The world of technology moves fast, and so do accounting software trends. Software providers are always making improvements to enhance the effectiveness of their solutions and keep pace with the way business owners and accountants work.
That includes introducing cloud-based solutions that are easier to maintain, introducing new accounting automation features, new integrations and more. As we start a new year, here are the top accounting software trends you need to know.
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Top accounting software trends
1. Cloud-based accounting software has become the standard
The continuation of remote and hybrid work and the desire for more sustainable software continue to accelerate digital transformation. The market for cloud accounting software is expected to grow to over $416 million by 2024, according to Fortune Business Insights.
Unlike on-premise solutions that require expensive hardware, hosting, ongoing updates and a dedicated IT to maintain it all, software-as-a-service (SaaS) has become the clear choice for growing companies. SaaS providers release updates more frequently and automatically, and they include these updates in their subscription costs. This eliminates the need for large upfront capital costs and allows you to make more affordable monthly payments. Cloud-based solutions make it easier for teams to collaborate because they can access them anywhere with the confidence that the data will always be updated in real-time. Industries that need to communicate frequently with stakeholders, such as family offices or private equity firms, can save significant time by providing users with role-based permissions so they can monitor the performance of their companies or investments, rather than having to wait for you to compile separate reports.
The flexibility of cloud accounting software makes it easy for growing businesses to scale. Adding new users or features is as simple as upgrading your monthly subscription. This is especially appealing for companies with multiple entities, such as franchises that frequently need to add new locations or businesses that have seasonal fluctuations that require them to expand or contract their workforce quickly.
Cloud-based software also helps companies to reduce their carbon footprint. Research from Ontario's McMaster University shows the communications industry, including servers and data centers, will account for 14% of the world's carbon footprint by 2040.
2. Innovation with integrations
In addition to saving time and space, companies using cloud accounting software don’t have to wait around for the next edition of their solution to come to market before they can take advantage of newly available technologies. Cloud accounting software such as Gravity Software updates automatically, adding new innovations regularly. Cloud software also allows for more opportunities to integrate with other applications, either on a vendor-provided platform or even from third parties. Gravity, for example, integrates with Bill.com, Microsoft Dynamics 365 CRM, Jet Reports and a host of other collaboration- and visibility-enhancing applications available on the Microsoft Power Platform.
Software providers are introducing many other system integrations to connect accounting software with the rest of your business systems. For example, connecting your customer and financial data to your CRM system can help your sales team optimize their sales process and generate more revenue. An accounting system built on a larger platform that natively supports other apps and systems will always make it easier to facilitate these connections and provide the kind of interoperability businesses need to be their most efficient.
If you use the Microsoft Power Platform, you can also take advantage of newer integrations, including built-in business intelligence, automated workflows you can create without a developer, and even virtual agents who can handle customer service inquiries.
3. Accounting automation becomes more extensive
Accounting automation software creates greater efficiency by eliminating manual tasks that slow down operations. This also allows accounting professionals to focus more on unpacking financial insights, rather than becoming bogged down in the daily minutia. Accounting automation can take many forms, but the goal is to minimize manual data entry, limit the number of steps in workflows and make the entire accounting operation a more hands-off experience. From invoice approval processes to inputting sales data into your system and automating revenue recognition, automated accounting software features are expected to become more robust to help accounting teams work smarter, not harder.
It also reduces errors and business risks that come with manual data entry, such as the need to copy and paste data from one invoice into many different spreadsheets for multiple entities.
Other examples of automation in business include the ability to create accounts payable workflows, automated currency conversion, revenue recognition and subscription billing. You can set up automated recurring payments on a monthly basis and set rate increases or discounts to be applied at certain times, depending on your subscription model.
4. AI in accounting enhances productivity
While technologies like robotic process automation have been available for a few years, they're getting an upgrade thanks to the exploding popularity of AI in accounting. Automation has especially come in handy with processes like accounts payable, with the proof found in the numbers. According to data from Tech.co, companies can experience 80% increased operational efficiency when accounts payable is automated, with a 366% ROI.
AI accelerates these efficiencies. Gravity Software features AI-assisted accounts payable automation.
This new feature uses Microsoft Cognitive Services’ Azure Form Recognizer to extract data from invoices, even when they deviate from a traditional document format. It has the potential to save accounts payable teams hours each week by eliminating manual data entry.
Just as automation of any stripe has far-reaching benefits in accounting. Many other accounting tasks can be automated with accounting software. Here are just a few examples within Gravity:
- Automated approval workflows that can route invoices to the appropriate personnel
- AI-powered, real-time data analysis
- Ensuring invoices comply with regulations and company policies
And there's likely to be more AI innovation on the horizon for small- to medium-sized business accounting software: Microsoft 365 Copilot, currently available to enterprise customers, is designed to be a digital assistant, quickly delivering information, helping brainstorm speeches and text for reports, and summarizing notes and research.
5. Real-time reporting features
Another accounting software trend that's gaining traction is the flexibility of reporting features. The increase in international business and the complexity of global tax laws makes it even more important for companies to have access to real-time reporting. Payments expert Digital River predicts that within a few years, “nearly every tax authority will have some form of real-time reporting requirement and will likely have a way to plug into your financial system and collect information on a real-time basis.” This means accounting software systems will have to adapt to provide for these integrations and produce automated, real-time reports.
