Whenever there's a significant data breach, it's always huge news. Think Equifax and Target, to name two. Breaches like those can scare people away from technology. And, artificial intelligence (AI) experts have had some frightening predictions about how it will be used; how it will replace human beings and make some jobs irrelevant. But, what about using technology to your advantage, to reduce risk and not increase it? With advances happening almost daily, it's time to look at how you can use technology to manage certain risks effectively.
Cloud-based Accounting Solutions
Cloud-based accounting solutions are where the industry is going. And, there are many advantages to these solutions. But, it can be a double-edged sword. Clients expect their accountants to stay up-to-date with the latest technology. This especially if it can result
We all hear about hacker horror stories in the news. Keep your computing environment secure to manage risk, not increase it. Keep your clients informed as to how you're keeping their data and financial information safe. Explain how you're staying cutting-edge technologically. It may even lower your reputational risk. Ever-evolving technology-savvy firms are firms of the future.
AI and Blockchain Technology
Accountants and their firms can become irrelevant if they don't keep up with technology. It's a significant risk. The accounting profession is changing in vast ways. AI and the emergence of blockchain technology to manage transactions mean that tax and audit work is changing. For instance, auditors have historically relied on samples as ways to maintain efficiencies when dealing with large numbers of transactions. But samples present risks. What if a critical transaction was somehow missed because it wasn't in the sample? This might be a textbook example of how an accounting malpractice issue arises. However, soon technology will allow auditors to do away with samples. All transactions will be audited efficiently and timely due to computing advances.
Blockchain technology, itself, has the potential for transformational change to how audits are approached. Smart contracts, which are impossible to alter due to security keys and redundancy measures through multiple "original" copies, will change how assurance work is handled. It will allow for increased risk management by being able to rely on technology to provide greater security to transactions.
Accountants need to embrace technology and become more consultative to stay ahead of the curve. This will not only help to manage risk but will also be a positive to the firm's bottom line. Consulting services are consistently higher paying gigs that clients tend to value more than straight tax and accounting services.
Here's another consideration for managing risk through technology. Keep your website up-to-date and active. It helps maintain your relevancy and reputation. The first thing that potential new customers often do is go out to your website. If it doesn't work properly or doesn't present the firm in a favorable (and technologically-savvy) light, then the site is a liability and a risk. Make sure that you're managing reputational risk by maintaining a vibrant and easy-to-navigate website. Be sure you have useful content that keeps users coming back to you and your site as a source of valuable, easy-to-use information. It helps build professional credibility.
Social Media Policies
Another way to utilize technology to manage risk involves the use of social media. It's too powerful a tool to ignore. It used to be that firms banned access to social media through the company network. Now, it's not so for many practices. Numerous firms have found that they can use the technology of social media to grow their reputation and reach across all age groups. But, it's essential to have policies and procedures in place as to proper use. While social media can be a valuable tool, it can also be a dangerous weapon in the wrong hands. Be careful and use social media to increase your reputation, not risk it.
Streamlined Accounting Services
Technology can help accountants in other ways, as well. For instance, bank feeds into accounting software like QuickBooks Online, FreshBooks and Zero decrease input errors and data-entry time. What used to be hours of data entry and then account reconciliation can now be significantly reduced and simplified. This error reduction can also mean a decrease in accounting malpractice claims. Transactions are recorded correctly the first time. This helps avoid circumstances where errors are found later with adverse impacts on both clients and firms.
Another way to manage risk with technology is to link applications so that they speak directly to each other instead of going through a human conduit. Here's an example. Say a small retail client uses an online application to conduct its sales and inventory management. It's possible to run reports and then manually key data into their accounting software. But, what if you could link the two applications together? These days, more and more, you can. And, it saves time and the potential for data-input and other errors by removing the "middleman," so to speak.
Helping your clients to implement these types of advances improves their accounting efficiency. That can aid you in potentially then having more time to work with them on other things. Clients only have so much they can spend on accounting services. Help them to get more value by automating what can be automated. Then they will have more time and money to strategize with you about how they can grow their business. It's a better spend of resources for both of you. It also helps you seal your position as a trusted business advisor. Plus, you've again used technology in a variety of ways, and all in managing one form of risk or another.
Firms these days must embrace technology, use it to their advantage. They must keep up with the latest trends and techniques. If they do, technology can be a powerful tool to effectively manage certain risks.