Five technologies set to rock your (accounting) world in 2018

Since mathematician Luca Pacioli formalized the system of double-entry bookkeeping over 500 years ago, accountants have been on the leading edge of technology. Are we ready for the next wave of innovation?

In 2013, Carl Frey and Michael Osborne of the University of Oxford published an alarming paper. They argued that 47 per cent of American jobs were at risk of automation, with accounting a near certainty (0.94 probability, where 1.00 is certain).

Needless to say, the article garnered much attention (it has been cited over 1,300 times in books and academic journals) and much debate. But as James Bessen of Boston University noted in an Economist story last year, it’s not all bad news: “Rather than destroying jobs, automation redefines them, and in ways that reduce costs and boost demand.”

Here are five technologies that are set to redefine your work as an accountant—if they haven’t already:

CLOUD ACCOUNTING

Until recently, accounting software demanded that a user download their company file and email it to their accountant. With platforms such as QuickBooks Online, FreshBooks, Wave, and Xero, the days of shuttling data back and forth are gone. Cloud-hosted accounting software means that both the company user and accountant can access the data directly and simultaneously. All that’s required is a computer, internet connection, and the right password.

INTEGRATIONS

For simplifying workflows, specialized integrations with accounting software are the next level. Tools such as Receipt Bank, Expensify, and Shoeboxed manage expense reports paperlessly. Gusto and Wagepoint handle payroll. TSheets, Harvest, and Temponia manage time-tracking and invoicing. PayPal, Stripe, and Square can process payments. Each is tailor-made for its part of the workflow, freeing users to spend more time earning revenue and less time creating expense reports.

DIGITAL CURRENCY

With total market capitalization of all digital currencies (also known as “cryptocurrencies”) having recently broken $200 billion U.S., you might not own Bitcoin but likely someone you know does. A form of stateless fiat currency, buyers and sellers (and especially money launderers) can transmit the digital store of value to one another as easily as sending a text. The CRA, which has been tracking developments in this arena, notes that digital currencies are subject to the barter rules of the Income Tax Act—meaning that if your client is using them to transact business, it must record the transaction in its ledgers at the appropriate exchange rate. Likewise, capital gains are reportable and taxable, too.

BLOCKCHAIN

Born together with Bitcoin, blockchains are the ledgers on which digital currencies are typically written. However, their key features give them much wider application. Blockchains are transparent, auditable, cryptographically secure, impossible to alter retroactively, and distributed, meaning every party has a complete record of all confirmed transactions at all times.

The blockchain offers a world without clearinghouses or cheques, settlement dates for stocks, bonds, or other capital-raising instruments, and quite possibly without centralized land registries.

It also offers a world of “triple-entry bookkeeping,” in which transactions are recorded on both the ledgers of two companies doing business and also on a third, shared ledger on a blockchain: distributed, secure, and uneditable. Funds and transactions would take place instantaneously, eliminating the need for accounts receivable and payable, and ensuring the near-perfect accuracy of the balance sheet and income statement—making audits a comparative cinch.

MACHINE LEARNING

Although it sounds much sexier than it really is, machine learning holds real promise. It uses algorithms, statistics, and very large data sets to detect patterns and determine whether an item conforms or not. That makes it useful for categorization and validation work, like reviewing expense policies. Given a large set of valid expenses, an algorithm can be programmed to predict with a high degree of accuracy whether an additional expense is valid or not. Similarly, machine learning can be used to spot subtle anomalies among normal transactions, like fraudulent activity.

Will our work be replaced by machines? Unlikely, and quite possibly the opposite. In the 19th century, the number of weavers quadrupled after the invention of the loom made woven fabric much cheaper, driving up demand. In the late 20th century, the number of bank branches increased 43 per cent after the ATM made the costs of running a branch less expensive.

However, to stay relevant—and employed—we must learn to adopt and adapt to new technology. The future belongs not to those who do, in other words, but those who can learn to do anew.

KEEP THE CONVERSATION GOING

Any other new or emerging technologies that you use or are looking forward to using? Post a comment below.

Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.