Accounting trends date back to ancient civilizations, with evidence found in Mesopotamia as early as 7500 BC. They used clay tokens to track business activities, including trades, labor, and transactions, demonstrating an early form of record-keeping.
Fast forward to the 21st century, accounting isn’t as simple anymore, thanks to ever-complicated business activities and the need for transparency and regulatory compliance. Today, technologies like cloud computing, AI, and automation are driving a new wave of transformation in the accounting industry.
Staying aware of accounting trends is important for businesses and accountants in maintaining competitive and compliance practices. And that’s not only us, but 83% of 3,298 global accounts surveyed by Sage agree that they need an imminent transition to accounting automation to keep up with the market pace and shifting client expectations. [1]
Top Accounting Trends
Below are the latest accounting trends, highlighting advancements in automation and AI, blockchain technology, cloud accounting, data analytics, and ESG reporting, shaping the future of the industry.
Automation and Artificial Intelligence
Thanks to accounting automation, manual labor, and human error that comes along are gradually leaving the scene. Add AI to this mix, and you have a potent system for efficiently automating mundane tasks, such as data entry, allowing professionals to focus on more critical things, including analytics, advisory, planning, etc.
The numbers confirm this as well, with estimated market size for AI in accounting is expected to increase from $4.73 billion in 2024 to $26.66 billion in 2029 at a CAGR of 41.27%, per Mordor intelligence[2].
Most of this growth can be attributed to the advancements in large language models and the role they play in the development of generative AI. For those new, generative AI is artificial intelligence at its best, with accounting-related abilities spanning across data analysis, interpretation, extraction, report generation, reconciliation, tax calculations, and more.
AI adoption in the accounting industry is validated by research done by Moss Adams, which includes the following statistics[3].
- 44% of accountants use AI as directed by their employers
- 40% use AI both as directed by the company and as their personal preference
- 67% of accountants also predict that their companies will increase investments in AI.
While AI has proved helpful, research conducted by The Accountant has revealed interesting perceptions people have about this technology taking space in their professional routines [4].
- 41% of senior finance professionals view AI as a way to augment their efforts by automating routine tasks.
- 23% of accounting professionals fear that AI could result in job losses.
- 91% of finance departments are planning to automate tasks like data collection and account reconciliation
- More than 60% of younger accountants still use Excel sheets as their weapon of choice.
Since the shift to AI accounting is inevitable, below are some AI-powered accounting tools.
- VIC.AI: It helps companies to optimize accounts payable/accounts receivable and make enlightened decisions with the most advanced AI platforms for accounting and finance.
- Bill: Bill enables businesses and accountants to create and pay bills easily, send invoices, manage expenses, control budgets, and access the credit that your business might need to grow.
- Truewind.AI: Truewind uses machine learning to automate transactions, reconcile accounts, and generate real-time financial reports.
- Zeni.ai: Zeni.ai combines AI automation with human expertise to provide bookkeeping and accounting solutions for small and medium-scale businesses.
Blockchain Technology
Blockchain technology is inherently open, immutable, and decentralized. These virtues make blockchain and accounting a match made in heaven. For accounting, this means a permanent, tamper-proof book of records, which is always visible to its stakeholders, allowing real-time tracking and continuous auditing of data.
Eyeing the potential benefits, 50% of large global companies will use blockchain for transactional data sharing by 2025, per Wordmetrics.[5] It will be a $868 million market by 2027, indicating a healthy blockchain adoption in the accounting domain.
Likewise, a study by Transparency Market Research validates blockchain technology’s significance in creating a transparent business process and predicts high growth in the next few years[6].
Cloud Accounting
The continuous shift towards cloud-based accounting software solutions is driven by the potential for greater accessibility, real-time collaboration, scalability, cost reduction, and 3rd-party integrations. More than 80% of businesses in Australia have moved to cloud-based accounting systems[7]
- Accessibility: Cloud technology enables accountants to access real-time financial data from anywhere. It also automates repetitive tasks like account reconciliation using AI.
- Collaboration: Cloud accounting utilities offer multi-user plans, which can help teams simultaneously work on the same project while being located in geographically different locations.
- Cost-effectiveness: Transitioning to cloud accounting reduces labor costs by as much as 50%.
- Scalability: Cloud accounting software can be easily scaled up or down with a click of a button.
- Integrations: Accounting tools such as Freshbooks allow effortless integration with tons of apps (ex., Excel, Microsoft Outlook, & HubSpot CRM) a business might already be using.
Over 65% of accountants believe cloud technology enhances their business success, according to Sage research. [8] Likewise, more than 50% of accountants have also already started using cloud-based solutions for efficient project management and communication with clients. It’s also expected that companies using cloud accounting will add five times more clients than companies banking on traditional accounting practices.
