The accounting field is one of the most cutthroat industries known globally, and any company that specializes in this profession needs to stay ahead as much as possible. With the dawning of the digital era, however, skills and experience alone may not be enough. One way to remain a standout among the competition is by implementing the right accounting software.
While choosing the right platform to use for your business can give you the technological advantage you need, it doesn’t hurt to gain insight into what’s going on in the industry. Paying attention to accounting software developments cannot tell you what the future holds, but it can give you a sense of what to prepare for. With a better view as to where the industry is headed, you will be able to prepare your business for the future, not the least use the right accounting platforms. Below, you’ll find the latest data on accounting and accounting software, how the market is shaping up, the users are behaving, and vendors are responding. This guide is designed to help you see the big picture in one sitting.
General Accounting Statistics
Traditional accounting practices like the use of spreadsheets or ledgers may be tried and tested, but they aren’t exactly the most efficient methods for modern businesses. They tend to take up more time, and they are error-prone compared to current technologies available. In addition, they may not be enough to help you keep up with the increasingly difficult demands of the industry.
This is why it comes as no surprise that the accounting software market share has seen steady revenue growth over the years. In fact, it seems that more and more accountants are gearing towards adopting technology in the near future to remain competitive or to satisfy client demands.
- The global accounting software market size was valued at $57 million in 2017.
By 2026, it is expected to reach $ 117 million. (Transparency Market Research, 2019)
- 90% of accountants feel that there is a cultural shift in accountancy that leans toward technological adoption. (Sage Practice of Now 2019)
- Also, 21% of accountants believe that market demands are driving the cultural shift in accountancy. Other drivers include regulations (16%), ongoing digitization (15%), generational changes (13%), Client demands (13%), and investments to keep pace (12%). (Sage Practice of Now 2019)
- The majority of accountants today feel that traditional accounting is no longer enough to remain competitive. (Sage Practice of Now 2019)
- 83% of accountants say companies are more demanding today than they were five years ago. (Sage Practice of Now 2018 report)
- One of the biggest contributors to the evolution of accountancy is the ongoing digitization of processes. (Sage Practice of Now 2019)
- 56% of accountants say that accounting technology has increased their productivity. (Sage Practice of Now 2019)
- 58% of accounting firms invest in accounting solutions to satisfy client expectations. (Sage Practice of Now 2019)
- Interestingly, only 38% of accountants believe that today’s accountancy training programs will be relevant enough to sustain a successful practice by 2030. (Sage Practice of Now 2019)
- In a bid to build practices that are ready for the next decade, 49% of accounting firms have reviewed their business practices in the last year. (Sage Practice of Now 2019)
- Some of the top services undertaken by accounting firms include accounting/bookkeeping (79%), payroll (25%), tax (24%), compliance (20%), business advisory (17%), assurance/audit (15%), and outsourced CFO (5%). (Sage Practice of Now 2019)
- The “Big Four” global accounting firms, namely: KPMG, PWC, EY, and Deloitte, generated a combined $56 billion in revenue from the US market in 2018. (Statista, 2019)
- In 2018, there were 1.26 million auditors and accountants, and 1.53 million accounting, bookkeeping, and auditing clerks working in the United States. (Statista, 2019)
- The highest full-time accounting positions in small businesses are CFO (30%), general bookkeeper (21%), accounting manager (19%), controller (12%), and staff accountant (4%). (Wasp Barcode)
- Surprisingly, only 26% of small businesses understand how ghost assets impact their accounting books and taxes. (Wasp Barcode)
- Accounting services generated £17.2 billion for the UK GDP in 2016. (CCAB, 2017)
- A recent survey by SJD Accountancy found that 72% of self-employed contractors handle their accounting tasks without seeking assistance from a professional. Consequently, the remaining 28% get some assistance from general accountancy firms (18%), specialist accountants (7%), family & friends (2%), and another person (1%). (AccountancyAge, 2017)
- Besides, 35% of self-employed contractors say making mistakes when doing their accounts is the most stressful thing. Other worries include how long it takes to complete (15%), the complexity of the process (13%), and being slapped with financial penalties (5%). (AccountancyAge, 2017)
Cloud Accounting Data
The cloud has proven to be one of the best platforms for all sorts of programs ranging from communication to business management. In the case of accounting, it can do wonders to make ledgers more accessible and collaboration among accountants simpler. What’s more, software providers are still finding ways to make their products more efficient. With that said, we can expect that more companies will realize the value of cloud accounting in the next few years.
