What’s New in Technology

Previously we looked at the key technology trends in accounting to watch out for in 2020. Among the trends are big data and data analytics, which can have a great impact on businesses.

Business data has existed for a long time, whether in filing cabinets, ledgers or storage devices. But today businesses both large and small have to deal with huge collections of data every day. This has seen the rise of data analytics trends that include deep learning, machine learning and dark data.

Unfortunately, small and medium businesses (SMB) have to struggle with making a decision on implementing data analytics. This is largely because many SMB owners assume that data analytics is strictly for large organizations – especially because of the expectation that it’s expensive and complicated.

Luckily, reduced tech costs have made it possible for small and medium businesses to afford technologies that were previously only cost-effective for big organizations.

Is the Cost and Effort Worth It? 

Before the advent of big data analytics, customer data was collected using surveys or customer feedback forms. Analyzing such data is tedious, and it’s possible to miss out on important trends.

Also, imagine running marketing campaigns and having no way to track how effective the campaign was. If you do this in your business, you have no way to know who saw the ad or even the response.

Enter big data and analytics and the whole marketing landscape changes. With big data, a business has clear insights about customer behavior. This is possible because we now can track visitors to a website, the time a visitor spends on a given page, action taken such as making an order, the location the purchase came from and so many other details that help a business refine its marketing strategy.

Is it costly? You’d be surprised to know that you don’t need to purchase expensive software. You’ll find, for instance, that you can take advantage of data collected by the QuickBooks accounting software. And depending on your business needs, the software can be connected with low-cost platforms that enable more detailed analytics.

You also can get free platforms such as Google analytics to analyze website traffic and gain insight into consumer behavior. Whatever your company size, you can take advantage of big data insights to better understand your customers.

Here are some reasons why it’s worth it:

• Analytics help to launch effective marketing campaigns that result in better ROI.
• Analytics help to track the customers in their sales cycle.
• It’s possible to track the outcome of business decisions, such as promotional strategies.
• You get to know which suppliers or other business partners to work with.
• Provides insights on customers who are likely to pay on time based on historical payment data.
• Improves customer service. This is possible when customer conversations from different channels are analyzed.
• It helps to improve the product or service offered by a business.  
• Identifies trends and patterns. For instance, you can track frequently asked questions and then create a page to handle the common questions.
• Helps create a strong bond with customers. By understanding customer interests, a business will then engage with their customers by creating personalized offers and campaigns.
• On the tech side, big data is being used to detect and prevent fraud.  
• Analytics identify problematic areas of a business, and this makes it easier to come up with a response quickly before the problem escalates.

Become Smarter

When used correctly, data analytics can help a business gain a competitive advantage over other businesses. At the same time, it will also boost your business conversions and revenue. But collecting just any piece of data can be overwhelming and even a waste of time. The secret is in collecting data that will help you reduce business costs and increase your revenue.

Technology advances continue to reshape industries and businesses – and the accounting industry is no exception. So far, a lot of repetitive tasks are performed with the help of advanced hardware and software. Even for businesses that do not like change, many find themselves making adjustments due to a generation change in the workforce, marketing demands, regulations and client demand. In any case, technology offers strengths once a business adopts new solutions to the accounting processes.

The accounting industry has evolved so much that bookkeeping is no longer just about balancing books; professionals in this field are slowly transitioning into strategic business advisors.

Technological innovations offer inexpensive and efficient ways to run businesses and other aspects of life. Every now and then, there is news on emerging technologies.

Here are some tech trends that are expected to influence the accounting industry in the year 2020.

Cloud-Based Accounting

The internet has enabled the storage and processing of data from remote servers. Small- and medium-sized businesses can now leverage the power of the internet and access data and infrastructure without worrying about the cost of purchasing and maintaining hardware and software services on-site. The ease of accessing data anytime and anywhere helps businesses save valuable time. Such benefits will continue driving more businesses to adopting the use of cloud-based accounting systems.  

Automation

Automating repetitive tasks has helped eliminate manual data entry while saving production hours at the same time. Since technology continues to advance, the accounting industry will see more tasks become automated. This trend can be observed in the growing number of accounting software available for both small and large businesses. Artificial intelligence will also contribute to automation in the industry. This is already evident with the increased development and adoption of robotic process automation.