A few popular cloud accounting platforms we recommend include Xero, QuickBooks Online, and FreshBooks.
Data Analytics and Big Data
Companies are using big data for a wide range of purposes, including performance evaluation, decision-making, research and development, and order fulfillment. This has improved the privacy and data security of accounting firms, since they are now dealing with large sets of sensitive customer data.
The big data analytics market valuation is expected to soar from $348.21 billion in 2024 to $924.39 billion by 2032 at a CAGR of 13%, as per GlobalNewswire.[9] This growth isn’t limited to a specific sector; instead, the adoption is everywhere across industries, such as BFSI, retail, telecom, healthcare, automotive, energy, and government.
Business Intelligence (BI) tools like Microsoft Power BI, Looker Studio, and Tableau enable accountants to create interactive dashboards and visual reports which also enable effective financial forecasting, performance analysis, and risk management.
Regulatory Changes and Compliance
This section highlights a few anticipated regulatory changes in 2024 and their implication for accounting practices.
New Policy
Taxes were supposed to expand to include the Income Tax Self Assessment (ITSA) for self-employed people in the UK. However, it has been delayed until 2026. [10]
R&D Tax Relief
A system that merges R&D Expenditure Credit (RDEC) and SME schemes was introduced on the 1st of April. [11] This means that the merged scheme will follow the RDEC approach where the R&D tax credit is recognized as taxable income above the line in the income statement. The merged scheme will also use the current RDEC rate of 20% but apply the small profits rate of 19% for companies making losses rather than the 25% main rate.
Cross-border Taxation
Over 100 countries have required foreign businesses to register and collect local tax. [12]. While these tax requirements were initially applied to digital services, more countries are expanding them to services like accounting, legal, consulting, and low-value goods.
It is important for accountants to continue staying ahead of these regulatory and compliance changes in 2024 for the following reasons listed below.
- Understanding new regulations enables accountants to effectively identify and address emerging financial risks for their clients.
- Staying ahead of these regulatory and compliance changes helps clients to have more confidence in their abilities as an accountant or accounting firm, which gives them a competitive edge over others.
- Outdated knowledge can lead to errors in financial reporting, which result in hefty penalties from regulatory bodies.
Sustainability and ESG Reporting
Third-party assurance from accounting firms can help ensure that a company’s Environmental, Social, and Governance (ESG) report is high quality and reliable. 90% of investors say they pay more attention to a company’s ESG performance when making investment decisions, as per Thomson Reuters. [13]
In a recent survey of 27 of the top 100 US accounting firms, 84% of those not already providing ESG reports stated that they are very likely to provide ESG assurance services in the next 1 to 3 years. Smaller companies are now required to report their impact on ESG metrics in 2024. Larger publicly traded companies started doing this in 2023, as directed by the ESG Disclosure Simplification Act in 2021. [14]
Some frameworks used in ESG reporting include the following.
- Sustainability Accounting Standard Board (SASB): SASB focuses on industry-specific ESG metrics that investors are concerned with.
- Global Reporting Initiative (GRI): GRI is about the socio-economic and environmental impact of a business.
- Task Force on Climate-Related Financial Disclosures (TCFD): TCFD enables companies to report climate-related risks.
- Greenhouse gas emissions (GHG): This measures a company’s total carbon footprint across its activities.
Remote Work and Agile Accounting
The pandemic propelled the world into a situation where almost any job was done remotely. This trend does not seem to go away anytime soon. This year, the majority of tax returns were prepared remotely, and the amount of in-person interaction with clients during auditing was reduced significantly, according to Wolters Kluwer. Also, 43% of accounting firms are reducing on-site presence and transitioning to virtual-only work environments.
Tools like Slack, Zoom, and Google Workspaces allow virtual collaboration, and we have listed the best software for remote accounting down below.
- NetSuite Oracle: NetSuite Oracle is a cloud-based suite that comprises business management applications for bookkeeping and accounting, Enterprise Resource Planning (ERP), and Customer Relationship Management features. It helps enterprises to streamline financial processes.
- Xero: Xero is also a cloud-based accounting tool. It is designed for small and medium-sized businesses. It provides advanced accounting and bookkeeping features like invoicing, payroll, and expense tracking. Check out our Xero Accounting review to know more.
- Quickbooks: Quickbooks is an accounting software that caters to all business sizes. It also provides reporting tools, and it integrates seamlessly with various business applications.