- The global cloud accounting market share is projected to increase by up to $4.25 billion by 2023. (AB Newswire, 2018)
- Companies that rely solely on cloud accounting has five times the number of customers than businesses that do not. (Xero, 2017)
- Businesses that utilize cloud-based accounting have a 15% year-over-year growth in revenue. (Xero, 2017)
- 90% of accountants say that cloud accounting and digital business processes can be the key differentiator among companies in the near future. (Journal of Accountancy, 2015)
- 67% of accounting professionals prefer cloud accounting. (Sage Practice of Now 2018 report)
- 58% of large companies utilize cloud accounting in their operations. (Accounting Today, 2018)
- 78% of SMBs will rely exclusively on cloud accounting software by 2020. (Accountancy Age)
- Large businesses are 41% less likely to buy cloud-based accounting software than small businesses. (Software Connect, 2018)
- Also, 20.4% of businesses want cloud-based accounting software. On the other hand, 19.7% of businesses want on-premise accounting software. (Software Connect, 2018)
- In 2016, 41% of C-level accounting executives said the adoption of cloud computing would have the biggest impact in the next three to ten years. (ACCA, 2016)
However, it is best to note that the abovementioned accounting software facts do not mean cloud-based solutions will replace on-premise platforms any time soon. Many companies still believe that while cloud-hosted accounting can be more convenient, there are still many benefits to be gained from using legacy systems.
Most popular accounting software
- Freshbooks is a cloud-based accounting solution that offers client invoicing and time tracking tools. It’s perfect for small business owners who need to automate invoicing tasks and organize expenses. You can find out its full features in our Freshbooks review.
- Sage50cloud is an accounting solution for credit card processing, payroll, and real-time tracking of sales and receipt. It uses industry best practices in tracking your finances. Know more of its features in our Sage50cloud review.
- NetSuite ERP has billing and expense management features, giving you real-time visibility into the financial performance of your business. You’ll find out more about its accounting tools in our NetSuite ERP review.
- Zoho Books is an accounting solution that allows you to send invoices and receive online payments. Aside from being packed with financial control features, it also has collaboration tools for better communication with your clients. You can find out more about its features in our Zoho Books review.
- QuickBooks Enterprise is an end-to-end accounting platform that automates payroll tasks, payables, and inventory tracking. You can find out more details about its features in our QuickBooks Enterprise review.
Small Business Accounting Statistics
SMBs represent 99% of businesses globally; however, only a small fraction of SMB owners are equipped to perform accounting on their own. So, they often rely on their accountants to perform all their bookkeeping, tax calculations, and other accounting tasks.
While there is nothing wrong about outsourcing this job to professionals, it often leaves business owners frustrated once things go awry. This is because not all accountants can be on call 24/7 to help them keep their finances in order. The silver lining here is that there are plenty of free accounting software available to help them perform some basic accounting on their own and take control over their companies’ money matters. Consider these findings from various accounting software research:
- 21% of SMB owners feel that they are not knowledgeable enough about accounting and finance. (Wasp Barcode, 2016)
- SMBs outsource the following accounting tasks: tax preparation (71%), payroll (50%), auditing (48%), tax planning (30%), personal finances (16%), and bookkeeping (14%). (Wasp Barcode, 2016)
- 30% of SMBs regard their accountants as their most trusted advisors. (ICAS, 2016)
- Companies with less than 25 employees feel that their accountants are more reactive than proactive (41%). (Wasp Barcode, 2016)
- 82% of small businesses use some form of accounting software, be it on-premise or cloud-hosted. (Viewpost)
- 81% of C-level accounting executives believe that harmonization of business standards with global accounting will certainly impact the accounting industry in the next three to ten years. (ACCA, 2016)
- 74% of C-level accounting executives are certain that the emergence of the cashless society will have the greatest long-term effect after 2025. (ACCA, 2016)
- Interestingly, 56% of firms in the UK believe that accountants will help them accomplish tasks outsides the field of accountancy in the future. (Xero, 2016)
- Moreover, 59% of small businesses in the UK believe they won’t need to hire an accountant in 10 years’ time. (Xero, 2016)
- 77% of accountants are either ‘confident’ or ‘very confident’ in providing general business management advice to their clients. (Sage Practice of Now 2019)
