4 ways investing in technology will pay dividends for CPAs

4 ways investing in tech will pay dividends for CPAs

December 7, 2021 11:15 AM

Spending cash can often be anathema for accountants, who are wired to carefully account for every penny and keep expenses down. While socking away extra money for a rainy day is always a good idea, good accountants also know that sound investments are critical for financial success.

As the old saying goes, you’ve got to spend money to make money. That saying rings true when it comes to wise investments. Investing in the right technology can pay dividends for accountants, especially as the industry faces major changes. Many firms are already taking the plunge, as the biggest firms recently announced they would invest $9 billion in new technology. Most firms don’t have that kind of money at their disposal, but even small firms will find that putting money into new technology will pay off in the end.

Here are four ways spending on technology will improve the bottom line for accounting firms.

Cybersecurity

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Cybersecurity is the elephant in the room that some businesses hope to avoid until it tramples everything in its path. Unfortunately, if companies don’t protect their data — and that of their clients — the financial hit will be far greater. An

IBM report

found that data breaches cost an average of $4.24 million in 2021, up from $3.86 million. Not only do firms face the direct cost of lost data; they can also be severely hurt by the lack of trust from clients who are impacted. Research shows one of the

highest costs

of a security breach is losing customers.

Smaller firms should not be complacent, believing they aren’t big enough to be noticed by malicious cyber threats. In fact, small businesses can be heavily impacted and face disproportionately high costs as a result. A cybersecurity overhaul may be expensive, but protecting data from security threats will be worth it in the long run.

Reporting software

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The right kind of reporting software can have a big impact on profits for accountants. Providing advisory services for clients is a major tool for CPAs to expand their offerings and bring in more money. Translating expert advice into usable reports for clients not only helps firms provide a better product for their clients, but it also helps improve efficiency and saves time and money. Investing in better software will allow firms to create better reports and improve their services to clients. The return on the investment is well worth, it as accountants are able to provide more advisory services with deeper insights.

Visual reporting software can save time on generating reports, as many software programs can quickly populate templates with important data. It can also significantly reduce the time spent after a client receives the report. Visual financial reports make data

less complicated

and easier to understand, and clients may have fewer questions for their accountant. Visual reporting software can be a valuable tool to improve communication and understanding between clients and their trusted advisors.

Automation

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Automation is no longer a futuristic idea like flying cars and robot butlers. It is everywhere today, and it is here to stay. Research from Sage found that

20%

of accountants are currently investing in automation, and an additional 43% plan to do so in the next three years. Automation can’t take the place of a real CPA, but it can definitely take over time-consuming jobs and make business more profitable. If time is money, accountants should see dollar signs with every task delegated to automation.

Those who get on board with automation can use it to perform routine functions to assist with audits, payroll, expense management and more. Meanwhile, accountants can devote their energy to advisory and analysis for clients, allowing firms to expand their services and build revenue.

Cloud technology

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The cloud is a powerful tool for accountants working to be their clients’ most trusted advisors. Cloud technology is the backbone of automation and visual reporting software that can be so valuable for firms. The cloud enables accountants and their clients to utilize data in real time, rather than consistently analyzing old information. Using the cloud allows businesses to send information to their accountant immediately and vice versa. This isn’t just about convenience; the efficiency that cloud technology provides saves an enormous amount of time. One survey found that accountants who utilized the cloud saved an average of

three hours

a day. That time can be spent doing other work, or it can give employees a higher quality of life by not overworking them — both valuable options for companies.