Accounting technology has always been a vital tool in helping small businesses with their record-keeping and accounting challenges. Record-keeping dates all the way back to Ancient Mesopotamia when it was done on tablets. Accounting technology today has seen a shift from mere record-keeping to drawing out ever more important business insights from accounting data that impacts the day to day operations and long-term strategies of businesses of all sizes.
Accounting technology has come a long way since cave wall markings, the abacus and the barter system as a way of counting transactions. As trade and shipping increased, single-entry bookkeeping evolved to replace the barter system. With the development of currencies came new ledger systems and basic accounting and bookkeeping techniques. The advent of the credit card led to the first digital financial transactions and then came the first automated payroll system.
During the decade of the 1990s businesses began making the transition to enterprise resource planning or ERP systems in order to integrate their financial functions including accounting and payroll management. With ERP systems also came the evolution of cloud computing and service as a software accounting solutions that introduced a whole new level of accounting task automation and scalability across multiple different platforms.
The decade since 2010 might be best described as the age of intelligent accounting because we witnessed a shift from mere counting and “accounting” tools to systems that focus on business intelligence and predictive analytics. The growing field of artificial intelligence and machine learning has truly changed the face of accounting software. The ability for programs to “learn” from data has led to software programs that can improve a business’s systems and processes as well as identify areas for improvements and efficiencies.
Accounting automation continues to be an area of evolution with accounting robots or chatbots automating more and more data entry allowing for greater personalization of financial data and more tailored financial advice.
Mobile wallets and different mobile payment options bring opportunities for businesses to optimize their earnings but it also means that there are more tax implications with the advent of eCommerce transactions. Ecommerce transactions cut across state and international lines. This adds a new level of complexity and demands greater and more sophisticated accounting software and tools. Accounting software today must be able to handle a myriad of tasks and provide analytical and regulatory requirements and rules support for businesses. This need for accounting systems to handle new levels of complexity is leading to accounting ecosystems where a single app is no longer sufficient. Now accounting software providers offer a variety of third-party apps so customers can more closely customize their accounting software to their specific needs.
As we move towards 2025 and beyond we can expect to see accounting systems utilizing blockchain technology. Blockchain is a popular technology in the finance sector. It has the potential to reform the accounting industry by reducing the costs of maintaining and reconciling ledgers and providing absolute certainty over the ownership and history of assets.
With blockchain technology instead of keeping separate records based on transaction receipts, companies would be able to write their transactions directly into a joint register, creating an interlocking system of permanent accounting records. As entries are distributed and cryptographically sealed, the chances of destroying or manipulating them to conceal illegal activity is practically impossible. This technology does precisely the same thing as a notary verifying a transaction but it is done electronically. This means auditors will be able to verify a large amount of data transactions in a short amount of time. The cost and time necessary to conduct an audit will considerably decline to deliver greater efficiencies and savings to businesses.