Over the past few weeks, we here at Interactive Accountants have noticed another change in the technology people are using for their finances. This time around, we noticed new software integrations between business or practice management and accounting systems aren’t always talking to each other correctly. Our research found that the root of this news comes from the increasingly automated formats that we are seeing software use. Paperwork has been the lifeblood of almost all organizations until 10 to 20 years ago. Even then, we are still seeing advancements and changes in how automated software is being developed.
What's happening now is we are seeing the line between business and finance blur with the areas of accounting and law. Considering how important this is regardless of the internet, we would be remiss not to take the time to share what we found. There are a few aspects to the changes we are now seeing in software, which is intelligent document processing. IDPs take technologies like computer vision and recognition software and apply them to electronic documents to collect data as efficiently as possible. The industry is trying to speed up the record-keeping process to be as efficient as possible beyond what humans are capable of doing, even with computers at their use. The second part of this complex equation is that we are seeing software become able to not only track one type of financial record but apply artificial intelligence to data collection software that essentially keeps records.
One reason this is important to keep an eye on is that the digital world is mirroring the physical world. We mean that recently, some states across the United States of America have been filing legislation and putting into practice a new combined Law & Accounting without having to contain both licenses at once. If you are a regular reader of our newsletter, this may sound familiar as we talked about it in the past about what these potential changes could mean for businesses going forward. A good analogy for what these new software databases are going to do is essentially the opposite of what most privacy-based software would do.
That is not to say that these systems are designed to put your information at risk. It does mean that the software is going to become proficient at collecting all of your information and putting it in one place accessible for you to serve as records for your financial or accounting needs. When we say Supply, we mean the actual lawyers and accountants who are growing in this ever-changing field and want to find ways to further the reach of their experience. Considering that this is already happening with technology, it won't be surprising to see more in-depth legislation regarding the merging of the duties of a CPA or a lawyer in the coming years.
Ultimately the question going through most people's heads at this point is something along the lines of how it will affect their wallet, and it's a good question. As we see software and technology change and evolve, we will need people specialized in these matters while simultaneously we are going to start seeing people less specialized in either finance or law. Rather, we will see them take on more general roles as technology grows and do more housekeeping work for us.
We see technology compensate for the more time-consuming tasks in legal paperwork-oriented jobs, and it isn't much of a stretch to start thinking about how this will change the rates in the industry. Firms may charge more or less depending on their CPA and bar certification. Unfortunately, at the moment, there isn't much that is concrete yet. Most of the legal work that's going to be put into the background of these new business operations is in the process of being written right now.
However, just because it may be a way off in the future does not mean we should ignore it until it's here. The smart, advisable course of action would be to stay on top of these changes as they come. Especially in the domains of Business and Technology if for no reason other than the amount of information that they will have access to. The point we are trying to really sell home is that while some of these software and Law changes are in the background and they may not impact your specific business as much as another, yet eventually these changes will impact us all. If there is one thing you could take from this article, we would recommend researching your current record-keeping systems and potential future ones that may benefit you more down the line.
What we can do for you primarily revolves around two principles: the first of which is the obvious one: we can help file your taxes. The second one is more of a personal mission our company has taken on. Here at Interactive Accountants, learning about the new technologies or laws coming up in the financial world is part of the fun for us because not only do we get to advance ourselves, but we get to advance our clients. The spread of knowledge should be open and free, and we have taken it upon ourselves to keep you and us informed about what's going on every step of the way
When you combine a digital Market with a potentially hypothetical form of record-keeping, it can become easy to think the numbers are different than they are. This goes back to what we previously mentioned about businesses having a good idea of what they want and should do for their business. As a CPA firm, we know some needs that certain businesses may have that they may not even realize existed. We wanted to take this time and explain accrual accounting because we have found that it is becoming increasingly popular.
When done digitally, it is a faster way to keep records because most software coming out now is partially aware of the patterns that a business will see in general. Of course, depending on the nature of your business, your monthly earnings may vary, but there is still a general format that can be expected, and it's these expectations that software is now being driven by.
To give a very simplified example, let's say you earn $1,000 a month, and of that thousand dollars 200 goes towards expenses, another hundred goes towards taxes, and the rest is put into a checking account but may be used at a different point. The real function of accrual-based accounting software is to essentially make a calendar of what your business is expecting to happen. If the reality of your business does not match what this software expects, you need to take the time to be aware and fix the differences.
This reality creates two main scenarios. The first is that you, as a business, either internally or externally, use an accountant to keep track of these numbers. Or you try to use these software's independently and function with them the best you can. We are not here to tell you which option is right; we are here to tell you that it is very advisable to get consulting with your CPA and other financial advisors to help keep track of this new method of record-keeping. We even acknowledge that this advice may seem generic or obvious, but we simply want to make you aware of the environment you are in. As we have mentioned previously, the growing shift towards digital that the business world is taking will create a few bumps in the road along the way. The only real way to set yourself up for failure is to not make an effort to learn and grow.
Individually we would love to consult with you and your business to help create an effective business strategy to address your individual concerns and help you succeed. Here at Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. We are here to help because the better you do, the better we all do! If you're still not convinced yet to give us a call, feel free to look at our other blogs regarding the help we offer various businesses and offices.
If you are a professional in any field that these tips apply to, schedule a free consultation here with our owner Matthew Shiebler, CPA. He's been practicing accounting for over 25 years now and is a business owner, just like you!