- Also, 82% of accountants are considering hiring from a nontraditional background. (Sage Practice of Now 2019)
- In order of importance, the following are the additional skills needed by accountants joining the industry today. Technology literacy (57%), relationship building (46%), business advisory (44%), industry experience outside accountancy (43%), and project management (36%). (Sage Practice of Now 2019)
- 67% of small businesses are satisfied with their accounting services. (Wasp Barcode)
- Also, in 2017, 39% of accounts payable (AP) teams said that the volume of their invoices increased by up to 10% from the previous year. (iPayable, 2017)
- Approximately 42% of businesses/clients expect their accountants to offer business advice. (Sage Practice of Now, 2018)
- 40% of accountants say they feel less confident about the prospects for their practices. (Sage Practice of Now, 2018)
Source: AccountingToday.com 2018 "Year Ahead" Survey Designed by
Accounting Automation Facts
Accounting automation offers a number of benefits that are simply too good to pass up. However, it is perhaps one of the biggest hurdles that businesses have to overcome in the next few years.
As of late, accounting software solutions have become more sophisticated in terms of automation, and it is expected to continually evolve. However, many accountants are not equipped to operate the systems currently available, so this means that they will have an even harder time keeping up with the changes. With that said, companies should anticipate that they need to provide ample training before reaping the benefits of accounting software solutions
- More than 50% of C-level accounting executives expect that the development of more sophisticated automated accounting systems will have a big impact on the industry in the next three years. (ACCA study)
- 50% of accounting tasks can be automated through currently available technologies. (McKinsey Global Institute, 2017)
- Labor-intensive processes like tax preparation, payroll, management, and auditing will be fully automated by 2020. (Forbes, 2018)
- AP automation can help businesses save at least $16/invoice. (Vanguard Systems, 2017)
- Professionals who automate invoice capture and payments for their accounts payable processes can save an average of 1 hour/day (MineralTree)
- Most accounting professionals don’t have the necessary skills to operate accounting automation and AI tools. (McKinsey Global Institute)
- 37% of business owners think that they can complete more accounting tasks on their own as processes become automated. (Xero State of Accounts)
- Most importantly, 83% of accountants in the UK’s small businesses say that understanding technology is as vital to their roles as understanding accountancy. (Xero, 2016)
- Also, 85% of accountants believe that to gain a competitive edge internationally, they need to keep up with the pace of technology adoption. (Sage Practice of Now 2019)
- Only 17% of small businesses use asset management solutions that allow auditing. (Wasp Barcode)
- As of 2016, 64.4% of small and midsized businesses in the United States used software to streamline their accounting. (Statista, 2016)
- A survey by Viewpost reveals that only 21% of small and midsized businesses in the US have integrated their accounting system with payments and invoicing products. (ViewPost, 2017)
- Of companies buying accounting software, 37% are first-time users. (Software Connect, 2018)
- Of companies upgrading their accounting software, 35% are coming from Intuit QuickBooks. However, only 11% of the upgraders are from Sage 50. Other upgraders come from QuickBooks Pro (9%), QuickBooks Online (5%), QuickBooks Enterprise (4%), and QuickBooks Premier (3%). (Software Connect, 2018)
- Furthermore, more than 20% of businesses require accounting software that can handle tasks beyond core accounting. Preferably, many want a solution that can handle additional tasks like inventory, payroll, and invoicing. (Software Connect, 2018)
- Key accounting software purchase motivations include to increase functionality (43%), replace a dated system (29%), improve usability (17%), consolidate multiple systems (10%), improve product support (10%), reduce cost (7%), and improve reporting (5%). (Software Connect, 2018)
- Also, 39% of accountants say they are early adopters of technology. (Sage Practice of Now, 2018)
- The top reasons why accountants adopt new technology include to increase efficiency (64%), improve the quality of service (44%), and attract new clients (42%). (Sage Practice of Now, 2018)
AI and Big Data in Accounting
Artificial intelligence has become an asset to companies from various industries—and accounting is no exception. Be it for bookkeeping platforms, invoicing software, tax management tools, or other types of accounting solutions; AI is being used to optimize processes. Hence, it is best that businesses apprise themselves about the utilization of this technology in order to make the most out of it.
