The accounting profession has altered dramatically in the previous year, and many people's business practices have also changed. Many firms are looking forward with cautious optimism now that things appear to be settling down to some new normal. However, these changes are likely to last beyond the pandemic's end, posing new issues for accountants. Clients in this new environment need accounting professionals to be strategic consultants and transactional accountants, providing accounting services to assist them in dealing with the latest issues.
Is the Role of Accountants Still Important?
Yes, accountants are still necessary, but the profession is evolving. Today's accountant is primarily a consultant, which is the most valuable aspect of their job. Accounts are getting increasingly more complex due to the rising usage of cloud accounting technologies. Data entry, bank reconciliations, and billing are becoming more efficient due to technology, reducing time spent inputting numbers.
On the other hand, automated accounting systems provide accountants with greater tools to examine and report these statistics. Accountants will be in increasing demand due to their usefulness in assisting businesses in making better, more successful business decisions.
Accounting Problems and How to Solve Them
Accounting departments that use technology are better equipped to respond to changes and problems, such as the supply chain and revenue disruptions in 2020. Accounting teams face challenges for accountants like cash flow, attracting new personnel, reacting to recent tax and regulatory changes, and adjusting to remote work.
Challenges for accountants: Artificial Intelligence And Automation
Although around 2% of big companies have integrated machine learning or AI, roughly one in five say they aim to do so shortly. Artificial intelligence (AI) is being implemented to overcome labour shortages, automate labour-intensive operations, and provide more insightful data.
As more operational work is computerised, accountants will need to learn new skills to apply their expertise to new technologies' information and data and play a bigger role in company planning. Cloud-based accounting software, planning, forecasting, big data, and visual data help with accounting automation.
Challenges for accountants: Upskilling
As automation becomes more common, enhancing current skills and experience to take advantage of technology's outputs will benefit both individuals and your company. Prioritise learning and upskilling in cloud-based payroll and HR information systems, ERP systems, data analytics, and financial planning and forecasting.
Aside from technical capabilities, working alone and in virtual teams, powers of observation, comfort with change, creativity, a desire to learn continually, and written and verbal effective communication will all be in high demand. In addition to enhancing employee morale and retention, continuing training has other advantages. Companies with strong employee training ratings had 53 per cent lower turnover rates than those with bad ratings.
Challenges for accountants: Reporting On Finance
Financial disclosure management challenges public and big private firms subject to SEC regulations. Finance executives are concerned about meeting COVID-19-related government stimulus reporting obligations and ensuring correct documentation, recording, and reporting for audits. Changes in disclosure requirements for Environmental, Social, and Governance (ESG) are also anticipated shortly, and accounting firms must be aware of the changing regulatory landscape.
Challenges for accountants: Cash flow
When there is an economic downturn or signals that one is on the way, corporations often act rapidly to increase liquidity by implementing cost-cutting measures and postponing planned expenditures. Some focus on increasing cash flow will continue into 2021, particularly concerning capital expenditures.
According to management and consulting company McKinsey & Company, boardrooms have changed their attention from profits before interest and taxes (EBIT) to cash, which has translated into responsibility for cash management at all levels of the organisation.
Businesses are more confident in their ability to generate income due to modifications to product or service offerings and pricing strategies in 2020. In a poll conducted by PwC in October 2020, 28 per cent of CFOs predicted a rise in revenue over the following 12 months, up from just 11 per cent in June 2020. However, several cost-cutting efforts have paused, particularly those involving labour and operations.
It will be critical to improving the efficiency of accounts receivable and accounts payable operations to maintain a consistent cash flow. Expenses, past-due bills, and operating cash flow are all variables to watch. Daily cash reports can help you plan for the future since you'll be able to identify changes or fluctuations that you can utilise to guide other decisions.
