If you are a small business owner, you understand how important accounting is for your organization’s success. Accounting helps you manage your cash flow, track your income and expenses, plan your taxes, and more. That’s why, in this blog, we’ll explore 9 key accounting trends for you to watch out for in 2024.
For years, the finance and accounting field was left behind by the tech revolution. But now the times have changed: Accounting is no longer a static field. With the arrival of 2024, technological advancements are shaping a new era for businesses. And staying ahead of the curve is crucial, especially for small business owners.
In this blog, we will also address how each trend can impact your business. Apart from that, we will provide actionable steps for you to prepare your business for the demanding future. So let’s begin!
Top 9 Predicted Small Business Accounting Trends 2024
Here are 9 important trends you need to be aware of about the accounting future.
Trend 1: Automation Will Further Streamline Small Business Accounting Processes
Gone are the days when business accounting departments used to rely on human data entry. With the introduction of many computerized accounting software, accounting operations have been transformed 360 degrees.
According to Statista, 64.4% of small businesses in the U.S. use accounting software to manage their business operations. The reason is that accounting automation can streamline Accounts Payable and Accounts Receivable (AP/AR) processes.
With the rise of Artificial Intelligence (AI) & Machine Learning (ML), the accounting software landscape will continue to evolve in 2024. Going forward, we can expect to see more companies using more sophisticated accounting software to streamline their business operations.
Benefits of Automation in Accounting Processes for Small Businesses
Organizations can reap several benefits from automated accounting. In comparison to traditional accounting methods, accounting software can help generate precise financial data, save time, and reduce manual errors.
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Here are specific ways that enabling automation systems in accounting can benefit businesses small and large:
- Data Accuracy: Automated accounting software can really take human errors out as it can effortlessly handle various tasks like data entry, bank reconciliation, and calculations. So, your business can generate accurate financial records.
- Real-time Insights: From invoices in accounts receivable and accounts payable to bank balances, you can gain real-time access to these financial data using an automated accounting system.
- Cost Savings: Although these cloud-based software will require initial investments, consider them as assets, and not liability. Because in the longer run, your business can experience substantial cost savings.
- Enhanced Scalability: As your business grows, there will be a considerable increase in transaction volumes. Thanks to robust accounting software solutions, you can easily scale your business without needing a proportional increase in staffing.
Meaningful Actions to Take to Automate Accounting in 2024
Given all the benefits above, small businesses should embrace automation accounting cautiously. They should ensure all the security measures are in place before implementing a cloud-based accounting software in their system. The seven-step sequence of how that can work:
- Access your business’ current accounting process
- Identify areas for automation
- Define and set clear objectives for automation
- Implement the right automated accounting software
- Migrate your data and ensure data security
- Train your team to take the best advantage of automated accounting systems
- Conduct regular audits to maintain accuracy
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Trend 2: Many Small Businesses Will Consider Outsourcing Accounting and Bookkeeping Services for Enhanced Efficiency
Outsourced accounting and bookkeeping is a new trend for growing businesses. In fact, about 37% of small businesses globally have outsourced their accounting functions in 2023, making it one of the most outsourced services. And no doubt, outsourcing will continue to thrive and shape the global outlook in 2024.
Outsourcing, basically, allows businesses to focus on core activities by delegating some functions to an external team. In other words, it is a solution not employed by your company but offers capabilities of cost, expertise, and scale which is difficult for a small business to find internally.
Benefits of Outsourced Bookkeeping and Accounting for Small Businesses
As the current modern business scenario is evolving, it will be difficult for your staff to gain enough expertise to cope with increasing challenges in the industry. Not just that, 30% of small business owners feel they overpay their taxes and find managing their finances a burdensome task.
In this case, outsourcing to a reputed accounting and bookkeeping service provider seems reasonable to manage your accounting, tax preparation and financial reporting. Take a look at how an outsourced accounting and bookkeeping service will benefit your business:
- Industry-specific Expertise: Accounting and bookkeeping service providers are well-versed in the ongoing FinTech industry trends. They are a team of skilled professionals who are intellectual in understanding the current financial needs, intricacies, and tools to solve these problems.
- Streamlined and Efficient Operation: They leverage their expertise to simplify and automate the accounting processes of small businesses. By using advanced accounting systems, they can craft optimized workflows, streamline invoice generation, automate bank reconciliations and do reliable financial reporting.
- Enhanced Business Scalability: Every business needs extensive support when they are scaling up. You can scale your services seamlessly with the help of accounting service providers, that too without any lag.
