As an ancient practice, accounting is bound to experience changes in the technology it uses.
Instead of long, winding narratives to detail transactions, accounting and technology now work together for a more methodical and straightforward practice. Instead of solely relying on pen and paper, accountants use a gamut of technical tools to complete their work.
What results is an efficient system that tracks data beyond transactions. With the technology we have today, accounting is able to analyze a company’s financial performance and provide insights for growth in this fast-paced world.
So, what are these tools exactly, and how have accounting and technology merged to support accounting professionals in enhancing their systems?
5 Types of Accounting Technology Our Head Accountant Recommends
The application of technology and artificial intelligence to accounting is one of the greatest developments in business. Not only has it improved accounting accuracy over the years. It has also provided companies with better and more secure ways to store and manage financial data.
With the following types of technology used in accounting, companies can more easily accomplish their accounting goals and use financial data to their advantage.
Enterprise Resource Planning (ERP) platforms
ERPs are the all-rounders of accounting technologies. An ERP is an integrated software system containing all the tools an accountant or business may need. It has accounting and finance modules, manufacturing modules, HR modules, and more.
In it you will typically find tools for inventory management, invoicing, financial management, reporting, and even sales. Every department of your business is accounted for.
But the main point of having an ERP is to have a singular, integrated system that requires users to input data only once. This means data changes in one department will reflect in other departments as well.
ERPs are a great resource for automating connectivity, and our accountant says Oracle is an excellent example. According to Oracle’s documentation, the technological accounting tools you’ll find in this ERP include:
- Journal entry import and creation
- Cross-ledger intercompany balancing
- Comprehensive processing of financial information
Payroll is a key component of accounting, and the technology used for this function enables accountants to prepare and compute employee salaries based on their timesheets and taxes, our accountant says.
This function of accounting is usually available in other software like ERPs and cloud-based accounting technology. The difference is the target users of payroll-specific software are both employees and accountants.
- Take government contributions into account when computing salaries
- Allow employees to request leaves on the program
- Compute time records or attendance
Believe it or not, spreadsheets (particularly Microsoft Excel) are still the greatest allies of accountants, says our expert.
It’s the standard tool for auditing, bookkeeping, processing numbers, and storing a company’s financial data. Microsoft Excel is the perfect example of an easily accessible spreadsheet. It especially benefits startups and small enterprises as it’s free and beginner-friendly.
Our accountant says vlookup and iferror functions, data validation, and filtering are only some of the features they often use.
There are also hundreds, perhaps thousands, of Excel tutorials online, allowing users — new and old — to make the most out of this resource.
Cloud-based accounting technology
Speaking of Microsoft Excel, an equally efficient alternative for it would be Google Sheets.
In most ways, both Excel and Google Sheets work similarly, and they even have similar formulas. But while Microsoft Excel excels at being easier to formulate and manipulate, another one of our accountants says, the advantage of Google Sheets technology is it’s better for collaborative accounting.
Besides Google Sheets, however, the other tools in Google Drive are just as instrumental for other accounting functions, such as cloud-based reporting with Google Slides, storage, and cross-platform access, our accountant adds. Even Google Docs is great for a more detailed documentation of the company’s finances.
Plus, through collaboration, you can also prevent different types of accounting errors by having another accountant go over the data.
Other relevant cloud-based accounting technologies are web-based software geared for accounting. They have bookkeeping functions, automated billing, payments processing, and invoice scheduling — essentially, the whole gamut of accounting work.
Examples of cloud-based accounting software are:
Now that we know productivity is unaffected and even improved by remote work, we need to adapt to the new circumstances with the right communication tools.
Communication software is a vital accounting technology for obvious reasons. Because many companies have committed to a remote or hybrid setup, tools like Skype, Zoom, and Slack are essential for accountants to keep stakeholders updated on the company’s finances. And if companies decide to go the finance and accounting outsourcing route, communication software enables them to stay connected with their outsourced team.
The Future of Accounting with Artificial Intelligence
In addition to the various tools specialists use for accounting, there is another technological advancement leaders deem necessary in the industry — artificial intelligence.
While artificial intelligence primarily benefits manufacturing, transportation, and fraud detection, accounting and finance also has significant uses for AI. Faster and more reliable financial data processing are becoming the norm. And today, payrolls, tax computations, and audits can be automated in a highly transparent process. At the same time, document and data analysis may be done in real-time through advanced machine learning.
With artificial intelligence, accountants and finance specialists experience improved productivity and better output quality without compromising their company’s security and data safety.
However, while artificial intelligence in accounting offers many advantages for organizations and employees, it’ll still need human intervention. AI is not designed to replace accountants, but it is an indispensable tool to achieve an optimized and faster workflow.
The Impact of Technology on Accounting
The impact technology’s made on different lines of work today is undeniable and substantial.
Back then, people had to do everything manually, and data was stored in endless stacks of paper. Back then, programmers were using punched cards to write lines upon lines of code. And back then, accountants mainly relied on writing instruments to record financial data, making data more vulnerable to incidences of human error.
With the advent of technology in accounting, big financial data can be digitized and encrypted in accounting software to keep it safe.
A journal article on the impact of IT in modern accounting systems notes some of the main advantages of integrating technology into accounting work. These are:
- Automation of adding up debits and credits with total accuracy
- Automatic maintenance of audit trails
- Creation of financial statements with a readily available format
- Instant retrieval of the latest accounting data, including inventory, accounts receivable, and sales figures
- Increased data security
Without the advancements we’ve made with technology, it’s difficult to imagine what life would be like for accountants. Thankfully, we wouldn’t have to because of the different technologies in accounting that are now at our disposal. From artificial intelligence to data encryption, the practice of accounting today gives business leaders and professionals a secure and efficient management system they rightfully deserve.
The technology accounting professionals typically use are:
- Enterprise resource planning platforms or ERPs
- Payroll software
- Cloud-based accounting technology
- Communication platforms
If you need top-notch accounting technology in an instant, why not try outsourcing? Not only will you gain the tools required to manage your company’s finances. You’ll also get to experience the many other advantages of outsourcing your financing.
Get in touch with our seasoned accountants by sending an email to email@example.com. You can also reach us using our chat box or contact form for any inquiries and a free consultation.