Challenges for accountants: Changes in the Tax Code
Accounting teams are frequently concerned about how to apply changes in tax regulations. In 2021, though, there will be much more upheaval than normal. On the heels of a new tax season, the president of the National Conference of CPA Practitioners said in his January 2021 newsletter that practitioners would now have to master 5,593 pages of new requirements in the Consolidated Appropriations Act, also known as the COVID stimulus.
Tax extenders, deductibility of PPP expenditures, the possibility of second-draw PPP loans, and a streamlined process for PPP loan forgiveness for sums under $150,000 are all part of this package. Tax changes are front of mind for accounting teams, particularly determining the overall tax due and negotiating to alter trade and tariff regulations.
Navigating the tax code changes effectively will help you have more finances available to deal with other upcoming company difficulties. Accounting software will help you manage a complicated tax year by digitising accurate and easy-to-access information.
Challenges for accountants: Recruiting and Retaining Top Performers
Accounting and finance positions in technology, health care, property management, financial services, and occupations that maintain cash accounts strong are still being filled. Billing accounts receivable and collections are examples of these responsibilities.
A difficult challenge is keeping top staff as competition grows. Retaining valued staff is a problem for 8 out of 10 finance and accounting managers. Low morale and high rates of burnout due to extreme workloads are two important areas of worry, with the latter being a rather recurring issue for accountants. One place to start raising morale is to ensure that critical staff retention tactics, such as continuing education and training, are applied to the accounting and finance departments.
Challenges for accountants: Payroll Administration
New payroll issues are on the horizon due to changing federal and state rules and regulations. State income tax administration has grown more challenging since designating a major workplace is difficult with remote employment. Payroll administrators face a significant issue in managing withholdings for workers who work in many locations.
Consider automating your payroll operations if you haven't already. Payroll solutions that are cloud-based assist with the computation of earnings, deductions, corporate contributions, taxes, and paid time off and support numerous jurisdictions in terms of taxes, forms, and direct deposit.
Challenges for accountants: Cyber Security
The time it takes to discover and contain a data breach is 280 days, and the average cost is $3.86 million. Employee credentials are stolen or compromised in the vast majority of breaches. The accounting staff receives emails with files or links to bills daily, and it's easy to see how a malicious link or attachment may slip between the cracks.
Accounting teams are well-suited to be company-wide champions for cybersecurity because they're already well-versed in the internal controls, access, and permissions that come with their jobs. Since outdated software may help malware and ransomware spread faster, your devices are up to date.
Challenges for accountants: Work remotely
One of the top accounting trends, like many others, is a desire for more flexible and remote employment. Approximately 77 per cent of accounting professionals want to continue working from home. However, remote labour is difficult for accounting and finance teams, which have traditionally completed responsibilities such as month-end closure by working long hours in the office.
Concentrate on implementing established financial controls with a distributed workforce. Using a traditional risk assessment approach to evaluate which rules may expose the organisation to risk. Remote work also increases the danger of cyberattacks, according to studies showing that 70% of organisations who used telework during the pandemic predict increased data breach expenses.
Challenges for accountants: Financial Forecasts That Are Accurate
The pandemic's conditions made precise financial forecasting all the more difficult. Business executives should do scenario planning and re-examine sales, expenditure, and cash estimates. Model cash flow, burn rate, and liquidity under numerous scenarios to test and re-test assumptions.
Using financial statements to analyse and anticipate business success is one of the top accounting recommendations for small businesses and startups. Because things change so fast, having access to real-time data is essential. That's what distinguishes financial models that consider past patterns, present situations, and the best, worst, and most likely scenarios.
Conclusion
The important step in addressing many of the difficulties that 2021 will provide is implementing and continuing to improve cloud-based accounting solutions. In top-of-the-line enterprise resource planning software, finance and accounting are integrated with other company software modules, including supply chain, warehousing, and order management. The accounting team now has more time and better data to weigh in on strategic choices and potentially become a significant partner in directing the company strategy, thanks to a reliable supply of data and enhanced automation of time-consuming and error-prone processes.