Accounting is no longer a paper and pencil business. It’s evolved from its days of handwritten long-form equations all the way to its spreadsheet-laden position of today.
Data analytic software has the potential to take accounting deeper into the future. Data has reshaped virtually every industry it touches and will continue to play an evolutionary role in how business is done in the 2020s.
In this article, we take a look at why accountants should use data analytic software, and how it can help them achieve better results.
Improved Internal Processes
Good data algorithms can play a significant role in the management of virtually any office space. Certainly, this is true for accountants.
Accountants can use software internally to monitor performance and make sure they are clearing their objectives. Real-time progress monitoring is an asset to any business and is particularly valued by accountants who deal in an industry that requires extremely high levels of precision.
Data implementation can also be useful from a customer service perspective. Using surveys and other analytics, accounts can get a granular look at how customers are experiencing their services, and what they can do to improve their business to make it more user-friendly.
Customer experience in accounting receives slightly less attention than it does for other businesses. Because it’s a trade that deals in hard, objective numbers, abstractions and matters of subjectivity can sometimes be underemphasized.
And yet client retention is just as important for CPAs as it is for anyone else.
Predictive Analytics Concerning Risk
Accountants working for businesses are uniquely positioned to identify risk before anyone else. Financial records have always told a story—describing a business’s past and present while casting a long shadow into the future.
With predictive analytic software that “shadow” begins to take a much more vivid shape. Accountants with access to data analytic software receive detailed financial predictions that they can translate into actionable insights for their employer concerning anything from current company spending to potential financial situations that would emerge from a new development such as a product expansion or merger.
A Vivid Picture
Data also paints a very vivid, accurate, up to the minute picture of what is going on financially within a business. In the past, it might take a business days or weeks to receive any insights at all into a recent decision they have made.
Analytic software, however, can generate up to the minute reports that accountants can use to monitor financial progress in real-time. This in-depth level of reporting allows businesses to catch problems early on, and react quickly and decisively before they have the chance to snowball.
For the Tax Accountant
Tax accountants can use data analytic software to quickly analyze potential investment situations. This information can help the companies that they work for make quick decisions that potentially allow them to beat competitors to market.
For the e-Commerce Accountant
Online shopping is almost deceptively easy. On the customer end, one needs only to click a few buttons and the item that they desired will be shipped and at their doorstep in a matter of days. What could be simpler?
From a financial management perspective, the equation can be a little more complicated. For one thing, e-commerce businesses are usually doing business with people all across the country. Fifty different states, each with unique rates and regulations.
Typically, sales taxes are processed based on the location of the buyer. However, for the state to collect on sales tax, the seller must maintain a ledger known as a “tax nexus” to store relevant information. Alternatively, they cannot charge tax at all and pass this burden onto the buyer.
Then there are the headaches that emerge from international business. Stir in data security considerations, inventory management, risk analysis, back-end fees from platforms like Amazon and eBay, and all of the other considerations that are common across the business world, and it becomes clear that an eCommerce accountant has a lot on their plate.
On the business owners’ end still more considerations emerge. For example, office size, inventory size, equipment, how and where things are being stored can all influence what the entrepreneur receives back in tax deductions. All vital considerations, all quite complicated.
Without the benefit of data analytic software, it would be quite a lot to handle. A well-equipped accountant can make things easier. Good software can manage tax information, and perform predictive functions that are vital to the e-commerce business.
Not So Optional
The data hesitant accountant may do well to recognize the emerging role that analytics are continuing to play in their profession.
Several years ago, big data implementation in accounting may have been a novel development. Now it’s the requisite. Nearly 70% of accounting firms are currently implementing some form of big data processing. Of them, half have already completed their data implementation journey.
Reluctance is no longer optional. Where once data might have been a business advantage, now it’s a required part of playing the game.
A Natural Fit
Few are quite so naturally suited for the world of data analysis as the accountant. Their jobs are numbers. They work in an industry that thrives on precision and information. In short, the same skills that make someone well suited for the profession of accounting make them equally well suited for data analysis.
Of course, becoming data proficient requires a degree of effort, even for someone as well suited to the task as an accountant. While some of the skills required may indeed emerge as the accountant learns on the job, they may also consider the merits of furthering their education with a degree in data analysis.
Not only will doing so improve their ability to effectively manage and process information, but it also has the potential to make them more marketable and qualified for careers in data science or analysis.
