May 26, 2020

Accounting and Technology: A Modern Finance Revolution

Mike YeagerBy Mike Yeager

Corporate Finance blog iconExecutives are increasingly turning to their finance teams for answers about the future of their organizations. Instead of exclusively focusing on what happened in the past, finance teams are being asked to project what will happen in the future.

Traditional accounting tools are not equipped to answer these questions. Often, they require hours of manual data entry, have limited or static reporting options, can’t be connected to other business tools, and don’t support collaboration. Fortunately, modern finance tools have been designed to eliminate these issues and support the modern CFO in the role of business strategist.

Worker on 3 electronic devices at the same time.As society becomes more mobile, can complete tasks online without paper, and has instant access to information through the applications we use at home, we begin to expect the same things at work. Here are how accounting practices are being influenced:

  • Real-time information – Today’s executives want instant access to the information they need to make strategic decisions.
  • Mobile work – In a world dominated by smartphones, we are no longer tied to the office.
  • Accounting automation – Finance teams are trying to focus on high-value tasks such as data analysis by automating time-consuming, repetitive tasks like data entry.
  • Predictive analytics – Accounting teams are identifying trends, conducting modeling, and working through what-if analyses.

What follows are some of the tools that are enabling traditional accounting to shift to modern finance expectations.

Cloud Software

We all access cloud apps on our phones, from Instagram to Gmail. Cloud accounting software satisfies our need for 24/7 access and allows accounting teams to manage a business’s financials anytime, anywhere, on any device. Employees all have access to the same information at the same time.

Cloud software has additional benefits for businesses.

  • Integration capabilities – Integration makes it possible to connect your accounting solution to your other business systems, eliminating double data entry.
  • Built-in reporting and dashboards – Instead of relying on a separate reporting product for business insights, cloud accounting tools have these capabilities built in.
  • Reduced costs – Cloud products eliminate the need to purchase and maintain costly hardware such as office servers.
  • Continuous improvement – With software in the cloud, providers can automatically roll out updates with no downtime or interruption to your business.
  • Extra security – Cloud software providers offer extensive security measures, disaster recovery, and continuous backups.

Automation Tools

Accounting tools today focus on automating and streamlining processes. By handling everyday busywork, these products allow accounting teams to be more proactive and productive.

Accounts receivable (AR) automation software reduces much of the back and forth associated with the receivables process, offering a better experience for customers and staff by speeding payment. AR automation provides features such as the following:

  • Tracking invoice deliveries and views
  • Web portals where customers can view invoices and make payments
  • Automatic matching of payments to invoices
  • Activity tracking
  • Managing customer conversations and disputes and answering questions

Accounts payable (AP) automation software makes it easier to track vendor invoices and approvals so you don’t fall behind on payments or issue incorrect/duplicate payments. AP automation provides features such as the following:

  • Electronic invoice routing approvals
  • Electronic payments
  • The ability to extract vendor information such as name, address, and payment amount from scanned invoices and automatically enter it into the software
  • Permanent storage of scanned invoices
  • The ability to track important information such as outstanding payments by vendor or recent expenses by product

Expense management software makes it easier for employees to submit expenses and for managers to review and approve them. Expense automation provides features such as the following:

  • Ability to create expense reports directly in the software
  • A mobile app for employees to take photos of receipts and submit expenses anywhere, anytime
  • Ability to build in company policies, such as requiring a receipt for expenses greater than $50
  • Up-to-the-minute expense tracking so there are no month-end surprises
  • Electronic approval workflows

Close management software reduces the number of days it takes to close the books. Close management software provides features such as the following:

  • Electronic checklists and workflows to offer insight into task assignments, deadlines, and progress
  • Automatic tie out of your reconciliation workbooks to your trial balance
  • Electronic tracking of documents, approvals, and notes
  • Comment functionality so your team can collaborate in the software

Business Intelligence Tools

Business intelligence requires collecting, analyzing, and presenting data from across your business in a way that’s easy to understand and fosters better business decisions.

Most of today’s accounting system software offers built-in business intelligence tools such as reporting and dashboard capabilities. These tools are designed to show traditional financial statements, like an income statement or a balance sheet, alongside other metrics to provide a comprehensive view of the business.

Some, like Microsoft Power BI, specialize in collecting data from separate systems so they can be viewed together. These products also offer reporting and dashboarding capabilities, and often incorporate artificial intelligence and machine learning to help identify trends or ask new questions.

Powerful Integrations

It doesn’t make sense to have such specialized tools if they don’t work together. These products need to share information and act as part of a seamless system that serves the entire accounting and finance department.

Integration capabilities offered by cloud platforms and public interfaces are critical financial solutions. These capabilities have transformed the way systems communicate and make it possible to build a cohesive system using multiple products from different vendors.

Artificial Intelligence & Machine Learning

Artificial intelligence and machine learning capabilities are making inroads into accounting technology to help spot anomalies and identify trends.

Many have alerts or notifications prompted by this technology. For example, if you’ve let an approval sit for too many days, the software recognizes this and may put it back at the top of your inbox with a reminder. You may get an alert if there is an unexpected spike in expenses or revenue. Or you may get a popup on a reporting screen asking if you would also like a report on a category you hadn’t considered.

Artificial intelligence and machine learning won’t replace CPAs, but this technology can help finance teams keep their attention on high-value tasks and identify the exceptions that need attention.

The Benefits of a Modern Finance Solution

A modern finance solution using some or all of the tools above will equip the CFO and his or her team with taking on the new expectations of business executives.

  • Real-time information – Modern finance tools deliver reports in minutes instead of hours or days and put performance indicators at executives’ fingertips with dashboard capabilities.
  • Mobile workforce – Cloud-based software allows executives to monitor the state of the business anywhere at any time.
  • Accounting automation – Technology frees accounting teams to focus on the things they’re good at, all while saving time and money.
  • Predictive analytics – With the budgeting and forecasting tools built into most modern accounting solutions, it’s easier than ever to develop forecasting models to help executives better understand how to plan for the future.

The accounting profession is evolving, and technology has changed with it to support its new roles. Integration capabilities, accounting automation, and business intelligence are now must-have features, and more software developers are exploring the potential for artificial intelligence and machine learning in financial solutions.

CFOs and their teams continue to move away from traditional accounting practices such as historical analytics and data entry. Instead, they’ll be able to contribute to their businesses as strategic partners, offering real-time information and insight.

Mike Yeager is vice president of Cargas, a software company in Lancaster, Pa. He can be reached at myeager@cargas.com.

For more on issues affecting corporate accounting and finance professionals, check out PICPA’s Changing Role of the CFO and Controller resource page. Also, be sure to sign up for weekly professional and technical updates in PICPA's blogs, podcasts, and discussion board topics by completing this form

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.