Emerging Trends of Accounting & Bookkeeping in 2020

At the beginning of the year, the accounting industry was in the midst of an ongoing boom, meaning consistent industry growth. But the current economic situation has turned the tables and compelled businesses to ponder over adopting digitalization and technologies so that they can work with ease and on the go.  The emergence of new accounting technology, along with some obstacles, would offer businesses with many new opportunities. 

The early bird catches the worm! In the same way, staying up to date with the new technical developments in the accounting field would help the businesses to remain up-to-date with rivals and succeed in the future for a long time.

Here are top 5 accounting trends to be aware of in 2020.

Accounting Trend#1: The rise of Automation & Artificial intelligence

Accounting automation is a trend that can save companies a great deal of time when it comes to accounting tasks. It slowly eliminates the need for manual data entry and saves a huge amount of production hours for businesses. The purpose of accounting automation is to reduce the burden of manual bookkeeping and accounting and to use that time to address actual real-time accounting issues.

Though automation and accounting software may seem like a threat to accountants, in the near future they won't replace accountants. Automating accounting is extremely beneficial for small business owners and entrepreneurs.

Accounting Trend#2: Blockchain - Introducing authentic source of trust 

The trends that have revolutionized accounting are not only automation and artificial intelligence, but the blockchain is also another tech trend that seeks to revolutionize the way we understand the transfer of funds and globalization taking place. The blockchain is a distributed ledger that is made in such a way that if a fraudulent transaction is attempted or someone tries to "spend" the same amount twice, it will get rejected. It’s a form of “trustless trust”, and does not need big institutions like banks to work.

Accounting Trend#3: Cloud - Access your business on the go

Although accounting software has existed for years, switching to the cloud is a fairly new trend that has evolved after a decade. The transformation is not underway and a number of companies have already taken the leap of faith.

Cloud helps organizations to access their business data anywhere anytime. Now you don't need to be at your workstation for analyzing your accounting data, you can do it at home or even on business trips too. The data on the cloud is secure and provides you a real-time view of how your business is performing. 

Accounting Trend#4: The adoption of Data Analytics and Science

It's important that you get the right information when making any financial decisions. The latest accounting trends suggest that accounting professionals need to be aware of the pricing structure of the company, proceed with the correct data while applying the required mathematics.

With the correct use of data science, businesses can make a simple identification of the details. It will also help businesses by navigating through any challenges in the business’s external environment.

Accounting Trend#5: E-commerce - A new concept of the growing market 

One more recent addition to the list of emerging accounting trends is e-commerce. The Internet has succeeded in bringing e-commerce to another level by also making it an option for online shopping.

The information & technology that comes with e-commerce can benefit accountants by offering accurate statistics and help them to access the true cost of goods. This would also encourage them to balance promotional expenditures with the true cost of goods.

How these accounting trends are changing the future of accounting

Cloud and AI have effective means of automating and streamlining manual and transactional activities. However, the tasks that would be difficult to automate will be those provided by the decision-making and planning of professional financial experts. Consequently, accountants will make their jobs future-proof by embracing technology and building on their position as the most respected and admired company for their clients.

For any sector worldwide, the technological revolution has been at the forefront and its consequences have been felt even in the smallest of companies. So, just welcome and embrace the transition. Within the accounting environment, the only constant is the transition and stability of its fluctuations. 

So is your business ready to adopt these new changes?

Top 10 basic Accounting Terms for small businesses

Knowing some the basics of accounting terms will help you understand basic accounting. It will not only enable you to communicate with your accountants in a better way but also help you gain deep insights into your financial reports. 

Here is a compiled list of the most common accounting terms which every business owner must know. 

1. Accounting Receivable (AR)

Accounts Receivable consists of all of the revenue or sales by a company that has provided but has not yet collected payment on it. AR has recorded in the balance sheets an asset that would likely to be converted to cash in a short period of time. 

2. Accounting Payable (AP)

Accounts Payable consists of all the expenses incurred by business but it is not paid yet. AP is being recorded as a liability in the Balance Sheet as it is also considered as a kind of debt owed by the company.

3. Cash Flow 

Cash Flow is a very important term for every business that describes the inflow and outflow of cash in a business. Net Cash Flow can be calculated by taking the beginning Cash Balance and then subtracting the Ending Cash Balance from it.  A positive number of this indicates that more cash has flowed into the business than out, while a negative number indicates the opposite side of it.

4. Inventory 

Inventory classifies the assets that a company has purchased to sell to its customers but it remains unsold. As these items are being sold to customers, the inventory account would be started decreasing.

5. Debits and Credits 

Debits and Credits are entries used in the company’s bookkeeping process to record changes. A debit entry in the accounts is considered as an increase in assets or expense accounts and decreases revenue or equity accounts and liability. Credits are considered as an increase in liability and an increase in assets.

