achieve with manual processes.
From cloud computing to blockchain technology, digital accounting has changed the face of the discipline and profession by offering revolutionary benefits in the following key areas:
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Data Analysis and Insights
Through digital accounting, practitioners can collect, process, and analyze large volumes of data with accuracy and speed. This allows them to perform deeper analysis and pinpoint significant patterns and irregularities that might go unnoticed with traditional methods. Most importantly, accountants can draw critical insights to identify tax-reducing opportunities, polish their tax strategies, and enhance compliance.
Teamwork and Communication
Digital accounting makes it easier for accountants to work with their teams and clients by making financial data and documents accessible in real time. Any necessary interactions can be done immediately, allowing everyone to complete their tasks faster with fewer delays and complications. Additionally, clients can provide data and receive updates over a secure platform, promoting transparency and consistency of goals throughout the tax accounting process.
Compliance and Reporting
Digital accounting tools allow accountants to simplify their tasks while increasing accuracy, such as in tax preparation and submitting regulatory filings. However, these tools do far more than free accountants from repetitive tasks. They minimize errors, ensure regulatory compliance, and prevent dreaded audits by tax authorities.
The benefits of digital accounting do not only extend to clients but to tax professionals themselves. Using digital platforms, accountants gain access to various online resources. These resources help them improve their skills and update their knowledge of tax laws, regulations, and industry developments. They can even gain new certifications through these platforms, enhancing their credentials and expanding their clientele.
Professional empowerment can be particularly crucial in a competitive accounting industry such as Canada’s, where nearly 30,000 accounting service businesses currently operate, including Faris CPA in Ontario.
The digitalization of accounting tasks is not free, but the savings practitioners can enjoy are enormous. Outdated accounting systems usually come with hidden costs and make digital accounting tools cost-friendlier in the long term. The use of physical assets, such as paper, printers, scanners, and even office space can also be too expensive compared to the overall cost-efficiency of digital accounting.
Given the growing popularity of digital accounting, it is easy to predict more widespread adoption in the coming years. The market size for cloud computing alone is expected to reach $4.25 billion by 2023. Not to mention other accounting technologies are also making headway, such as blockchain technology and enterprise resource planning platforms (ERPs).
In any case, the rise of accounting technologies can reasonably change the role of accountants as they evolve into strategic advisors. Of course, technology can never replace them, but their activities may take new forms as they aim to stay relevant in the industry. This may call for knowing the latest trends and using current systems to satisfy the firm’s or practice’s growing needs, and, most importantly, keeping an open mind as more advanced technologies emerge.