Though International management accounting has always dealt with the new and the diverse thanks to the nature of global business, the 21st century has unleashed an even wilder set of new challenges and opportunities for management accountants of global organizations. Unprecedented changes in technology, regulations, markets, customers and employee expectations are pushing open new frontiers in Accounting.
Technology has emerged as the biggest disruptor of all of them, already speeding up and even automating audits, banking, tax documentation and preparation, payroll, and other such manual, repetitive tasks, giving rise to new roles, even as the traditional ones of management accountants become redundant. As a result, most services in the accounting industry are now vulnerable to disruptions. Aspiring professionals in the field have to know these emerging accounting trends and techniques to make inroads in the talent market.
Trend 1: Invoice Factoring & Leading Payments
Smart, highly specialized and resourceful digital startups have emerged that have taken bills discounting and factoring to a whole new level. 60- and 120- day invoices can be sold by companies to these factoring agencies to get their payments released immediately, instead of waiting longer. Afterall, tighter bank balance sheets and more conservative risk portfolios could restrict business access to lines of credit. The emergence of Invoice factoring gives businesses control over the timing of their payments, especially benefitting small- and medium-sized businesses.
Trend 2: Automation
Automating accounting eliminates confusion and minimizes errors, and in the presence of smart internal auditors, reduces risks of fraud and compromised security, arising due to any data inaccuracies. ACMA analysis of global studies in the last three years shows that around half of the conventional accounting tasks have already been automated using software, internet and cloud technologies, and artificial intelligence and machine learning is ready to take over in the remaining. An overwhelming 56% of CXOs believe that automated accounting will be among the biggest shapers of businesses across industries.
The adoption of advanced software solutions in the accounting industry will intensify in the coming years, as organizations seek higher efficiencies in automation, core accounting, reporting and analytics, tax management, billing and invoicing, payroll system, mobility and data access, data security, integrations, fixed asset management, and inventory management. Fortune forecasts that between 2019 to 2024, the accounting software market will swell at a CAGR of 8.5%, led by North American organizations, followed by those in the Asia Pacific.
Source: Accounting Today (2018)
Trend 3: Outsourcing Accounting
Outsourced accounting continues to remain a top trend for the accounting industry, and is one of the fastest-spreading practice across the globe. SaaS based platforms have enabled the rise of more advanced accounting BPOs, that have the capabilities of playing more complex and strategic roles, becoming a partner of management and financial accountants. Outsourcing is now an increasingly important method for CPA firms to deliver efficient services to their clients, as well as analyze business operations and add more value to their business. Accountancy, especially in business processing outsourcing (BPO) companies, is also becoming a highly popular career all over the world.
Trend 4: Cloud-Based Accounting
Cloud technologies have caught the fancy of global accountants much like it has of professionals in other industries and functions. International management accountants, in particular are the maximum beneficiaries of this trend because the cloud gives them the capability to capture data in real time from diverse locations around the world; track and analyze cross-border currency transactions; payrolls; receivables; payables; inventory, sales, and expenses fast and build insights for department heads and leaders help them make optimal decisions without wasting time.
Trend 5: Data Science
If data is manna for management accountants, it is life-blood for international management accountants. Big data is godsend for both. New generation data Science and analytics tools and technologies are turning management accountants smarter, faster and more accurate in their analysis, reportage and advise for their CXOs and leaders.
Management accountants in global firms are deploying big data to build critical financial insights that help model competitive scenarios, predict demand, evaluate competition, manage products, supply chains, competitive resources, cost-structures and currency fluctuations. Advanced big data applications are helping management accountants design strategies for dealing with risks, detection of new opportunities and threats; new market entry challenges, and even model options of organic and inorganic growth. International management accounting has always been more proactive than reactive, and data science and big data together have given global accountants more weaponry and firepower.
Source: Dresner Advisory Services (2018)
Trend 6: Blockchain
Probably, the biggest disruptor of accounting, blockchain has already stormed the world of finance and banking, and is set to change them forever, knocking off intermediaries and many business practices too. The distributed ledger technology has started its inroads into accounting by lowering the costs of reconciling and maintaining ledgers.
By offering the promise of more accurate, reliable and transparent way of storing and exchanging information and data on critical financial and strategic elements like ownership and history of assets, for instance, blockchains have attracted immediate attention of CEOs and management accountants who are looking at ways to reduce possibilities of frauds and wrong decisions. Not just the biggest transnational banks, the Big Four in the accounting industry—Deloitte, Price Waterhouse, Ernst Young, and KPMG too have bet big on blockchain. Blockchain innovations for the finance industry value more than $5 billion in investments since 2017 alone.
Trend 7: Social Media
Though for most accountants, social media is already a powerful branding, sales, networking and learning tool, management accountants are probably its most advanced users. Global accountants deploy advanced social media analytics techniques to mine and analyze marketing, economic, consumption and demographic information and data strewn across social media to generate valuable insights that help in taking various business and growth decisions.
Trend 8: Advisory & Higher-Value Roles
Data science, blockchain, internet, digitalization, social media, outsourcing and SaaS-based accounting software have together freed up management accountants from the menial and the clerical, and given them the latitude for going up the value chain. Management accountants have more time and resources to assume more strategic and advisory roles for their organizations and clients and become partners in progress, rather than being mere cogs in the financial value chain. The growing trend is management accounting leveraging business intelligence to advise leaders and boards with digested financial insights on aspects like growth, profitability, expansion, diversification, competitiveness and business strategy.
Trend 9: AI
The entry of Data Science in accounting has paved the way for artificial intelligence and machine learning to barge in too. Over the last few years, the global fintech industry has made major breakthroughs in building reliable and sustainable use cases of Ai and ML in accounting. Leveraging powerful big data analytics engines that can process terabytes of data in seconds, new generation fintech applications offer software applications for managerial accountants that self-program and self-learn to take accuracy, error-reduction and insights-building to a whole new level of brilliance and efficiency. Ai and ML add new meaning to automation for management accounting, because there’s a lesser need for supervision or error-guarding. Ai also models breakthrough workflows for management accountants working across time zones and regulatory environments. ACMA analysis of global studies in the last three years estimates that more than 70% of senior professionals engaged in international management accounting are completely invested in Ai, and almost half of them see themselves using AI in the next two years. Indeed, experts do not see AI replacing human roles in accounting entirely.
Trend 10: A Wider skillset
Technology has forced all professions to change in the 21st century. An accountant too, must turn into an all-in-one solution for a client, offering more than what the typical certification course teaches. Among small business accountants, 70 percent see strategic advice as a bigger part of their role (according to PayPie). Such a deeper strategic understanding can only foster a more proactive role for the accountant in the future direction of the business. From reacting to the decisions of a business leader, the accountant must become the provider of insights driving strategic decisions. Gone is the era of just a CPA license serving the needs of an accounting role. The skillset must include more than just accounting, mathematics, and CRA or IRS legalese.