Finance Managers and accountants are key players behind the success of a company or a business. A company’s success relies heavily on sound accounting practices and savvy financial management. They count on accountants’ insightful analysis to support their decision-making process. They are also responsible for assuring the integrity of all financial statements. Implementing an efficient system or a skillful team of accountants helps new companies sustain their business operations in the long run.
The current economic landscape and consumer market changes have created new challenges for accountants and businesses. Accountants must go beyond transactional accounting and become strategic advisors for businesses to sustain their goals. Moreover, technology has changed how enterprises maintain their accounts. Automation and technology are taking over, and accounting professionals need to step up to the challenges and acquire the necessary business-oriented skills and technological accounting solutions to ensure job security and performance.
Here are the seven biggest challenges accounting professionals and business owners face.
Table of Contents
- Challenges for Accountants
- Challenges for the Business Owners
- Final Thoughts
Challenges for Accountants
1. Growth of Automation and Artificial Intelligence
Automation of the accounting industry that includes AI and VR technologies for accounting operations has become evident due to the fast pace and efficiency. At present, machines perform the accounting functions of transaction collection and addition of bills into financial statements. With automation in accounting, professionals working as accountants are estimated to save 25,000 hours approximately.
In addition, AI saves the industry from a labor shortage, generates in-depth data insights, and automates and accelerates operations. However, this fast adoption of technology in the accounting field is a threat for accountants unprepared to adapt to the shift.
2. Adapting with Accounting Skills
It has become essential for every accountant to upgrade skills according to the latest trends. Relevant qualifications, such as Master of Business Administration in Accounting can prepare accounting professionals to meet the need for strategic analysis of financial information for business growth. Technology is the other aspect where accounting professionals must learn cloud-based technology, data analytics, budgeting, and data forecasting tools to deal with vast amounts of financial data efficiently and quickly. They can get hands-on experience with the latest software and technologies contributing to the changing accounting industry.
In addition, accountants face a lack of soft skills such as communication skills, project management, and teamwork. After the pandemic, the dynamics of the workplace have significantly changed. Every accountant must know how to work remotely, virtually, and independently while focusing on details and the creative side. The only way to stay ahead in the accounting profession is to upgrade the knowledge and relevant skills. Companies that work on employee training are more substantial and have a 53% lower attrition rate than other organizations.
3. Meeting Regulatory Changes and New Accounting Standards
New accounting standards, including lease accounting, Current Expected Credit Losses (CECL) accounting, and revenue recognition standards, have become a challenge in recent years. The only way for accountants to meet regulatory changes and new accounting standards is through constant gain of knowledge of new regulations.
Challenges for the Business Owners
1. Reporting of Finances per the Regulations
The biggest fear for many business owners is the compliance of their business with the financial terms and conditions set by the United States Securities and Exchange Commission. Accountants remain under pressure to meet the latest financial reporting requirements for auditing purposes. It is always a great idea to find accountants who can ensure that your business meets the reporting requirements set by the regulatory authority.
2. Keeping Up With the Tax Laws
Sometimes it is hard to keep up-to-date information regarding tax reforms. It is one of the most common and daunting challenges for accountants. The regular amendments and constant changes in the tax laws put continual pressure on businesses to remain current. Businesses need accountants working in both public and private practice to develop their information according to the latest tax regime.
Employing an esteemed accountant who can navigate the changes in the tax laws can save businesses from overpaying. Similarly, by keeping taxable amounts with recent changes in law, business owners can invest more funds in new ventures or upgrade existing lines of operations.
3. High Rate of Threats of Cybersecurity
The increased use of technology has a significant drawback for businesses and the accounting industry. The financial information of clients and companies is always at the risk of cyber threats and attacks. Data breach takes an average of 280 days for identification with an average cost of
$3.86 million. These data breaches start with compromised or stolen employees’ credentials. On an average day for accountants, receiving emails with links or attachments is normal, but it can become a problem when malicious data creeps into the system unnoticed. To cope with cybersecurity threats, accountants must verify data before opening and entering the system. Similarly, they should upgrade security software from time to time to improve their performance against cyber-attacks, including ransomware and malware.
4. Predicting Accurate Financial Forecasts
It is vital to produce accurate financial forecasts to run a successful business setup that can keep a company on a progressive path. However, financial forecasting has become a challenge with the sudden economic change.
Business owners can make better decisions using financial statements and data analytics to predict business performance. In addition, reassessment of cash, expenses, sales, and testing of assumptions under different circumstances is one of the ways to analyze accurate financial forecasts.
To gain a competitive edge over others, accountants must know when and how to seek and upgrade their knowledge and skills. The only way to deal with modern-day accounting challenges is to stay updated and relevant with the latest trends and digital tools.