How Big Data Is Impacting Accounting Industry
Big data has become the buzzword in the global IT space. But should it matter to accounting professionals? In a word, yes!
The accounting professionals must evaluate the relevant data, identify key suppositions, and determine long-term valuation techniques. Big data helps in this regard, guiding accountants in evaluating data sets through advanced assessment techniques.
What’s more, the accounting industry is one of the most data-intensive sectors in the world economy. So, it’s not surprising that an increasing number of accounting professionals are implementing big data in their business processes, as per a report by the Institute of Management Accountants.
The pattern will continue in the future and change the accounting industry in the following ways-
1. Take Auditing to the Next Level
Audits are a key aspect of the accounting industry that help analyze an organization’s assets and finances.
However, the traditional methods of auditing no longer provide valuable insights that businesses require. Enter big data, which is slowly shifting the audit process away from sample-based testing to data-driven population-level audits.
Gone are the days when auditors had to scan large files manually for errors and risks. Now, they can assess terabytes of unstructured data, like formal business records and emails with the technology.
The combination of big data and analytics reconstructs the auditing process and provides accountants with structured data. This helps them explore more areas and identify outliers effectively.
2. Identify and Manage Risks
Accountants must identify and evaluate risk factors capable of affecting the business’ performance on a regular basis.
Thanks to big data and predictive analysis, accounting professionals can predict future financial risks and advise clients to avoid or rectify them.
If that’s not all, accountants can also identify potential frauds using big data. Applying algorithms on larger sets of data prevents human intervention and effort. Big data also predicts new economic trends, minimizes supply chain risks, and recommends mergers and acquisitions.
Most importantly, big data helps accountants perform risk management like:
Card Fraud Detection
Accounting professionals can analyze card transaction patterns with big data, including amount, location, timing, and other information. This helps identify fraudulent transactions and block the card.
Credit Risk Management
Banks minimize credit risk by evaluating transaction history and public details like annual business reports. Depending on such analyses, banks improve their credit model for both corporate and individual customers and help them manage their credit collateral better.
Liquid Risk Management
Big data provides in-depth insights on incoming and outgoing cash flow for liquid risk management. Accountants use the insights to optimize liquidity management.
The quicker accountants identify these risks, the better their chances of mitigating them.
3. Improve Performance
A business’s performance varies according to parameters like core processes, budget allocation, and employees. Thanks to big data and advanced analytics, accountants can monitor business performance by defining new KPIs.
Plus, big data helps them recognize market trends and outperform the competition. Nearly 84 percent of enterprises think those without a proper analytics strategy run the risk of losing their competitive edge in the market.
When combined with advanced analytics, big data helps accounting professionals identify and analyze customer patterns, and improve the overall customer experience.
4. Experience Real-Time Reporting
The advancements in Big data and cloud technology have led to and real-time reporting, both of which benefit the accounting industry. The accountants can now host their accounting software like QuickBooks on cloud and leverage its unlimited potential for the storage and analysis of big data.
Thanks to the integration of cloud technology and big data, accountants can now:
● Provide real-time insights to customers
● Analyze financial records on a monthly, quarterly, or annual basis
● Make strategic business decisions
● Quickly find out which channels are most lucrative
Automation in accounting has helped accountants move away from repetitive tasks to advisory roles in business. They now help create financial plans for clients and offer valuable insights instead of wasting time on reports.
Big data, therefore, serves in the role of a trusted advisor for companies. The accounting industry relies on big data to help businesses make informed decisions regarding relevant data sets supported by their finances. Also, they help create long-term financial plans.
Not just the big firms, even small businesses are attempting to leverage the advantages of big data in accounting.
5. Enhance Client Experience
Big data not only helps in the development of future strategic planning for the accounting industry but also optimizes customer relationships.
The analysis of big data provides helpful customer information like:
● Family details
● Bank details
● History of inquiries
● Past transactions
These insights help accountants enter into conversation with users and create a strong rapport. Moreover, they can create targeted offers for existing customers to gain more customer loyalty.
Thanks to big data, accountants can monitor buying and spending habits to create a premium service for high-value clients and retain them.
6. Increase Acquisition Efficiency
Businesses usually turn to mass marketing campaigns to promote their offerings. Now, however, nearly all marketing channels are overloaded with campaigns. This makes it hard to come up with effective campaigns without spending a lot of money.
Thankfully, businesses can improve their visibility by using big data with data visualization. It helps provide better business insights by segmenting and transforming big data sets into meaningful information.
This means the accounting professionals can target the right audience with the right channel and message. Big data easily segments business prospects based on the existing customer base.
The technology can also be used by accountants to personalize messages and identify influential customers who spread awareness about financial services.
What’s Next?
Big data unlocks new and untouched avenues of data insights and analytics in the field of accounting. And professionals in the industry are quickly realizing the implications of big data.
They are designing the movement of both internal and external data to improve their respective organizations. The faster they adapt to big data, the better they can capitalize on opportunities that big data brings in the accounting industry.