6. Financial reports 

Financial reports are the periodic financial communications that are used to know about the financial position and performance of any entity. These financial reports include three primary financial statements which are the balance sheet, statement of cash flows and income statement along with footnotes and other important information relevant to the proprietors of the business. Public companies must file several types of financial reports and forms with the Securities and Exchange Commission (SEC), which are open to the public. 

7. Financial statement

The financial statement refers to basically three primary accounting reports of an industry: the balance sheet, statement of cash flows, and income statement. Internal financial statements and other accounting reports usually contain more detail, which is used at the time of taking important decisions. 

8. Assets and Liabilities 

Assets and liabilities are very important aspects of business where assets give you future financial benefits and liabilities give you a glimpse of future obligations. The proportion of assets should always be higher than the liabilities. The difference between assets and liabilities refers to the equity of the company. This classification of assets and liabilities helps us in properly arranging assets and liabilities in the balance sheet.

9. Trial balance 

The trial balance includes both debits and credits entries for one particular account and it is recorded in the general ledger. The sheet should have balance, with debits equaling credits.

10. Balance sheet 

The balance sheet is the summary of statements of the business including assets, liabilities, and proprietor's equity at a certain time. In other words, the balance sheet also illustrates your business's net worth.

The balance sheet consists of all the details from previous years also so that you can get insights into a back-to-back comparison of two consecutive years. This data helps to track the business’s performance and identify ways to build up your finances and help you to see where you need to improve. 

These are the most basic accounting terms which every businessman or entrepreneur should know. Accounting is broad that means there’s so much to know, but at least you can start with the basic terms to make better-informed decisions.

Trust the signs! Your Business might be Ready for Cloud Accounting

While managing your business accounts, there are a lot of tedious pieces of work that might take the fun out of your work, keeping you constantly worried. Manual data entry, upfront business costs, chasing your clients for information, data security, compliance, to name a few.

A big thanks to the technology that all your problems have one solution and that is cloud accounting software. Cloud is like pretty much of life these days as it works as a backup recovery tool, makes accounting easy. It enables you to access your business data anywhere, anytime.

Here are some of the signs you may feel when your business is ready to take a leap from old accounting methods to the cloud.

Business is Growing

And as your business is growing you don't have time and resources to use the same old book-keeping system. Especially if you are dealing with a lot of things such as inventory system, bulk invoices, tax compliance. In the age of technology, you need modern support such as cloud-based accounting software. So, you can ease your burden. 

Data Security becomes a Priority

One of the biggest concerns of a business is keeping data safe and for that, they are considering a move to the cloud. Sometimes business suffers a lot when the device is corrupt or the data is misused. Keeping this in mind, experts suggest using a cloud tool can be the most secure way to keep business records safe.

Cloud always take a backup at regular intervals and keep data secure. Even if you lose the data, you may retrieve it again from the cloud server.

For Anywhere Anytime Access

If your business requires a lot of travelling, you can manage your work with just a device and an internet connection. Cloud-based software allows users to access data even without carrying their own devices. It enables to log in to your account on your mobile phones too.

When you Want to save Money                                                                                                                                                                                                                                                

While on the one hand cloud software shows you every account separately, it reduces the upfront business costs, helping you save money. You would be making better-informed decisions while using cloud accounting that would be fruitful for your business. There are no heavy maintenance charges, IT cost or any other capital cost when you use online accounting. You just pay as you go and there is no unforeseen cost to update, upgrade or maintain your software.

Checking for Real-time Updates

Can you get real-time updates for your work with your current accounting software or business books? If you are finding your current accounting processes tedious, you must go for online accounting software.

It simply helps you to track sales, inventory and your expenses too, you just need to up-to-date all the financial data and you can get real-time insights into how your business is doing.

Multiple-user Dashboard

It is quite difficult to work together on the same account when you have multiple partners in your business. Cloud accounting software comes with multiple-user dashboard which allows you to create multiple users log-in accounts to work accordingly.

Ultimately, switching to cloud-hosted accounting software is a big step, but this is the step that will take your business to the next level. 

Taking the Leap Toward Cloud Accounting

• Are you confident about company data, is it safely backed up to your accounting software or old bookkeeping system?
• If there is a sudden hardware failure, would you be ready to put your company and data at risk?
• How quickly you would be able to retrieve your data?
• Did you ever test your backup? Are you sure it works?

If these points are stressing you out, it means you need to make your operations more efficient. Cloud accounting can surely provide your business with several significant advantages.

In case of any doubts, take assistance from HostBooks as it is one of the best cloud accounting software to meet your business needs.

It’s time to spread your wings with cloud accounting and strengthen your business.