From ledgers, registers, and spreadsheets to sophisticated cloud software, accounting has come a long way. This evolution is not just a sign of the times. Instead, it is a change that reflects how important the art of balancing the books is. It is no secret that bookkeeping plays a crucial role in deciding if a business takes off or crashes and burns. Over 80% of startups fail just because of accounting mismanagement. Given its climacteric nature, businesses of all shapes and sizes would only benefit from knowing all there is to know about the world of accounting. That is why we have compiled this list of 33 surprising accounting stats based on the latest data. The list will showcase the changes happening in this sphere and hopefully give you a clearer picture.
Statistics On Accounting In SMB Setups
With more than 90% of businesses being in the SMB segment, it is essential to see how they handle their bookkeeping responsibilities.
1. Around 40% of SMB owners say that maintaining accounts is the most cumbersome part of running a business.
2. The above stat probably explains why over 50% of SMBs outsource some of their accounting responsibilities to external management. These tasks include maintaining payroll and tax payments.
3. Half of those who do not outsource their bookkeeping tasks hire an in-house CFO to handle their business’s financial aspect. These two stats not only show how vital business owners think accounting is but that an overwhelming majority of them are not confident in their accounting skills.
4. Because of the latest Tax Cuts and Jobs Act (TCJA), businesses with $25,000,000 or less in gross receipts can now use the cash method of accounting rather than the accrual method. This facility is especially advantageous for SMBs as cash accounting yields superior tax savings
5. SMB owners rate accounting professionals higher and more crucial to their business than even lawyers and bankers.
6. Only a small percentage (less than 9%) of small business owners understand asset management’s nuances and how it can affect their financial books.
Statistics On Technology And Artificial Intelligence In Accounting
With technology being as pervasive as it is in 2020, it is not surprising that computing has had a resounding effect on the way bookkeeping works.
7. Industry experts predict that by the end of this year, administrative accounting tasks such as tax and payroll management will become 100% automated with the help of artificial intelligence software.
9. At present, the tech-driven accounting market is worth more than $2.5 billion. This segment is projected to grow to over $4 billion by 2023.
10. According to Xero, using accounting software helps businesses add five times as many customers than those using traditional pen-and-paper accounting.
11. It also reduces labor costs by a whopping 50%.
12. Moreover, companies that use cloud technology for all their accounting needs experience 11% more year-over-year growth than their counterparts who make only a partial shift.
14. Most CFOs feel that a majority of the software available today is too complicated. Almost 75% of them say they prefer user-friendliness over sophisticated tools any day.
15. That is probably why, even with all the cutting-edge technology out there, a majority of CFOs still spend over 2 hours every day preparing spreadsheets.
Statistics On Accounting Jobs
The tech invasion has brought about many changes in the accounting-jobs landscape. While some of these stats play along expected lines, some do not.
16. Over 80% of accountants now believe that imbibing the latest technology is just as important as learning the accounting basics.
17. Business owners are increasingly expecting more than just bookkeeping expertise from their accountants. This trend is visible by the fact that over 40% of owners expect business advice and risk assessment from their accountants.
18. Accountants also favor this change. Around 70% of them are ready to expand their roles into more strategic ones.
19. More than 55% of accountants agree that using technology has made them more productive.
20. Despite software technology replacing some of the accounting jobs, auditors and accountants are still in high demand. The job market is projected to grow by 6% in the near future, which is 1% more than other professions.
21. Presently, there are around 1.3 million auditors and accountants in the United States alone.
22. On average, accountants earn over $71,000 every year.
Statistics On Accounting Trends
While the shift to cloud and AI-backed accounting software is a well-documented one, there are several other less-documented trends. Here are some of the ones to watch out for:
23. An emerging trend in accounting circles is that of blockchain usage. This decentralized way of maintaining a ledger is not only safer but also cheaper. As of June 2020, there are over 50,000,000 blockchain wallet users worldwide with more on the way.
24. Almost 75% of accountants believe that a cashless economy will cause far-reaching effects that will be felt only five years from now.
25. With user-friendliness becoming one of the paramount features that users look for in software, mobile-friendly accounting apps are on the rise. At present, there are over 700 bookkeeping mobile apps. About 65% of accounting software providers have corresponding mobile applications.
26. Even accounting firms are not immune to the social media bug. Over 75% of large firms and 50% of SMBs now leverage social media platforms such as LinkedIn and Facebook to grow their accounting business.
27. In the year 2020, the most popular add-on service is projected to be Client Accounting Services (CAS).
28. Big data is also trending in accounting circles, a fad that will see the industry become more proactive than reactive. More than 60% of accounting firms now look for data analytics skills in their accounting employees.
Statistics On Impact Of Covid-19 On Accounting
The ongoing global coronavirus pandemic has affected just about every job sector. Surprisingly, the accounting sector has fared better than expected. Here are some statistics that show just that:
29. Over 74% of internal auditing companies say they have, so far, not been affected by budgetary or staffing cuts.
30. In a poll conducted by IIA, 40% of respondents have said that their auditing firms have gotten more work during the pandemic.
31. One reason for the above stats is that the accounting fraternity has stayed busy. Nearly half have shifted from being one-dimensional auditors. They have taken on more diverse roles, such as becoming cost-cutting identifiers, risk mitigators, and expense trackers.
32. More than 60% of accounting firms that have coped well during this crisis are the ones that have embraced cloud technology.
33. Around 48% of accounting firms are now paying more attention to the process of Business Continuity Planning and Enterprise Risk Management.
We hope you enjoyed reading our compilation of accounting stats. More importantly, we hope it has given you a better understanding of everything from the current trends to the future of accounting so you can plan accordingly. If you still haven’t embraced technology to help with your accounting, now is the time, and you should seriously start thinking about taking the leap!