Social Media

In the early 2000s, social media platforms were mainly used to communicate with family and friends. Today, social media is making an impact in digital marketing. Social media platforms will continue influencing how businesses communicate with their clients.

Apart from reaching out to more clients, accounting firms can also find talent to hire from social media platforms such as LinkedIn.

Big Data and Data Analytics

With advanced data collection and processing, it’s now possible to have access to insights and predictive analysis. Although analytics is not entirely new in accounting, the availability of data analytics tools makes it more powerful. This is important for business owners as it helps to improve decision making as well as understand the overall status of a company with the click of a button.

Cryptocurrency

This digital currency has revolutionized the financial industry with millions of coins present in the market today, including Bitcoin, Ripple and Ethereum among others. This digital currency has taken root so much that it is now accepted as a means of payment. Cryptocurrency has been enabled by blockchain technology.

Blockchain

For businesses, blockchain technology helps maintain a unique history of all interactions with various parties, which is indisputable. Widely known accounting companies like Ernst Young and Price Waterhouse already have people working in distributed ledger laboratories. The blockchain technology will not only lower the cost of reconciling and maintaining ledgers, but it will also provide accuracy of ownership and asset history. 

Remote Working

Remote work settings are becoming common in most industries, and accounting leaders are also adapting this trend. With expectations of more advanced computerized accounting systems as well as cloud-based solutions, it will not be a surprise to have your accountant handling accounting tasks remotely.

In Conclusion

With technology largely affecting how businesses are run, it’s no longer enough for a business to stick to traditional accountancy practices.

As technology and accounting becomes more intertwined, it’s wise for businesses to stay ahead of the curve. The most important way to deal with it is to embrace the technology, learn about new technologies and most importantly, learn new skills. This will ensure that your business remains competitive as you are ready to meet customer demands for faster processes. 

Eric Schmidt, former Google CEO, made a prediction in September 2018 that the internet will split in two – one part being led by China and the other by the United States. The reasoning behind this involves China’s active monitoring of all internet activities, as well as technological products and services from the country. Other reasons include a different leadership regime, controls and censorship.

Although it’s just speculation, the splinternet phenomenon has been around since the 1990s. Also known as cyber-balkanization, the concept is slowly taking root as governments seek to fence off their internet to create national internets.

How Realistic is Splinternet?

The United States has maintained dominance over the internet since its inception and going public. But in the modern digital landscape, rules and regulations are expected to curve the global internet into smaller networks. The idea is being driven by nationalism as well as concerns surrounding digital colonization and privacy issues.

China is one country known to be taking steps to compartmentalize the internet through its Great Firewall. Other countries that have taken steps to control domestic access to the internet include Russia and Iran. Europe is also taking steps toward reducing U.S. dominance by increasing regulations that require data localization. They have facilitates this with the 2018 introduction of General Data Protection Regulation (GDPR).

In the United States, there is a drive to increase internet fragmentation to reduce the domination of large companies. This is because of the need to increase personal data protection and reduce data control by large companies. With the world becoming more global, we continue to see cases of large companies like Facebook or Apple having more influence as well as centralized power.

Though a small fraction of the internet interactions, this provides a good example of the splintering. With such fragmentation of the internet increasing, it’s bound to have an effect on economic interests.

How a Split Internet Would Affect Businesses

Data has become a critical resource, from influencing purchasing decisions, behavior dynamics, health and other aspects. But with the changing internet landscape, businesses could be affected in one way or another. Businesses have had an easy time operating in a standardized web. But with the unity of the internet shattered, they would have to adjust their planning and metrics to fit into the new environment. For instance, due to China’s domestic internet control, it’s impossible for some companies in the United States to carry out business operations in China.

This situation presents a challenge for businesses – and especially those whose operations are purely internet based. Increased regulation means disruption of operations.

For small companies expanding to other countries, it would be difficult due to the overhead costs of compliance to various regional regulations. As a business, failing to comply with the laws of a different region would subject it to hefty fines.

Be Prepared

Whether this is going to be a reality or not, the fact is there are big changes happening on the internet. The days of an open internet are dwindling with different countries and companies erecting digital walls on the internet every other day.