As accounting departments make better use of analytics to make decisions, accounting software systems are enhancing their business intelligence tools to keep up with the demand.
We're also seeing more organizations who want to continue using Excel alongside more robust financial reporting tools. Gravity's integration with Jet Reports™ makes this seamless for companies with multiple entities. Users can export data with a single click rather than needing to copy and paste hundreds of data fields into a single spreadsheet.
6. Accounting software features that increase transparency
This is more of an industry-wide accounting trend, but one that will ultimately impact software systems. As accounting professionals and regulatory bodies put more of an emphasis on transparency and accountability, software providers will need to find new ways to make it fast and easy for accountants to produce reliable, transparent reports. That means full audit trails will become increasingly common.
“When data and analytics work in tandem, the benefits become obvious,” said CEO Nitin Seth in Forbes. “Companies can leverage data to improve cost savings, redefine processes, drive market strategy, establish competitive differentiators and, perhaps most importantly, build an exceptional and truly personalized customer experience.”
7. More opportunities for personalization
Personalized technology is becoming more common across industries, from sales and marketing solutions to consumer apps. Many accounting software programs have been slower to adopt personalization, but as accounting professionals take on more strategic roles, they need more specific functionality that goes beyond "out of the box" offerings.
The need to create workflows for multi-step expense approvals or manage multi-entity reporting for many locations are just a few examples.
8. Accounting for special purpose entities
Special purpose entities (SPEs), or special purpose vehicles (SPVs) can encourage innovation while mitigating financial risk. These legal entities allow companies to fund a specific project or category of financial assets while protecting the parent company if that project fails. These have become increasingly popular among companies in the renewable energy sector.
However, SPEs come with specific regulations to safeguard against fraud similar to what occurred with the Enron financial scandal of the early 2000s. That's why it's critical to maintain separate accounting and financial reporting for special purpose entities while also keeping them connected to the parent company for auditing purposes.
9. An increased focus on forecasting, scenario planning and analytics
It's clear the accounting field is undergoing a transformation and that AI plays a significant role. The days of data entry and rote calculations are waning. Now the emphasis for accountants is on tasks such as forecasting and scenario planning and, most significantly, using that information to build strategies and make decisions – as only humans with deep-seated knowledge of their company and its stakeholders can do.
Accounting software like Gravity keeps in step with that trend by providing myriad features that streamline repetitive tasks, thus freeing up finance teams for tasks that require human insight. In addition to AI-powered AP, these include automated bank book reconciliation along with the ability to use Microsoft Power Automate to build automated workflows for a broad spectrum of tasks. Gravity's seamless integration with Microsoft Power BI is what provides the foundation of real-time, comprehensive financial data on which finance leaders can base their strategies and decisions.
10. ESG and sustainability become increasingly important
According to the AICPA & CIMA, sustainability and environmental and social governance (ESG) principles are a top priority for CFOs in 2024. The accounting professional associations warn that a company's reputation among current and prospective stakeholders can be influenced by its transparency surrounding ESG. Further, the organizations advise companies to gain an understanding of certain nonfinancial KPIs such as carbon emissions and to strategize ways to incorporate them into their reporting.
But companies can begin considering environmental principles long before using a software solution to report on sustainability or any other metric. They can begin with the selection process for the software itself. Cloud accounting software can be more environmentally friendly than infrastructure-heavy, on-premise software, as the energy required to run servers for numerous businesses are consolidated into one location as opposed to every business housing its own. But that potential environmental boon can become a bust if the vendor or cloud hosting provider doesn't espouse ESG principles. Companies using accounting software built on the Microsoft Power Platform, like Gravity Software, can be confident they're working with a vendor committed to sustainability.
11. Security is still top of mind
Cybersecurity is not so much an emerging accounting software trend as it is an ongoing consideration. In an August 2023 PwC survey, 74% of responding executives described cyber attacks as either a moderate or serious risk for their business. And their concern is well-placed: according to IBM data reported by Tech.co, the average cost of a data breach was more than $4 million in 2023.
Businesses can mitigate the risks of a data breach in a few ways, such as by requiring multi-factor authentication and by training employees to recognize and avoid phishing scams. But that will be all for naught if third-party software vendors’ security practices aren't held to an equally high standard. Fortunately, software like Gravity that’s built on the Microsoft Power Platform has the backing of Microsoft's robust security measures, which are constantly evolving based on the latest best practices. Gravity's security updates happen automatically, and Gravity utilizes role-based access as well as audit trails to prevent fraud.
Go boldly into the future of accounting with Gravity Software
Remaining informed about emerging trends is important for any business. It helps you see what's coming on the horizon so you can plan ahead. At the same time, though, chasing after the latest fad won't matter much if you don't have a solid foundation to build upon.
At Gravity, we understand that. Our software is designed specifically for mid-sized, multi-entity companies and backed by one of the most well-respected technology companies in the world.
Our cloud accounting software is built natively on the Microsoft Power Platform. This gives you built-in business intelligence and the ability to create workflows specifically for the way you work without relying on a developer. Gravity is designed specifically for multi-entity accounting, eliminating the need to manually enter the same information dozens of times in different systems. It also includes the most automated accounting software to simplify billing, currency conversion, reporting and much more.
Be ready for anything the coming year has in store. Schedule an online demo today for a closer look.
Gravity Software
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