Remote accounting has its benefits as well as its challenges, which we will look at briefly.
| Remote Accounting Pros | Remote Accounting Cons |
|---|---|
| Flexible schedules lead to higher job satisfaction | Challenging to convince clients while presenting auditing reports virtually |
| Enables companies to hire accountants beyond their geographical reach | Keeping everyone in the company aligned isn’t easy for a remote culture |
| Reduces overhead costs like office spaces and equipment | Difficult to conduct physical verifications, inventory counts, and internal control tests remotely |
Personalized Client Services
More than 60% of accountants state that their clients need more from them than basic bookkeeping, including tax planning, wealth management, business advisory, and strategic bill paying, reveals a Quickbooks survey. [15] This has caused professionals to shift to advisory roles in their accounting firms and rely on technology to cater to these changing consumer demands.
This trend has been confirmed by the study done by Business Research Insights, which shows the accounting advisory market growth from $87890 million in 2021 to $156534.52 million in 2032 at 5.3% CAGR. [16]
These new responsibilities also enable accountants to charge higher fees and reduce churn at the same time.
The Role of Third-Party Services
3rd-party agencies winning company-internal accounting projects is yet another trend picking up steam. AccountancyAge has reported a 40% increase in global spend and 20% showing greater interest in outsourcing accounting services. [17]
A 2023 Clutch report indicates that 14% of small businesses were ready to outsource accounting. The benefits sought in such cases are given below. [18]
Enhanced efficiency: Outsourcing accounting provides more time for core business activities.
Access to specialized expertise: Third-party platforms make accessing specialized expertise easier.
Cost saving: Third-party services can help save the cost of hiring accounting experts.
Additional services: Many accounting firms also include services like payroll services and financial software integrations.
Enhanced Financial Reporting
The introduction of International Financial Reporting Standards (IFRS) is improving transparency in cross-border financial reporting. [19] As of this writing, over 160 countries adhere to IFRS, including significant economies such as the United States, Germany, Japan, India, China, and others.
This will be further boosted by technology adoption in the accounting space, especially AI and blockchain, which will promote high transparency and enhance data processing, analysis, and reporting.
Carbon Accounting
Carbon accounting measures the quantity of greenhouse gases (GHGs) produced by an organization. The global carbon accounting software market size is expected to grow from USD 18.52 billion in 2024 to USD 100.84 billion by 2032 at 23.6% CAGR, according to Fortune Business Insights. [20]
Not only does carbon accounting enable organizations to measure the environmental cost of their operations, but it also serves as a gentle push towards greater sustainability. Additionally, it allows investors to assess the environmental risks or opportunities associated with potential investments.
Future of Accounting
The future of accounting is beyond just financial reporting and accounts reconciliation. Clients’ needs are changing and technology is revolutionizing the way things are done in the accounting sector.
Accountants and accounting firms also have to broaden their offers and become more knowledgeable in financial strategy and climate consciousness. Environmental, social, and governance factors will become a big factor for investors before any potential investments are made. Therefore, I expect a rise in the development of more technologies that enable easy and accurate ESG reports for accounting purposes.
Overall, the future of accounting is deeply rooted in technology, which will keep evolving at a rapid rate.
References
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1. Sage – The Practice of Now
2. Mordor Intelligence AI In Accounting Market Size & Share Analysis – Growth Trends & Forecasts (2024 – 2029)
3. Moss Adams – 69 Percent of Accountants Said AI Has a Positive Impact on the Profession
4. The Accountant – A quarter of senior finance professionals fear AI could put them out of a job
5. Worldmetrics – Blockchain in Accounting Statistics
6. Transparency Market Research – Blockchain Technology Market Outlook, Trends, Analysis 2024
7. Use of paid cloud computing services by businesses in Australia
8. Accountants Adoption of Artificial Intelligence Expected to Increase as Clients’ Expectations Shift
9. Fortune Business Insights – Big Data Analytics Market Size to Surpass USD 745.15 billion by 2030, at a CAGR of 13.5%
10. HM Revenue and Customs – Extension of Making Tax Digital for Income Tax Self-Assessment to Businesses and Landlords
11. HM Revenue and Customs – Merger of current small or medium enterprise (SME) and Research and Development Expenditure Credit (RDEC) schemes
12. Stripe – Global tax compliance: 2024 tax trends and changes
13. Thomson Reuters – ESG in accounting: Building your firm’s offering
14. Journal of Accountancy – Opportunity knocks for firms as ESG reporting, assurance levels rise
15. Quickbooks – Technology’s impact on accounting – insights from our 2023 Tech Forward Survey
16. Business Research Insights – Financial Accounting Advisory Services Market Report Overview
17. AccountancyAge – Figures reveal ‘enormous’ rise in firms choosing accountancy outsourcing as industry faces ‘pivotal’ moment
18. Clutch – Small Business Outsourcing Primed to Boom in 2023
19. IFRS – Why Global Accounting Standards?
20. Fortune Business Insights – Carbon Accounting Software Market Size, Share and Industry Analysis