Unless we have a new set of global rules that enhance openness and public interest, then businesses and consumers will have to navigate complex laws and regulations that will not only affect the economy, but also disrupt seamless communication.

Since data today plays a big role in the digital economy, businesses can’t afford to ignore the possibility of a splinternet. As a business owner, you need to stay steps ahead as it would be a challenge connecting with your customers when caught up in the changes.

Businesses need to know how to follow consumers to new environments – and this could mean a bigger budget is required for development and testing different markets. Given that technological changes happen gradually, it’s advisable to keep tabs on tech trends and adjust accordingly. 

According to a report by the Financial Crimes Enforcement Network (FinCEN) released in July, financial institutions have incurred more than $9 billion in losses due to Business Email Compromise (BEC) schemes since 2016. With such staggering losses, businesses and even individuals can’t afford to ignore BEC attacks.

What is BEC?

BEC fraud involves cyber thieves posing as company executives or a business contact with the intention to commit wire transfer fraud or obtain sensitive information. The main targets are businesses working with foreign suppliers or a business that carries out regular wire-transfer payments.

To carry out this attack, criminals might pretend to be the company CEO and request that a junior staff member perform a task for them, such as transferring funds. Attackers take advantage of the fact that most organizations don’t have a set procedure to verify instructions received from the top management.

How Attackers Collect Data from their Targets

Cyber criminals use various techniques to carry out BEC fraud, with the main aim of stealing funds from the victims. The techniques used include:

• Imposter techniques – this can be carried out in various ways. Attackers use a look-alike domain, display-name deception and spoofed emails that appear to come from legitimate addresses.
• Social engineering – when a target has not set appropriate privacy settings on social media accounts, an attacker can easily collect information that will make their requests sound legitimate.
• Malware – this enables attackers to have access to sensitive information that makes the fake request sound legitimate.
• Mining from the Dark Web – here attackers can obtain stolen credentials.

How to Avoid BEC Attacks

It is difficult for conventional security systems to detect BEC schemes. Consider a case in which a transaction is initiated willingly by a legitimate user in response to a request from a legitimate source. Such an email has no payloads such as malicious attachments that can be blocked.

Here are some methods to help reduce the possibility of these attacks:

• Raising awareness of common attack scenarios or tactics used by the cyber criminals, such as a false domain name that looks almost like the original one, impersonation of a vendor, false sense of urgency or a request for secrecy.
• Training employees on cyber security risks and implications.
• Implementing email authentication protocols like Domain-Based Message  Authentication, Reporting and Conformance (DMARC) and email authentication, such as DomainKeys Identified Mail (DKIM).
• Using layered defense, such as encryption, and virtual private networks.
• Implementing a multifactor authentication that will introduce a secondary authorization control. This will help stop attackers even when they have access to the target’s credentials.
• Establishing communication protocols that will allow for a follow-up. For instance, if the person is requesting financial transactions, an employee should call to ascertain the request.
• Scrutinizing all emails that request for fund transfer.
• Monitoring incoming email, especially those that use VIP names.
• Optimizing accounting systems and controls.

Final Thoughts

Apart from taking precautionary measures, businesses also should make sure that their insurance specifically covers BEC attacks, as courts might have different interpretations of policies. Consider the case of Apache Corporation, which lost $7million due to a BEC attack. The judge ruled that since the money was sent to pay a legitimate invoice to the wrong bank, it was not covered by their insurance policy.

Note that a majority of these criminals are from countries that might not have strict laws on cybercrime, making it difficult to have them prosecuted.

So, whether you run a small, medium or large business, or even a personal account, it’s vital that you take precautionary measures against the increasing BEC schemes.

The rise in the number of data breaches reported every other day has become a major concern – even to the ordinary internet user. As a result, we have all become aware of the need to maintain privacy while online. One of the measures promising to keep you safe on the internet is the use of a virtual private network (VPN). But before rushing to install one of the many VPNs available, it’s important to understand what a VPN is, why you need it, if it is foolproof and other ways to stay safe on the internet.

What is a VPN?

The VPN service lets you browse the internet privately by masking your IP address – the unique address identifying your device on the web. It also encrypts your internet traffic as it passes through a secure tunnel created from your device to a remote server. Your data appears to be coming from the remote server. This means that a VPN can hide your geographical location, personal data, web browsing history, spending habits and mobile phone activities.