- Cost-effective and Time-saving: Your organization can cut down expenses as you will no longer hire and train an accounting team in-house. Besides, you will find more time to sell your products or services rather than worrying about managing your money and accounting transactions.
Meaningful Actions to Take to Outsource Bookkeeping and Accounting Services
Before choosing an accounting and bookkeeping outsourcing company, consider the following essential factors:
- Evaluate outsourcing partners and choose the one that aligns with your accounting and bookkeeping service requirements
- Choose the price structure that suits your budget
- Select an experienced and professional accounting service provider
- Ensure data security in outsourcing arrangements
- Establish clear communication channels
- Read the terms and conditions thoroughly before agreeing on the contract
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Trend 3: Remote Work will be a New Norm
The concept of remote work which was once uncommon in the conservative accounting field, has now become a new normal. Earlier, there was a necessity for a physical presence in the workplace due to the absence of online tools for financial auditing and reporting and also to prevent financial data leaks.
Thanks to advanced security measures, the emergence of cloud computing, and collaborative online tools, these barriers have been significantly diminished.
Now, let’s understand how remote work settings will be advantageous for your business:
- Access to a Vast Talent Pool: Small businesses are no longer limited geographically in hiring talent. This means your organization has access to a broader group of potential job candidates. It can lead to a team that is more skilled, diverse, and has a better approach to solving accounting problems.
- Reduced Expenses for Businesses: Your business can save a lot on office space, rent, electricity bills, equipment, lease payments, and so on if you have fewer employees in the office.
- Increased Employee Retention: In today’s time, many qualified people prefer working in a remote setting or as a freelancer. Moreover, it is expected that by 2025 about 32.6 million Americans will work remotely. One of the many reasons for this huge change is the work-life balance remote work provides. On a positive note, this flexibility can result in:
- higher productivity
- enhanced job satisfaction for the employees
- better retention rate
- reduced turnover costs for the organization
Meaningful Action a Small Business Can Take:
See there will still be challenges despite the number of benefits a remote work could offer a business. For instance, handling sensitive financial records remotely, smooth collaboration and communication between the team, and maintaining a cohesive company culture.
Nevertheless, you have to implement best practices to set up the remote work model in your organization, including:
- Investing in software and technology solutions such as secure VPNs, productivity tracking tools, robust cybersecurity measures, etc.
- Establishing clear remote work guidelines and policies to ensure fairness.
- Using software tools for collaboration and making clear communication protocols.
- Offering regular training to employees and organizing virtual team-building activities regularly.
Trend 4: Increasing Importance of Data Analytics and AI
Businesses, large or small, generate large volumes of data every day, and analyzing this information wisely can be the key to the success of your business. Although data analytics is not a current trend, it has become more prevalent than ever before. Many firms use such tools for tax consultation, budgeting, auditing, and risk management.
Simply put, data analysis and visualization have made accounting functions more analytical. These tools have helped many accounting firms gain valuable insights from large and complex financial data sets.
Furthermore, the AI plug-ins marketplace is growing rapidly. The data analytics tools powered by AI, such as Stampli, Booke.Ai, and Domo, are also available as add-on services for various business apps for faster financial analysis.
Currently, 11% of SMBs are using AI for data analytics in the US and about 35% of businesses will consider leveraging AI for analyzing their finances. We suggest SMBs adopt this technology as the insights will only help you gain efficiency in the current sluggish economy,
Meaningful Action You Can Take to Leverage Data Analytics Tools
Small businesses should notice the new era of data analytics that has many practical applications that they could never imagine. Hence, you should consider leveraging the power of data analytics and AI to add more value to your business. You can do so by:
- Getting deeper insights into your operational data
- Training staff on utilizing data effectively
- Generating more precise forecasts and future projections
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Trend 5: Cloud-Based Accounting Will Make a Progress
The year 2024 is going to witness more smaller businesses moving towards cloud-based accounting systems. Yes, we know cloud computing is not a new trend, however, it will continue to grow rapidly in the upcoming years.
Out of the three major categories of cloud computing services, Software as a service (SaaS) emerged as a market leader in 2022. The SaaS market was estimated at $197 billion in 2023 and this industry is anticipating further growth and estimated to reach $232 billion by 2024.
Therefore, small business owners must take advantage of SaaS accounting software solutions to help them mitigate risks and get complete financial visibility over every business aspect.
