It’s over 500 years since Luca Pacioli invented double-entry bookkeeping and created the basic concepts on which all accounting is still based. But although the principles are the same, the technologies used in accountancy have changed to fit the needs of the digital world.
It used to be standard practice to use physical paper files and ledgers to track your accounts. Then in the late 20th century spreadsheets took over, followed by office-based desktop accounting software and, finally, the cloud accounting software that we know today.
So if basic bookkeeping has made the switch to the cloud, the same should go for the actual implementation of how forecasts and day-to-day accounting take place – it should be evolving as technology makes it possible, and looking to the benefits of cloud software.
Working in the cloud
45% of UK accountants are using cloud solutions, with 35% of German accountancy firms and 60% of firms in the Netherlands also embracing a cloud way of working. And this shift towards online working comes through a clear understanding of the increased efficiency of cloud.
There are a host of inherent advantages of moving your entire financial workload to a cloud platform, including the reduced IT spend for the firm, the instant 24/7 access to your clients’ key numbers and the ability for your team to work remotely away from the main office.
But one of the key benefits of using a cloud platform is the access your firm then has to a huge ecosystem of add-on business apps and cloud solutions. Using the open APIs included in most cloud platforms, you can quickly integrate with bespoke tools for managing your firm – whether it’s practice management tools, online payment apps or smart cashflow solutions.
Real-time data to work with
Access to up-to-date financial data is the conduit for having more proactive and valuable conversations with your business clients and keeping your advise timely.
An effective cloud system delivers real-time data and reporting, where the numbers you see are current, not weeks or months out of date. Many platforms now offer live bank feeds, helping to speed up bank reconciliation and quickly update the books, and with the Open Banking Standard going live in early 2018, it will be even easier to take a modular approach to finance software and increase the availability of real-time accounts data.
Rather than relying on the historical data that bookkeepers like Paciolo had access to, with real-time numbers, you have the most current view of a client’s financial position and can help them make make better business decisions.
Real-time automatic forecasting
Having a better overview of a client’s current financial position is a real benefit, but the potential value of your advice is greatly increased when you can start to forecast the possible future position of their income, cashflow and aged debtors.
With software that can deliver real-time automatic forecasting, you get
- Real-time automated predictions – helping the business to predict their cash position in a month, through the whole quarter or even 12 months ahead.
- Opportunity spotting – with opportunities to improve the business’s cash position, chase the most pressing invoices and operate financially in the most efficient manner.
- Threat detection – where you look for anomalies, spot any spend that’s out of kilter or unusual, and see how many weeks of trading the business has in the bank currently etc.
With software providing automatic forecasts, you and you client have a clearer view into the future. You can lift the fog and achieve a real-time forward view of the route ahead, making financial navigation a far easier task in the coming months.
Artificial intelligence: the next step in accounting
Artificial intelligence (AI) is transforming accountancy, with smart apps and machine-learning already starting to revolutionise the ways in which accounting operates in the 21st century.
AI and machine-learning algorithms can process real-time financial data incredibly quickly – far faster than any human – and can make smart decisions based on this analysis. That helps your firm to spot the patterns, opportunities, issues and areas of concern in clients’ cashflow statements, financial reports and forecasts.
Smart AI-driven apps can even help your clients to get more proactive, by prioritising their most important debts, creating action lists and automating their credit control function.
The importance of human expertise
Software is helping accountants to remove a significant amount of the time-consuming number-crunching work. But it’s also helping firms look to the future and be more proactive.
With AI revealing key insights in client’s financial data, you and your team can apply your human expertise, helping your business clients to base their strategic thinking and decisions on stronger data evidence and sound financial foundations.