Initially, VPNs were built for business environments to help a business operate a secure network connection. But with today’s cyber security concerns, they have become popular and more widespread.

Why Would You Need to Use a VPN?

There are numerous reasons why a person would need to enlist the services of a VPN company. Here are some situations that require the use of a VPN:

• Since Congress cleared the way for ISPs to sell users’ browsing history without their consent, privacy is a thing of the past. This means that an internet service provider can sell your browsing data to third parties. A VPN can mask your IP address from your service provider.
• The encryption offered by VPNs guards against digital threats, hacking, malware attacks and identify theft.
• VPNs help keep hackers and marketers from tracking your movement online.
• If you travel to a country where you can’t access some sites, for instance in China where Facebook is not allowed, a VPN will help you stay in touch on any of these blocked sites.
• When using public Wi-Fi in airports or any other place that offers free Wi-Fi, a VPN comes in handy.
• Employers who have workers going out for field work or working remotely can set up a VPN to help access company networks securely.
• Used by whistleblowers, law enforcement agencies, investigative journalists and others who want to shield their identities or location.
• For user with Voice over IP (VOIP) for making calls, a VPN will help prevent your phone conversations from being tracked or intercepted.
• When you need to visit questionable websites but want to be safe. For instance, when your identity is stolen and you want to find the website selling your data.

The Bad Side of Using a VPN

Although a VPN service may sound perfect for internet security, it also has some disadvantages. Keep in mind that your internet service provider may no longer have your data, but the VPN provider now has access to it.

A VPN is not 100 percent guaranteed. The VPN provider could be disconnected or there could be a Domain Name Server (DNS) leak. Even with advanced features such as kill switch, VPN data can still leak through software, hardware or other means.

If you fail to use the right VPN, you’ll be in more problems than you are running from. Some VPNs (especially the free services) keep log files. There is no telling where your private data will end up. They could end up selling your data to third parties or supplying your information to the government.

These services also slow down your internet access speed due to the process of data encryption and tunneling network traffic to a remote server that is used to connect you to the internet.

It is not possible to know if the VPN provider commits to what they promise. The only way to find out is when things go wrong. They may promise not to keep logs, but if you fail to read the privacy policy of a VPN company, you will not know if they retain customer data.

A VPN doesn’t protect you from viruses and malware.

Other Security Measures

Since a VPN is not foolproof, it is important that you also observe other security measures to protect your privacy.

It is crucial that you practice digital privacy hygiene. In other words, when online you should limit the amount of personal information that you share. This will help minimize your digital footprint.

Investing in quality antivirus software will protect your device from malware and viruses.

Regularly check if your data has been compromised. Check for strange activity in your emails, social media accounts and even in your bank account.

Use strong passwords or other security features such as biometrics to secure your accounts.

Final Word

You may come across many different types of products and services that promise to keep you safe on the internet. The bottom line is, it’s up to you to protect yourself. A combination of several security measures is a good starting point – the use of a VPN, strong passwords and antivirus programs.

Accountants are no strangers to inventions. Known inventions such as the abacus, calculators and computers have helped complete tasks quickly and in less time. However, today’s technology is complex and is reshaping the world of accounting. Such new technologies include big data, cloud computing, artificial intelligence, block chain, payment systems, mobility and social collaboration, among many others.

How Technology has Changed the Accounting Industry

Accounting, a traditional field, has not been immune to technological innovations. Initially, an accounting department would rely on IT leaders to make its technology decisions. Today, CFOs are increasingly taking part in decision making when it comes to the implementation of new technologies.

These changes are due to technological innovations in the accounting industry that have contributed to improved productivity and operational efficiency. The replacement of manual accounting with computerized tools has contributed greatly to reducing errors, resulting in more accurate reporting.  

The accounting industry has reaped many benefits from adopting technology. Such benefits include virtual storage of documents, compliant online tools for accounting and taxes, use of communication platforms that ease connecting with customers, forensic analysis tools, and filing financial details with authorities.

Technology such as cloud computing means that a CPA can collaborate with clients in real time. This means that you are able to provide your clients with frequent business insights for performance monitoring and decision making.

