CEOs Share Their Thoughts on The Impact of Technology on Small Business Accounting
Ezra Cabrera | April 5, 2024
Accounting is crucial for managing finances and maintaining cash flow in business. However, many startups and small companies struggle to optimize their accounting operations. As such, modern technology can help!
A recent SBM Compass article cites that accounting firms use cutting-edge technologies to reduce routine and repetitive tasks. About 45% of respondents say technological integration improves overall productivity. Meanwhile, 67% of accounting professionals note that cloud-based technology enhances the quality of accounting work.
Further, the same article cites that digital tools and technologies for accounting will continue to rise in the next few years. It highlights automation, artificial intelligence (AI), and data analytics as modern technologies best for optimizing accounting jobs.
This page discusses the impact of technology on small business accounting. Read on to gain expert insights into technological integration with accounting operations from business executives.
How Modern Technology Impacts Small Business Accounting
Technology has become a game-changer in today’s business landscape. Even startups and small companies can use digital tools and software applications for their accounting operations. Don’t worry; some of the best accounting software for small businesses is readily available in the market.
Global Market Insights predicts the accounting and budgeting software market will grow from $18.7 billion in 2023 to $54.2 billion by 2032 at a 12% compound annual growth rate (CAGR). The financial support for accounting platforms paves the way for bookkeeping, budgeting, and financial management advancements.
As such, you should capitalize on this market growth for your small business. Sure, investing in accounting software might be costly at the onset. However, it will pay off in the long run, especially when you see high returns on investment (ROI).
Unconvinced? Here’s how technology can impact your small business accounting, as shared by business experts:
1. It removes manual work and automates various tasks
Accounting can be such tedious work. Not only does it entail financial recording, but it also involves financial analysis and reporting. Sure, Excel spreadsheet lets you crunch the numbers; however, software automation can substantially reduce your manual tasks. Technology can indeed work wonders on your small business!
Morgan Taylor, Co-Founder of Jolly SEO, recommends using automation for accounting operations.
Taylor says, “Tons of accounting tools with automated features are readily available in the market, capable of automating tasks and accelerating processes. Airtable is a perfect example of automation—a combination of spreadsheet and database we use not only for accounting but also for sales and marketing. You might want to invest in a similar accounting tool for your small business.”
2. It increases overall efficiency and productivity
Technology aims to improve operational efficiency and overall productivity in business. Robotic process automation (RPA) and artificial intelligence (AI) are digital tools you can leverage for accounting operations. While RPA automates several accounting tasks, AI aids in financial forecasting, analysis, and reporting.
Stephan Baldwin, Founder of Assisted Living, suggests using RPA and AI for small business accounting.
Baldwin explains, “Manual accounting tasks like data recording and financial analysis can be taxing. They can take too much of your time, leaving you physically and mentally exhausted. However, automated and AI-powered software can automate your tasks and accelerate your processes. It can make you more efficient and productive as an accountant.”
3. It promotes data accuracy and completeness
Startups and small companies must be keen on their finances. They should manage their cash flow well to achieve financial growth and business success. Technologies like automated accounting tools and the best expense tracker apps can help ensure accurate, complete, and updated financial data.
Look at Intuit Quickbooks below as an example of accounting software for small businesses:
Gerald Lombardo, Head of Growth at Popl, emphasizes the value of accounting technology for data accuracy.
Lombardo argues, “There is no room for errors in accounting as they can negatively impact your cash flow. Use software automation for bookkeeping and AI for accounting while your accountant focuses on reviewing financial transactions. Leveraging human and technological resources combined ensures your financial reports are always accurate, complete, and up-to-date.”
4. It protects consumer and business data
Accounting is a critical part of business operations for maintaining financial health. As an accountant, you must navigate the world of small business taxes, payroll, expenditures, profits, and more. For legal and regulatory compliance, you must also safeguard your company’s financial data and customers’ personal information.
Volodymyr Shchegel, VP of Engineering at Clario, suggests leveraging accounting tools for data and consumer protection.
Shchegel explains, “It’s best to protect your financial data using secured accounting software. The last thing you want to happen is to compromise your company’s financial information and your clients’ bank details. Not only will your small business face financial losses, but it will also face legal ramifications for non-compliance with laws and regulations.”
5. It provides a unified platform for seamless management
When it comes to accounting, having a centralized platform for financial data management is best. Think of payroll accounting software for managing employee compensation and benefits. Consider accounting customer relationship management (CRM) for managing clients’ personal and financial data.
Take a look at the accounting CRM below used for seamless financial management:
7. It balances cost reduction and profit increase
Artificial intelligence (AI) has become a buzzword in business across all industries. Think of AI subsets like machine learning (ML) and deep learning (DL), which can learn from data and decide with zero-to-minimal human intervention. These technologies practically apply to small business accounting.
Anthony Martin, Founder and CEO of Choice Mutual, cites the value of ML and DL for business forecasting and decision-making.
Martin believes, “Financial analysis, forecasting, and reporting are critical to small business operations. However, you can leverage data analytics to help you analyze your finances, predict potential earnings, and generate financial reports. These digital tools are usually powered by ML and DP, capable of learning from datasets based on patterns and trends.”
6. It aids in business forecasting and decision-making
Startups and small companies seek to make more money and grow over time. However, achieving this goal isn’t a walk in the park. As an accountant, you must manage your finances well by cutting expenses and increasing income. Financial management with the help of technology is key to financial success!
Catherine Schwartz, Finance Editor at Crediful, recommends harnessing the power of accounting tools for small businesses.
Schwartz says, “Investing in accounting tools might require a huge amount of money. However, such an investment is more cost-effective than hiring several accountants and purchasing various resources. More importantly, these technologies will help you manage your finances better by reducing costs and boosting profits. In short, they will pay off in the long run.”
8. It helps maintain a consistent cash flow
Maintaining a consistent cash flow is vital to achieving business growth and success. Strike a balance between your income and expenses, which entails cutting costs to save money and boosting profits to grow your small business. Technology can help maintain a consistent cash flow.
Jim Pendergast, Senior Vice President at altLINE Sobanco, suggests leveraging accounting technology for financial management.
Pendergast explains, “Proper bookkeeping and effective accounting can aid in maintaining the financial health of your small business. They require carefully examining your cash flow and finding practical ways to reduce expenditures and augment your revenues. Accounting tools can give you a clearer picture of your finances and help you manage them well.”
Final Thoughts
Companies can no longer ignore the impact of modern technology in today’s business landscape. Even startups and small companies should capitalize on digital tools and software applications for their accounting operations.
Take it from the expert insights shared by business executives above. Consider leveraging accounting tools and technologies for your small business.
First, use AI and automation to increase efficiency, enhance productivity, ensure data accuracy, and protect consumer information. Second, utilize data analytics for business forecasting, decision-making, and accurate reporting. Third, leverage digital platforms like CRM to streamline client management and maintain a consistent cash flow.
Harness the power of technology for your business, and you can ultimately optimize your accounting operations for financial growth and success!
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