All major businesses and companies in the world need good accounting processes in order to function effectively and legally. Whilst not necessarily a direct part of business operations, accounting is nonetheless crucial in helping businesses keep their financial records up to date and transparent.
It is fair to say that accounting processes have undergone massive changes over the years, especially with the major advances in technology over the last few decades. As such, here is an insight into accounting, and the factors which are changing the playing field in this exciting area.
Accounting processes are much older than many people may think. Back when there was a basic barter and trade system in place, most people recorded their trades in simple ledgers which detailed the time of the trade and what was being traded. This system is thought to have been used by the Ancient Egyptians and Mesopotamians, as well as later civilisations.
It was in the 15th century that bookkeeping began to evolve significantly, with the double-entry system being introduced to help give a clearer understanding of a business’s finances. A few centuries later, companies then sought to attract investment through being able to present financial records as evidence of being responsible and investment-worthy.
Nowadays, accounting processes are very different to their predecessors. There are many specialist accounting firms across the world, which are hired by companies to manage their financial records and ensure that everything is in order.
Most records are stored digitally, and the advent of computers and the internet has enabled large amounts of data to be collected quickly and with greater ease.
Accounting firms also serve nearly all types of business, from specialist online trading brokers offering contracts for difference to high street shops which sell clothes.
Perhaps one of the most significant and exciting developments in the world of accounting is the introduction of artificial intelligence (AI). Technology which harnesses AI is changing industries across the world, and accounting processes are likely to be made much simpler with this new technology.
AI can, for instance, do calculations and process data which would previously have been done by humans, meaning that it greatly frees up time and resources for accounting firms to use in other areas of their operations (such as hiring new staff and taking on more clients). The adoption of AI is a growing trend, and one which is likely to completely revolutionise accounting as we know it.
With technology advancing at such an unprecedented rate, it is difficult to accurately predict how accounting process will look in ten, five or even two years’ time. Not only are accounting processes changing, but also the way companies across the world are structured and operate.
If one thing is certain, though, it is that all accounting firms will need to embrace technological change in the industry. Automation is presenting new opportunities for accounting processes to evolve, and it may well be the case that cloud and mobile technology is also more widely adopted into daily accounting procedures, to help companies be as transparent and accessible as possible.
Ultimately, the basic principles of accounting remain the same as they were thousands of years ago. Companies still record their financial transactions in order to paint a clear picture of their overall finances and operations.
The way in which accounting is conducted, however, has changed massively, and it is fair to say that accounting processes are still undergoing a massive transition. Data is now fully digitalised, and AI is transforming the way it is collected, stored and analysed. As such, it will be interesting to see how accounting processes change in the coming years.