All this makes it crucial for any company or professional to adopt these new technologies to remain competitive in today’s digital world.

Impact on the Accounting Profession

There is mixed opinion regarding how technology impacts the accounting industry. With the new technologies adopted in accounting, the accountant and finance professionals are expected to master new skills beyond numbers.

As accounting technology continues to evolve, there are considerations about necessary skill sets for new hires. Recruiters also are searching for candidates with extra skills relating to emerging technological trends.

Obviously, some roles such as manual entry and calculations have become obsolete. But technology has introduced new roles that require that accountants to approach the business environment differently so as to drive value. This calls for a mindset ready to embrace the constant state of change.  

Why It’s Necessary to Have IT Skills

Today it’s not enough just to have basic training for software programs used in accounting. CPAs are now becoming part of strategic planning teams. Their new roles include developing new processes, giving advice and even performing future forecasts. You may find an accountant working with a system programmer when developing a digital financial process.

This means that apart from learning accounting practices, an accountant should know how to integrate accounting processes with IT programs. Systems used today require technical skills. Such systems include strategic software applications like enterprise resource planning (ERP) and supply chain management (SCM) systems. Other technologies such as cloud computing have taken accounting to new levels that require advanced skills.

We also can’t ignore the fact that technology has also brought with it new challenges. Data security is one such challenge. This requires that accountants also be equipped with knowledge on protecting data and computer systems against cyber threats.

Technology Skills for Accountants

As we have seen, the accounting industry has been impacted by technology. For an accountant to remain relevant in the accounting industry, here are some necessary technology skills:

• Knowledge of enterprise resource planning (ERP) and supply chain management (SCM) systems
• Experience in cloud computing
• Data analytics skills
• Knowledge of business intelligence software
• Understanding how processes work
• Advanced Excel ability

What the Future Holds

Initially, it was thought that the advent of accounting tools would make the accountant redundant. But these tools have helped professional accountants become financial advisors, business counselors and strategists. Hence, the growing automation of accounting tasks presents a great opportunity for professional accountants willing to take up new skills.

It is critical that accountants understand the importance of investing in themselves. This will require learning skills beyond number crunching and preparing tax returns.

It’s also important to note that apart from technological skills, the new work environment will require additional skills such as customer service, business insight, flexibility, communication skills, regulatory knowledge and leadership abilities.

There is a lot of new technology being used to automate functions and save money in large corporations, but many small organizations are shut out of those advancements. This is largely because of the cost, training, knowledge and resources it requires to take advantage of such new technology.

But while small business owners might not be able to afford such advances, it’s good to keep up with what’s going on in the tech world – particularly innovations that can help a business owner automate processes and save money on personnel expenses.

One such advancement is how artificial intelligence (AI) can be used for human resources functions. For example, automated processes that adapt to situations can be useful with recruitment, onboarding and training new employees.

Recruiting

In a loose labor market, even a small business could receive hundreds or even thousands of resumes for one open position. In a tight labor market, a job listing might not procure that many responses, but an employer can be very particular about which applicants to meet. In either scenario, AI can be deployed to screen resumes for keywords, experience and education requirements in order to narrow down the list to only highly qualified candidates.

AI processes can help reduce unconscious biases during the initial recruitment process. Furthermore, AI can help businesses automate scheduling and conduct customized text interviewing. In fact, there are now AI pre-screening tools that host video interviews of potential candidates to narrow the list even further before inviting a short list for a phone or face-to-face meeting. One such tool hosts a series of “games” to assess candidates based on their cognitive and emotional features, while avoiding traits related to their gender, socioeconomic status or race. The assessment is then matched up against profiles of past or current employees who have succeeded in that position. If the AI evaluation determines a candidate is not a good fit for the position for which he applied, it can scan other position profiles to see if there is another role for which the candidate might be better suited.

Onboarding

Onboarding often consists of paperwork, digital tools and videos, with very little personal contact apart from a mass orientation. However, AI-enabled chatbots can provide new employees with a more customized and pseudo-personal experience by answering specific questions and providing tailored information based on their role, department or required job skills and processes they need to learn. AI allows a new hire to self-acclimate to the job without having to bother HR, the hiring manager or colleagues with a lot of questions – helping the new employee get up-to-speed and gain confidence on his or her own.

