Tech-Driven Evolution Of Business And Role Of Accounting
This simple fact shouldn’t surprise you that amid financial crises caused by Coronavirus, few stocks saw an upwards trajectory. One trait in common for all those stocks is all of them are tech-driven firms. Modern technologies such as Big Data, Machine Learning, and Artificial Intelligence have reshaped businesses.
As Leon C. Megginson summarized the Darwin thesis, “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change”.
Fairly easy to assume gigantic firms like Facebook, Amazon, and Google will adapt to changes or will be the catalysts of change. For small and medium businesses, it’s never easy to follow the suit. Traditionally, finance and accounting have been all about number crunching and accuracy. The evolution of businesses, the very nature of the customers, and modern technologies have all reshaped accounting too.
For big firms having hundreds of employees and designated corporate governance structures, the roles are clearly defined and assigned. In smaller and medium organizations, roles often overlap. A CFO is a financial strategist for any organization, leader, and change catalysts for any organization. Accountants are the backbone of the finance department in size organization providing accurate financial data, valuable insights, and trends to make decisions. Fast-paced nature of the businesses; e-commerce and social media marketing trends demand quick and responsive finance management.
Artificial intelligence (AI) is reshaping the financial advisory, data science, and data analytics. For example, Robo-advisors replacing the traditional broker agents enabling young individuals and small investors with the stock trade. Digitization and analytics of large records is a cumbersome job, modern software equipped with AI technology can ease that burden from the accountants. Once the repetitive and recurring tasks are automated, interpretation and analysis become easier. Traditionally, organizations tend to spend a large chunk of resources on basic tasks such as record keeping. The evolving nature of today’s businesses demands much more than that. For example, businesses would need to make quick sale price adjustments with a seasonal product demand or with new entrants in the market. Scaling costs and margins, evaluating margins, and assigning selling prices to require in-depth knowledge and efforts. Slight adjustments in margins can drastically change the profits and sales of any organization. Artificial Intelligence has helped reform the accounting software development and the way accountants analyze data. Some of the useful traits of Artificial Intelligence powered software are:
- It can help accountants analyze large and complex sets of data
- It can help find set patterns and trends in accounting records often overlooked with traditional accounting systems
- Strategic decision making is the most critical job for any businesses, well-analyzed accounting data can help make better decisions
- It can eliminate human emotional factors while interpreting data and also removes inconsistencies
Data visualization is a key component in decision making; financial data forms the backbone of any organization. Obtaining valuable data from sources, identifying business problems, and suggesting alternatives can take a lot of time and energy. For small and medium businesses, the cost is another factor while hiring specialist staff for each task. AI-driven software can enable accountants with multitasking and save on valuable resources for any organization, particularly for small businesses. AI accounting software can help with unbiased and rational decision making. Accountants are often tasked with variance analysis, trends, and forecasts which all depend on analyzing historic financial data. Once a large amount of financial data is digitized, machine learning can help identify these trends and variances, one step ahead can also predict forecasts. The role of modern accountants has evolved into business leaders rather than contributors.
AI-powered accounting software enables the modern accountant to automate routine tasks saving them precious time for decision making.
Young graduates are more attracted to entrepreneurship than jobs; they are also well equipped with modern technologies. It seems a natural fit for young business owners to adapt to new technologies and trends such as machine learning and AI-powered software. Practically, modern accountants are applying machine learning and AI accounting software to help organizations with:
- Improved data analysis with trends and forecasts for large volumes of financial data
- Automation of accounting tasks such as tax calculations
- Offer an adaptive and flexible approach in data analyses and decision making
- Integrate with other organization departments changes such as modern supply chain management techniques
The human decision-making process is intuitive in nature, machines follow logics and algorithms. Businesses and accounting professionals should look at artificial intelligence and machine learning as collaborative and empowering tools rather than instinctive. Accountants are being appraised on non-financial data metrics now than traditional quantitative ratios. AI armored accounting software and models should be used as complementary tools rather than thinking of them as disruptive forces. Modern accountants are likely to encounter machine learning and artificial intelligence accounting models either by choice or by compulsion. For small businesses though, the cost of falling behind the adaptive technologies can be too high to pay in the longer term.