According to a study, the global big data market's estimated value is expected to grow to $103 billion by 2027. As a result, the technology presents an unprecedented opportunity for accounting firms to develop and deliver exceptional service.
But adopting big data analytics in accounting calls for an evolution of traditional responsibilities. To thrive in this evolving environment, employees from accounting firms will need to update their data analytics skills. Additionally, accountants will need to learn to wrangle this data in other ways to ease their work.
What is the role of Big Data in the accounting industry?
Since Big Data is defined as a collection of data sets that are too large or complex to be analyzed by standard databases or spreadsheets, it aligns perfectly with the kind of data that the Accounting industry might see.
Accounting professionals now have access to more significant insights from large data sets due to the increased use of big data across businesses. Also, with the big data market's projected growth, this becomes an important issue for the accounting industry to pay heed to.
Big Data applications in finance offer several real-time implementation opportunities. The auditing process is a prime example: Accounting companies frequently use audit sampling to identify problems or trends in transactions or invoices. However, finding extreme values and oddities within a more significant trend is where big data analytics in accounting offers more profound value.
Data analytics is highly valuable for finance professionals, as accurate and insightful data is a terrific way to raise the value of the business. For example, with big data, accounting professionals can study a sector's broad landscape and spot shifts in consumer trends or behavior. With accurate data and analytics, accountants could also identify potential fraud indicators.
Challenges in accounting services
The ability to draw insights from the data and enable advanced technologies has become a prerequisite for organizations. Where legacy systems struggle to handle the volume, velocity, and variety of data, big data relies more on unstructured and structured sources to produce insights rapidly.
Although the technology is currently available, businesses need to learn how to manage extensive data, integrate new technological initiatives into their operations, and get through general organizational barriers. For various reasons, big data's challenges regarding finance are a little more complex than those in other industries.
Changes in buyer behavior
As consumers conduct their business more online, their relationships with financial institutions or insurance providers are becoming less personal. The lack of physical contact has reduced customer engagement, which should be compensated through data-driven user experiences online. In addition, customers demand high-quality, round-the-clock, low-friction, customer-centric experiences across various channels, and organizations need to ramp up operations to meet this demand or become obsolete in the future.
Complexities in managing a remote workforce
Compared to other businesses, the need for a more flexible and remote workforce is one of the essential considerations in accounting firms. Although most accounting professionals are willing to work remotely, accounting and finance organizations have challenges with remote work because teams tend to work long hours in the office to finish activities like month-end closure. Moreover, working remotely increases the risk of cyberattacks. Cloud-based accounting software and big data solutions can offer firms clear benefits for supporting remote accounting amongst professionals.
The rise in demand for new skills
Two options come to mind when we talk about learning new skills: educating your current workforce and employing new talent who already have the required skills. Upskilling your current workforce requires individuals to move away from billable tasks, but hiring qualified experts can also be quite expensive. However, accounting firms must make sure they have talent with the appropriate set of skills to compete in the global market. Therefore, staying updated with the right skills and technologies in current trends is essential to benefit your employees and your business.
Data breach and cyber security
Since financial services companies process sensitive data in their systems, they can be more susceptible to cyber-attacks and data breaches than other industries. In addition, it is simple to see how rapidly a malicious link or attachment may enter the system, given how frequently the accounting staff receives emails with attachments or links to bills. Therefore, the accounting firm must be aware of outdated software and stay updated with innovative solutions to prevent unwanted cybersecurity attacks.
Inability to drive accurate financial forecasting
The epidemic's effects made it difficult to predict the global financial situation accurately. Decision-makers had to reevaluate their sales, spending, and net income estimates. While simulating income stream, flow rate, and liquidity under different scenarios, accountants had to rethink their assumptions.
One of the finest accounting suggestions for startups and small businesses is to use financial statements to evaluate and forecast business performance. In addition, the availability of real-time analytics is crucial, given how quickly things are evolving.
Keeping up with trends and technology
Staying abreast with technology advancements is particularly difficult for the industry due to the dynamic regulatory system and tax restrictions. But there is a good reason why big data solutions for accounting are among the most in-demand skills right now, globally: Soon, all financial reporting, cash management, accounts payable, and month-end closure activities will depend on automation and data analytics accuracy, speed, and scale.
How big data can help accountants
Financial companies risk making poor choices when they rely on intuition to steer future endeavors. They frequently miss that people and times change, so what is relevant when a product or service is offered might not be compatible with current market trends. It is high time that the finance industry adopts big data analytics for better decision-making, increased agility, and the ability to identify potential new business prospects rapidly.
Real-time data improves customer engagement and retention while boosting employees' productivity and quality of work-life balance.
Real-time access to the accounting data puts you in sync with the more extensive corporate calendar, rapidly fixes report problems, and leads to better performance while helping you cut costs. Making better business decisions and establishing useful performance benchmarks can be accomplished using Big Data Analytics.
Track performance of the business
A thorough picture of the organization's situation might be helpful for managers trying to take appropriate action based on insights from reports and financial advisors.
Financial data analysis can improve the accuracy of business and operational decisions. With data analytics, accounting firms have the opportunity to automate irregular financial transactions, gain crucial insights, and predict future events.
Identifying financial risk management
The myriad security concerns connected with the industry stipulate that firms ensure that their customers receive risk-free financial services. Accounting professionals can use big data to prevent problems if organizations have immediate access to the data. In addition, accounting professionals can utilize big data to help companies identify hazards and eliminate or reduce risks before they happen.
Helps with continuous audit
The accounting industry has made substantial use of big data internally and externally. Outdated auditing methods that involved going through and examining trillions of ledger transactions are no longer needed. Even though they still work with enormous data sets, auditors can now visualize various financial and non-financial data thanks to audit analytics. Finding stress spots and outliers makes it easier for auditors to focus on areas with higher risks and predict outcomes that will improve forecasts.
The auditing process can be effectively automated, lowering the risk of human errors by leveraging the strengths of big data, analytics, and other tools like RPA. In comparison to conventional approaches, they provide increased accuracy and compliance.
Overall data visualization
Data visualization tools enable accountants to view large amounts of data in easily cognizable charts and patterns, making it simple for decision-makers and analysts to identify trends, errors, and exceptions. The tools have also enabled accountants and CPAs to perform extensive statistical analysis using additional variables, real-time data, and complex modeling.
Big data helps to keep the momentum going for the financial industry
The finance sector can use big data and other data management tools to contextualize and personalize spend data to help them make better decisions that drive long-term value.
To leverage this technology, accounting firms must also provide staff training in extensive data analysis and vetting techniques. Every organization that utilizes big data must realize that access is not enough; If big data is not adequately used and comprehended, it is meaningless. Any business must be responsive enough and have an agile culture to benefit from the increasing data volumes.
Enterprises that see the potential and significance of these technologies have started investing in the skills and supplies that will benefit their operations and ensure survival in this competitive world.
Although accounting firms have stated that to adopt big data technology for their business, they will need to adopt optimized methodologies to enhance client experiences, improve financial assurances, and increase the decision support required to ensure the success of their organization. Enterprises need to adopt big data analytics solutions to improve their work culture, and you need to start now!