Consumer goods manufacturer Unilever uses a chatbot that is able to speak and answer employee questions in plain, human language. The chatbot can answer hundreds of general questions and even tailor specific advice, ranging from where to catch a shuttle bus to the office in the morning to how to handle HR and payroll issues.

On-the-Job Training

No matter how perfectly qualified a new hire is for the job, there is always a learning curve. Most of the time, it’s a matter of learning the company’s specific computer programs, processes and even in-house jargon – such as what acronyms mean and the names and locations of conference rooms. AI can help new workers learn basic operating procedures such as these as well as specific job tasks.

For example, a new employee could wear an AI headset throughout the day to help carry out daily job functions, all the while asking specific questions and receiving guidance on best practices. An AI headset may even use image recognition technology to identify what the employee is referencing, and even playback images through virtual reality (VR) to help direct the worker to the appropriate screen on his or her computer.

Enhance Productivity (of Human Employees)

Instead of replacing humans, AI can be used to handle menial tasks so that employees can engage in more meaningful work that requires experience, knowledge and the ability to make calculated decisions. While technology is widely used these days for communication, data mining and researching information, AI as the technology of the future might replace lower-level administrative positions so that resources can be allocated to hiring more higher-level workers who will have a greater impact on firm revenues.

One way to reduce the overhead associated with hiring workers is to make efficient use of technology. According to a recent survey by CompTIA, 73 percent of midsize businesses and 56 percent of firms with fewer than 20 employees say technology is a primary factor in pursuing their business objectives.

Budgeting

According to the 4Q 2018 survey, the average small/midsize business (SMB) invests anywhere from $10,000 to $50,000 a year on technology. About half (52 percent) of small business owners think they’re not spending enough on business technology.

Upgrading

The largest share of small businesses (36 percent) say that in recent years they’ve focused their technology budget on infrastructure, such as laptops, desktops, servers, phones and storage. The second largest item in their tech budget was industry-specific software. Areas in which small businesses say they most need to improve technology include:

• Integrating different applications, platforms and devices
• Cyber and data security
• Managing and using data effectively
• Modernizing equipment and software
• Improving ROI on technology purchases
• Hiring skilled employees with experience working with newer technologies

Customer Service

One interesting find was that customer service is the biggest technology spending priority for SMBs going forward. Small business owners are looking to technology to help them renew existing customer accounts, identify new customer segments and markets, and innovate new products and services.

New Trend

A new trend among SMBs is to use technology as a service or product that can be offered to customers. In fact, more than half (52 percent) of professional service firms such as accountants and lawyers introduced such a service last year. For example, an accounting firm might provide a cyber security audit or become a software reseller (buy at wholesale price and sell to customers for a profit). Among SMBs that have begun offering technology services, almost half say that revenue stream is growing faster than their regular business.

Preferred Tech Vendors

Where do the majority of SMBs buy technology? Pretty much the same places as individual consumers, namely online retailers such as Amazon and brick-and-mortar stores like Best Buy.

Priorities Compared to Two Years Ago

Another interesting finding from the study is that SMBs are not executing on their technology plans as well as they had hoped. The share of respondents who say they’ve achieved their vision and strategy dropped from 23 percent in 2016 to just 18 percent in 2018. The report asserts that, “Many firms are taking two steps forward and one back as they navigate these new learning curves.”

Emerging Technologies

Despite their sluggish success, more than half (53 percent) of SMBs believe that emerging technologies, such as Internet of Things (IoT) devices, artificial intelligence (AI) and drones will drive opportunities for them in the future. Thirty percent of SMBs say they’ve already incorporated some form of emerging technology into their business to:

• Increase productivity: 63%
• Meet customer demand: 47%
• Enhance innovation: 42%
• Boost sales: 42%
• Differentiate themselves from the competition: 39%
• Avoid obsolescence: 22%

Still, some SMBs are hesitant to invest in emerging technologies. Ten percent think it will trigger a negative impact on their business while 23 percent believe it’s soon to project the potential impact, especially given the cost of entry, the technical training required, and the time it would take to identify high-quality and cost-efficient vendors or suppliers.