- 80% of executives believe that AI in accountancy gives them a competitive advantage. (Journal of Accountancy, 2017)
- 79% of business owners say that accounting AI is the key to increasing their company’s productivity. (Journal of Accountancy, 2017)
- 66% of accountants say they are more than willing to invest in artificial intelligence, while 55% are already planning on using it. (Sage Practice of Now 2018 report)
- Robotic process automation (RPA) can reduce the time spent on auditing and contractual from several months to only a few weeks (Forbes, 2018)
- 58% of accountants believe that AI is helpful in automating accounting tasks and improving overall operational efficiency. (Sage Practice of Now 2019)
- 58% of accountants ‘strongly agree’ or ‘agree’ that artificial intelligence (AI) will automate tasks and improve their firms. (Sage Practice of Now 2019)
- Moreover, 55% of accountants plan to utilize artificial intelligence (AI) in the next three years. (Sage Practice of Now, 2018)
Similarly, big data and analytics will soon become prevalent in the accounting industry. This is primarily because companies are slowly headed towards proactive than reactive strategies when it comes to handling their data. With big data, it would be much easier to gain insights into your earnings and expenditure and plan for the future of your company.
- 52% of senior executives report that they discounted data they didn’t understand. (PWC)
- 25% of accounting professionals lack the skills or expertise to make greater use of data. (PWC)
- Also, 59% of finance and accounting professionals say that by 2020, data science and analytics skills will be required in the industry. (Business Higher Education Forum, 2017)
- An increasing number of firms are prioritizing accountants who have knowledge of data science and analytics rather than those who only know core accounting. (Journal of Accountancy, 2018)
- 75% of C-level accounting executives believe data mining and new analytical technologies will impact the accounting industry. (ACCA, 2016)
From data input to processing, accounting can be tedious. So it makes sense for many companies to use technology to optimize their operations. However, while the use of accounting software has undoubtedly increased in the past few years, it has yet to become the norm for all businesses worldwide. This is because many companies are still on the fence about using software solutions due to the challenges related to implementation.
- The top accounting challenges facing SMBs are accounts receivables/collections (51%), cash flow (44%), paperwork (33%), closing the books monthly (28%), and payroll management (27%). (Wasp Barcode, 2016)
- 66% of companies in the United Kingdom are at risk due to the mismanagement of accounting paperwork. (The Accountancy Partnership, 2018)
- It takes at least five days for companies to retrieve accounting documents. (The Accountancy Partnership, 2018)
- 64% of small businesses in the US spend $1,000 annually on tax preparation. (NSBA Tax Survey, 2018)
- 26% of US companies take up to 10 hours per year to handle tax-related duties, while 40% claim it can add up to 40 hours per year. (NSBA Tax Survey, 2018)
- Also, 69% of CFOs rely on spreadsheets to build reports. (The Future of Financial Reporting Survey, 2017)
- Some businesses don’t use accounting software due to security issues (38%), high cost of programs (35%), and the long period of time required to learn to use a software (18%). (Viewpost)
What do these accounting statistics mean for your Business?
The implications of these accounting software statistics are clear: the future of accounting is headed towards technological adoption. Meaning, you will eventually have to bid farewell to your good old spreadsheet-based accounting processes to reap the benefits of accelerated AI-powered operations. So, despite the obstacles to user adoption, it is important to keep up with the times by understanding how to leverage new innovations in the industry.
However, you should note that the use of technology doesn’t necessarily lead to less work for you and your accountants. The evolution of accounting software may allow you to get rid of repetitive tasks, but this is only to help you focus more on process optimization. After all, with more software solutions offering big data functionalities, you will be able to get more substantial insights on your financial performance or a more proactive accounting approach.
If you have yet to make use of SaaS for accounting, you might want to start checking out reliable accounting software companies. Be sure to pay attention to what kinds of accounting tools each vendor offers, as well as what functionalities are included in their subscription packages. These include choosing accounting software designed for Mac, if device deployment is a factor for you. This way, you will know if you are getting the best value for your money.