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In December, I attended a series of events for bookkeepers, accountants and small business owners. The bulk of attendees play a significant role in their firm’s financial strategies and management of cash flow. Following these events, I talked to my colleagues. They also had many of the same conversations about what financial professionals expect in the future. As co-founder of a funding platform for small to midsize businesses, I know how important it is for organizations to stay updated on the very latest in the finance industry.
Today, I want to share these key takeaways regarding accounting trends for this year and beyond.
The 2020 Accountant
Ten years ago, accountants might have thought that they’d enter the decade with a CPA license and immerse themselves in the general needs of small businesses, and those demands alone would fill the description of a full-time job. The CPA education might have centered around mathematics and accounting, and legal knowledge would extend to IRS or CRA compliance and regulations.
Well, it’s a new decade, and the “all in one” accountant must offer more than ever before to their clients.
This year, the role of an accountant has expanded beyond the lessons learned in certification courses. According to PayPie, 70% of small business accountants now view their role incorporating more strategic advising.
Today, a deeper understanding of company strategy will push accountants into a more proactive role in the future of the business. Where individuals once offered small-business leaders reactions on their decisions, leaders will look to accountants to help shape the direction of their firm and provide real-time insight on strategic decisions.
To The Cloud
This year, I expect more and more small businesses will rely almost entirely on cloud technology. From basic Microsoft Office packages to communications tools like Slack, the migration from hardware to cloud technology will only accelerate.
The cloud model has its benefits.
Atop the list, companies can address their spending to add and subtract subscriptions. Cloud tools foster greater collaboration and the exchange of ideas. But they can also overwhelm individuals in charge of monitoring a vast system of subscriptions that cover payroll processing, cross-border currency accounting, expense management, media subscriptions and more. While the majority of accountants may favor cloud models, security risks rise as a result, and individuals must improve organizational skills to manage these tools at the SME level.
The Millennial Movement
It was a bumpy decade for millennials given high levels of student loan debt, stagnant wages, and rising rent and healthcare costs. But 10 years later, this generation has emerged as a significant force that is reshaping the financial markets, driving innovation and embracing social change. Right now, more than 1 in 3 members of the United States workforce are classified as millennials. This generation is reshaping the expectations of banks and financial institutions.
Their financial and social needs are far different than previous generations. It’s going to be important for financial institutions to continue to adapt to what millennials are looking for when it comes to financial business. First and foremost: They want convenience and ease of transactions.
As the world continues to move deeper into the digital realm, an increased emphasis on speed and convenience will be vital for businesses that wish to remain competitive. As millennials continue growing into management positions, their expectations of how businesses should operate also continue to grow. That means digitizing outdated practices, such as pen-and-paper processes, in addition to automating other financial tasks through AI applications.
Invoice Factoring Goes Mainstream
Most small businesses think that they don’t have control over when they get paid — if they want to sell to larger customers, they are beholden to their long payment terms. Invoice factoring changes that and gives businesses control over when they get paid. This year, invoice factoring could become a more mainstream practice among small- and medium-sized businesses.
Companies should consider innovative, technology-based ways to bolster cash flow. What used to be payment terms of 10 days and up to 30 days expanded to unprecedented levels. Now, 30 days, 90 days and even 120 days have become the norms around payment times between small businesses and their customers.
This year, as banks are tightening their balance sheets and altering their risk portfolios, companies with great credit might not gain access to the same lines of credit as they have in the past. Invoice factoring could prove useful to these companies: By using a business’s own assets (an invoice) and the creditworthiness of its customers (instead of relying on its own credit score), it can get access to instant cash flow simply by selling.
I expect that this year holds many changes for accountants and that technology will continue to evolve and be a driving factor.
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