Benefits of Cloud-based Accounting
Cloud-based SaaS accounting software like NetSuite, QuickBooks Online, Sage Intacct, and more offers several benefits to small businesses, such as:
- Data security
- Real-time collaboration
- Manage your financial data online from anywhere and at any time
- Multi-user access
- Seamless integration with other software and systems
- Scalability
Meaningful Actions a Small Business Must Take
To leverage the power of cloud computing in 2024 and make your business operations better and easier, you must take the following measures:
- Transition to the most suitable cloud-based accounting system.
- Explore collaborative features for enhanced teamwork.
- Ensure robust security measures for data protection.
Trend 6: A Positive Shift Towards ESG Reporting and Sustainable Accounting
Environmental, social, and governance (ESG) reporting is gaining momentum. Many organizations will give priority to incorporating social and environmental factors into their operations in light of new federal rules. To meet the ESG rules, using renewable energy and carbon offsets will be important.
Besides, keeping track of how much carbon a company produces will become a regular part of the tools and reports used in accounting and finance, especially in places where it’s legally needed, like in the UK.
Meaningful Actions a Small Business Must Take
You can also position your company as a responsible business and enhance its credibility by:
- Implementing sustainable accounting or ‘green accounting’ practices in business operations.
- Tracking ESG metrics and communicating efforts. transparently
- Transparently reporting on your environmental and social impacts.
Trend 7: Blockchain and Cryptocurrency Will Not Lose Momentum
One of the latest trends in accounting is blockchain technology. All thanks to its direct relationship with maintaining a ledger account containing financial statements. Furthermore, blockchain plays a major role in securely transferring the ownership of assets.
On the other hand, cryptocurrency is a virtual currency that makes use of cryptography for security. Cryptocurrencies, like Bitcoin, utilize blockchain to enable transparent and encrypted digital transactions.
In 2022 and 2023, cryptocurrency faced notable failures that shook the trust of investors. However, the buzz around blockchain and cryptocurrency will be undeniable in 2024. The implementation of regulation in the blockchain market will grow in 2024 to offer some security measures to cryptocurrency investors.
Apart from this, many big companies are taking the initiative to implement blockchain in their financial operations. For instance, Walmart has already conducted trials with beta blockchains within its supply chain operations.
This advancement can mean blockchain technology will soon be a game-changer in the accounting field. Perhaps changes will be seen gradually, with a potential acceleration when technologies like Quantum computing become more accessible.
Meaningful Actions for Small Businesses
To stay up-to-date with the growing trend in blockchain and cryptocurrency, you need to:
- Keep an eye on regulatory developments in cryptocurrency for better decision-making.
- Explore ways to leverage LLMs (Large Language Models), like Chat GPT for potential monetization.
- Assess if blockchain applications can improve security in financial processes.
Trend 8: Advisory Services Can Elevate Small Business Accounting Strategies
With a Compound Annual Growth Rate (CAGR) of 5.5% between 2023 and 2032, the worldwide financial advisory services market is set to expand significantly. The significant boost in market growth is seen due to the rising investments in AI that enable personalized financial insights, predictive analytics, and sophisticated data analysis.
As a consequence, there is a dire need for small businesses should tap into the best financial advisory services. So that they can receive guidance on how to optimize their accounting processes and leverage existing software.
Advisory firms can use generative AI and robotic process automation (RPA) to understand your intent in a better way. They will offer tailored advice specifically designed for your business.
Meaningful Actions to Take
The steps you must take to leverage financial advisory services for your business:
- Consult with an experienced advisory service provider to gain insights into technological optimization.
- Implement strategies recommended by advisors.
- Stay up-to-date with the industry’s best practices for better efficiency.
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Trend 9: Cybercrime and Digital Threats Will Continue to Grow
The frequency and severity of successful cyberattacks will continue to grow, especially in finance departments.
Thousands of small businesses in the US face data breaches annually. To prevent this, businesses would have to invest more in technology and insurance to provide better security against the financial impact of cybercrime.
Meaningful Actions a Small Business Can Take to Tackle Cybercrime in 2024
Small businesses must prioritize data security to protect sensitive financial information. They should:
- Implement robust cybersecurity measures
- Train staff on data security protocols
- Conduct regular security audits to identify vulnerabilities
Don’t Chase Every Accounting Trend — Use a Subtle Approach
So, these are the nine trends that will drive the future of accounting in 2024.
In a constantly changing business landscape, we would suggest staying side by side with the latest trends in accounting technology. It is not only key to making informed business decisions, but also to taking your business to new heights.
Therefore, you should not refrain from embracing the above-mentioned accounting trends. However, we would suggest relying only on those trends that you feel would positively impact your business the most.
