5 Ways to Modernize Your Accounting and Why It Matters

At a time when poor data quality is costing the US economy more than $3Trillion per year, organizations cannot afford to rely on outdated accounting practices as their source of financial data. Modernizing your accounting goes beyond efficiency—it’s essential for survival in today’s dynamic, data-driven environment.

As your business or nonprofit enters this new era of digital transformation, are you maximizing your resources? Specifically–we’re talking about your financial resources through accurate data, intelligent forecasting, and the right expertise.

A modern approach to accounting can facilitate strategic business decisions that increase revenue, mitigate risk, and help you plan for the future, even in the midst of complexity and change.

Here is a look at the modern accounting practices that can support the next leg of your transformation.

What is Modern Accounting?

Modern accounting involves a transformative change regarding people, processes, and technology to streamline efficiency and improve accuracy. With modern accounting practices, companies can eliminate risks associated with human error, speed up the exchange of information, and ensure compliance with government and industry regulations.

Here is what modern accounting looks like:

• Cloud-Based Accounting Software
• Outsourced Fractional Accounting Teams
• AI/ML for data processing and financial review augmentation
• Fractional Commitments for Financial Expertise
• Integrated Systems
• Mobile Apps for Time Tracking & Expense Recording
  

With modern accounting practices, the features and workflows of big technology are quickly becoming more accessible to companies of all sizes–and in all stages of growth.

The Accounting Modernization Playbook

Here are five ways to embrace the transition to modern accounting practices.

1. Meet Your People Needs First

The transformation to modern accounting starts and ends with your people–the actual talent on your team and where you find them. It’s 2023, and 27% of the full-time workforce is remote. If you add in flexible working arrangements, part-time employees, and freelance contractors–that number is much higher.

This means that your team doesn’t have to report to the same office in the same city at the same time in order to work together effectively. It doesn’t even mean that your talent needs will be addressed by adding full-time positions.

According to Deloitte’s global outsourcing survey (2022), third-party models continue to evolve to meet growing talent needs. In the survey, 67% of executives indicated plans to increase operating budgets for 2023–with half of those planning to increase outsourcing for efficiency.

This means that a modern accounting transformation might include outsourcing bookkeeping and accounting duties to a fractional accounting team. And modern accounting fintech like Quickbooks Online makes outsourcing these tasks easier than ever before.

2. Build Effective Processes Around Your People

Skilled talent is only one part of the equation. In order to get the most out of your accounting team, you also need to rethink how your organization works together. Traditionally, many accounting departments operated in silos–acting almost independently from other departments.

A modernized approach uses structured collaboration to streamline tasks and facilitate communication. This looks like:

• Team Accountability for Accurate Time Tracking
• Better Engagement in Expense Tracking
• Faster Invoicing Processes
• Streamlined Communication that Supports Efficient Cash Flow Management, Bill Approval, and Necessary Separation of Duties

3. Add the Right Technology

When it comes to finding the right tech stack for modern accounting, we mean choosing a scalable platform that has all the features (including integrations) that you need now–and the ability to add more in the future.

Migrate to a cloud-based accounting platform like Quickbooks Online. Storing accounting records digitally in the cloud offers significant advantages over relying on desktop-based records, such as:

• Centralized Storage: Records are digitally filed and maintained instead of scattered throughout a physical location, enabling easier collaboration across roles and locations.
• Disaster Resilience: Even in the face of natural disasters such as floods, fires, or weather, your financial facts are resilient to loss from any single impacted region.
• Enhanced Security: Hidden behind layers of digital protection and security, your sensitive financial information can be better protected from cyber threats.
• AI/ML Processing: Cloud solutions like QuickBooks Online will have increasing opportunities for secure Artificial Intelligence and Machine Learning processing native to the application and the cloud infrastructure it resides within.

4. Enable Efficiency with Automation

Automation is enabling greater operational efficiency, and it’s changing the way companies manage their finances. Instead of being bogged down by manual data entry tasks and labor-intensive rework to correct errors, modern accounting departments have more time to support high-value activities like strategic planning and risk-based assessments.

Automation and integrations can reduce the manual labor associated with:

• Data Entry (Process Receipts, Invoices, or Bank Statements)
• Transaction Coding and Account Reconciliation
• Invoicing
• Employee Expense Tracking
• Reporting

This enables accounting teams to:

• Focus on Analysis & Decision Making
• Proactively Manage Compliance & Regulatory Needs
• Invest in Continuous Process Improvement
• Handle increasing volumes at a lower cost per activity

According to McKinsey & Company, spending more time on high-value accounting and finance activities compounds net efficiency gains from automation alone, yielding 15-35% greater efficiency over a ten-year-period.

So, the one of the very real benefits of modern accounting practices lies in the compounded effect of bringing people and technology together to expand capabilities.

5. Enhance with Expertise

Modern digital accounting also extends to fractional CFO services, enabling smarter decision-making in hiring strategic financial expertise. With cloud-based accounting systems, you’re not limited to local financial advice from a full-time CFO.

Instead, you can access fractional CFO services from anywhere, allowing you to work with experienced financial professionals who can leverage your digital records to drive better business decisions.

The Bottom Line–It’s Time to Embrace the Transition to Modern Accounting

Modern accounting practices make everything easier. When you have the right data at the right time, shared with the right people, you can make smart decisions in less time. It goes beyond novelty. With modern accounting practices, you can build an essential foundation that is efficient, resilient, and more capable of supporting the company’s mission in a dynamic and evolving market.

Ready to take the first step in modernizing your accounting? Start by assessing your current processes and identifying areas where technology, talent, or automation could make the biggest impact.