2024 is already well underway, but we’re definitely still early enough into the year that it could go any direction. To help our team and clients prepare for what this year will bring, we’ve spent some time thinking about changes coming down the pipe.
As we zoomed out and looked ahead, we identified three trends that will likely play a big role in the accounting industry — and financial best practices in general — through the rest of 2024. In fact, we’ve already seen these forces start to shift how we work.
#1: The accountant shortage
As The CPA Journal put it, “The accounting profession is in crisis.” Between 2016 and 2021, the number of students sitting for the CPA exam decreased by 33%. That trend continued in 2022.
At the same time, the American Institute of Certified Public Accountants reports that roughly 75% of its members are eligible for retirement. In the last couple of years alone, about 300,000 accountants across the country have left their jobs, whether that’s to pursue better pay in another industry, to retire, or for another reason.
It’s not particularly surprising, really. Becoming a CPA takes about six years (with five years of schooling and the year sitting for exams). Even so, the starting salary for a new accountant is usually around $60,000. Jobs in tech promise higher pay with less work required on the front end.
Ultimately, the accounting industry may need to shift how it operates to lure in new professionals. Or the allure of the tech world may wear off as rampant layoffs continue.
In the meantime, though, businesses are having to get creative. A lot of companies are asking people within their finance function to take on more. They may even be training junior staff members for roles well beyond their experience.
Beyond that, many companies are looking outward to fulfill key financial functions. Many outsource their accounting entirely, while others have contract accountants come alongside their internal finance team.
Outsourcing providers can absolutely help companies navigate the accountant shortage, and we expect to see a rising trend in the number of businesses choosing this option. We will give one caveat here, though.
While accounting services from people or companies located in other countries might have appeal for their cost-effectiveness, be careful. Federal U.S. tax law is extremely complicated. When you layer on state laws, navigating the ins and outs requires a high level of knowledge and skill. If you outsource internationally, make sure it’s with people who have a deep understanding of the Internal Revenue Code and any applicable state tax laws.
#2: More movement to the cloud
The cloud has long been touted as a way to increase efficiencies while building scalability. Some business functions adopted it more readily than others. Marketing teams, for example, often operate primarily in the cloud in 2024. But finance teams have been slower to make the move.
That’s because cloud computing used to come with concerns that it was less secure. If all your information is in the cloud, someone could feasibly access that — and all the data therein.
But in 2024, cloud solutions are usually just as secure as localized ones. Because data is generally encrypted before it goes into the cloud and most modern cloud solutions have a secure-by-design infrastructure, operating in the cloud no longer brings in an added layer of liability.
In fact, most companies have at least started the move to the cloud for their accounting. We’re probably a bit ahead of the curve because we work with tech startups, which are notably ready adopters of new solutions. But we can share that 100% of our clients now use cloud-based accounting software. A decade ago, only about half were operating in the cloud.
The trend of moving to cloud-based accounting certainly isn’t new. But we think it’s worth calling out now because 2024 may be the year in which the vast majority of businesses fully make the transition. We’re sure that industry changes like QuickBooks’s phase-out of its desktop solution will help.
#3: Technological advances using AI and blockchain
Artificial intelligence (AI) and machine learning (ML) will impact virtually every industry this year, and accounting is no exception. Some experts are arguing that AI could help to save accounting from the shortage of professionals we explored earlier. AI can help to automate the more burdensome accounting tasks, all the while eliminating the possibility of human error.
We’ve seen it firsthand. Here at ShayCPA, we’re using AI in some simple ways, but we’ve experienced major gains from it.
We incorporated AI into our meetings to record them for us, for example. This gives us an easy way to revisit conversations with clients, helping us best serve them — and get clarity about precisely what they said without needing to ping them again.
Similarly, we’re using Loom to record video messages complete with AI-generated time-stamped chapters and summaries. We’ve found this to be particularly effective for pitches. With Loom, potential clients can easily find the information they want in the video.
These AI use cases aren’t even accounting specific and they’ve still helped our accounting firm see major productivity boosts. As more AI tools come out — and particularly ones geared toward accounting and finance — we look forward to seeing how much easier they can make our working lives.
AI and ML aren’t the only examples of technological advancement impacting accounting. As blockchain develops, more and more finance departments will likely adopt it. The heightened level of security that blockchain provides poises it to be effective in a range of accounting tasks. It could help to reduce errors and fraud while boosting automation and trust.
While blockchain has primarily been applied to cryptocurrency up to this point, we expect to see more conversation around using this technology in accounting in 2024.
We do our best to stay on top of the accounting curve, and watching these three trends this year should help us minimize surprises. If you want to work with a team committed to staying informed and ahead, contact us.