Jack Perkins is the Founder at CFO Hub, which provides on-demand CFO, Controller, Accounting, and HR services.
Technological innovations and digitization have continued to change the way accounting is done. As a result, financial management and accounting best practices must adapt to reflect these advances.
This brings about opportunities to increase efficiency, improve accuracy, and otherwise streamline accounting practices, with knock-on benefits across the organization.
What follows is a look at five key practices that have the potential to significantly enhance an organization’s accounting operations and position the business to capitalize on the continuing technological advances in 2025.
1. Prioritize Data Security
With more and more financial data being digitized and stored in non-centralized repositories, data security becomes a paramount concern. Cybercrime targeting financial operations has increased exponentially over the past two decades, quadrupling in frequency since 2017.
The cost of these data breaches is an estimated $2.5 billion per year, and as devastating as that figure sounds, the real threat may be in the reputational damage suffered by the firms targeted by these attacks.
Robust, responsive, and adaptive security measures are critical in avoiding the substantial threat cybercrime poses. Protecting financial data calls for security strategies that encompass every aspect of the accounting process. Policies mandating strong passwords, multifactor authentication, and ongoing reviews by qualified cybersecurity professionals are critical.
Regular audits of an organization’s security procedures, utilization of unbreakable encryption technologies, and intrusion prevention and detection measures must be in place to adequately protect sensitive financial information. These policies must also be combined with ongoing employee education and training programs to accommodate new developments in the threat landscape.
2. Adopt Cloud-Based Accounting Solutions
The widespread proliferation of cloud-based accounting solutions provides increased functionality and allows for decentralized access to financial data. This flexibility allows work-from-home or hybrid workers to access and update financial data when and where they need to.
Moving to cloud-based solutions typically brings with it an increase in automation capabilities across day-to-day accounting tasks. This leads to greater productivity and faster turnaround times for everything from accounts payable and receivable to payroll processing, invoicing, and other common accounting activities.
Cloud-based systems also generally bring improvements in accuracy, lower costs, and an easier time guaranteeing regulatory compliance.
3. Increase Automation
Many core accounting tasks can be both time-intensive and repetitive. The nature of these duties and the limitations of the human attention span can lead to inaccuracies and other errors. Automating these tasks whenever possible reduces costly recordkeeping and processing mistakes and drastically reduces the amount of time these responsibilities require.
Some routine tasks that can significantly benefit from an automated approach include:
- Expense reports: Allowing sales and service reps to instantly submit expenses from virtually anywhere can lead to increased compliance with company guidelines and faster processing and remuneration times.
- Invoice generation: Sales and other financial information can be handled by automated solutions from various sources in real time, resulting in quicker and more comprehensive invoicing and a more efficient accounts payable operation.
- Payment processing: Automation reduces time to payment, increases accuracy, and improves cash flow across the organization.
- Statement reconciliation: This is typically one of the most time- and labor-intensive responsibilities of an accounting team. Automating statement reconciliation not only greatly expedites the process but also results in fewer errors and greater accuracy in financial recordkeeping.
4. Leverage Artificial Intelligence
AI is the most transformative technological development in recent history. Increasingly sophisticated and capable models are changing accounting processes in surprising ways.
These developing tools can help with not only basic accounting procedures but also more advanced and nuanced tasks like financial forecasting, trend identification and analysis, and risk assessment and management.
5. Prioritize Ongoing Professional Development
As technology and accounting continue to evolve side by side, the need for ongoing professional development becomes clearer and more urgent. Accounting teams should be provided with and encouraged to take advantage of continuing education workshops and new technology certification courses. Continued technological advances also bring about regulatory changes and shifting industry trends, of which all financial professionals need to stay aware.
Changing Best Practices: Final Thoughts
The digitization of the accounting field continues to dictate best practices, though these bring with them increased accuracy, greater efficiency, improved security, and greater operational flexibility. No matter how these best practices may change over time, the underlying basics remain constant: Sound financial principles and due diligence can never be overlooked when an organization is adopting a new strategy.
Changes in accounting procedures are less about improved technology and more about adequately preparing accounting teams and other financial professionals with the knowledge and tools they need to stay productive, efficient, and competitive.