Technology continues to move at an incredibly fast pace and the accounting industry is hardly immune to advances and changes. Clients and staff alike have ever-growing expectations fueled by advances in other industries with which they interact. Even so, a 2015 survey revealed that 70% of CFOs claim to be unconcerned by disruptions, despite 50% of them also reporting that disruptions negatively impact their businesses. In order to avoid disruptions, it is extremely important that CFOs and controllers take an active approach to addressing applicable advances and ensuring that they position their organizations to not simply handle disruptions, but capitalize on them for the benefit of their organizations, staffs and clients.
The Death of the Paper Check
Today, almost every consumer has the ability to process virtually every transaction electronically using inexpensive mobile devices. As these technologies have emerged and reached more people, fewer and fewer have been using checks and other paper formats to complete transactions. According to Ernst & Young, mobile broadband connections will expand to nearly eight billion by 2019—more than one connection for every man, woman and child on the planet. Further, consumer mobile spending in the U.S. will increase from $204 billion in 2014 to $626 billion in 2018, with half of those sales being executed on mobile devices.
In short, your organization needs to recognize this reality and take advantage of it. First, ensure that your organization and your clients’ organizations have the ability to collect payment from customers in the most convenient ways for them (whether it’s via credit card, a mobile payment platform like Apple Pay, or by ACH). Second, consider taking advantage of ease of transmittal of funds by using a “Buyer Initiated Payments” provider in order to consolidate and simplify accounts payable functions. Both of these adjustments can be seamlessly integrated into many accounting information systems in order to automate data entry and increase the security and reliability of reporting data. This allows your organization to employ fewer data entry clerks and focus on higher-level accounting functions.
While many people are aware of cryptocurrencies like Bitcoin, a whopping 83% of respondents to a PwC survey indicated that they are slightly or not at all familiar with the technology. It is imperative that business leaders increase their understanding of cryptocurrencies if for no other reason than their increasing prevalence. There are currently 14 million Bitcoins in circulation, each with a current value of about $400. While that means only about $6 billion worth of the currency exists, that’s still nothing to balk at.
Cryptocurrencies’ strengths lie in purporting to function in a more “free-market” fashion. They are largely unregulated and threaten currency middlemen, such as banks and automated clearinghouses. They’re also extremely resistant to counterfeiting due to their encryption, have limited circulation to combat inflationary pressures and can conceal the personal information of the user, helping them to avoid fraud or identity theft. Whether or not their role grows in financial markets depends on their adoption rate, government regulation and resistance from global financial firms threatened by currencies they cannot control.
There are several reasons this is important in the field of accounting. First, knowing specifically how to account for cryptocurrencies is important, as well as knowing the tax implications of their usage. Second, one of the strengths of cryptocurrencies is getting currency into the hands of individuals who live in places that do not have conventional banking outlets. That means that businesses that deal in such currencies (like Dell, for example) will have access to a pool of customers that other businesses will not.
Follow the Crowd (funding)
Websites such as gofundme, Kickstarter and Indiegogo have been a boon to startups, artists, and other groups and individuals needing quick funding for a project. However, at least in the U.S., the government recently adopted rules to handle crowdfunding as it applies to companies, particularly those raising substantial amounts of money and those that are publicly traded. Knowing how to properly account for the proceeds of such fundraisers is critical.
There are plenty of legitimate ways to use crowdfunding sites in order to generate funds for business. Many organizations may use them to raise money for specific pet projects or philanthropic purposes that are of interest to their existing customers or stakeholders. While these can be a boon in marketing situations, they can create some concerns in the area of accounting, and it’s important to understand their implications in the event that your firm or organization goes down this path.
While the list above is hardly exhaustive, it hopefully serves to show that there are technologies in the marketplace that are significantly affecting how business gets done. In accounting, professionals must fully understand these technologies and their implications.
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