The digital transformation of nearly every industry over the past few years has left those who have yet to make the technological leap behind. One such sector that faces a pivotal juncture is tax and accounting.
A recent QuickBooks survey found that 86% of accountants expect technology to help their firms grow and expand their services over the next year, with nearly half (48%) planning to invest in automation tools, artificial intelligence and blockchain technology (47%).
While these firms are making the proper investments in new technology backed by AI and machine learning, many continue to rely heavily on outdated legacy systems. This leaves the question for those still leveraging manual, antiquated systems, “If not now, then when?” The tech era is here, and anyone who doesn’t make advanced technologies part of their daily operations can expect to lose clients and staff to competing firms that have ditched legacy systems.
Legacy system overload
Legacy systems have served as the tax and accounting profession’s digital framework for decades, supporting vital functions such as tax preparation, financial reporting and regulatory compliance. These systems persist for several reasons, including resistance to change, concerns about data migration, and apprehensions about adapting to new systems requiring regulatory compliance revalidation.
Nonetheless, while legacy systems endure, they have many challenges that impact daily functionality. So, what is the real cost of not investing in accounting technology? The answer has four parts.
1. Scarce support and expertise. As technology progresses, the pool of professionals proficient in maintaining and upgrading legacy systems decreases, making it challenging to address glitches, security vulnerabilities and other issues.
2. Integration complexity. Legacy systems rely on hardware that is no longer supported or in production, making it problematic to find replacements in case of hardware failures. In addition, merging legacy systems with contemporary applications can be intricate and error-prone, hampering data flow across processes and leading to inaccuracies and inefficiencies.
3. Scalability and performance issues. Legacy systems often struggle to handle growing data volumes and user demands as businesses expand, resulting in sluggish performance and downtime. This user frustration from staff members and clients opens the door for high customer turnover and a rise in talent loss to competitors.
4. Limited collaboration. In an age where remote work and collaboration are increasingly important, legacy systems often lack the tools for effective teamwork between tax professionals and clients.
These challenges culminate in a negative impact on internal operations and compliance, marred by disruptions to usability and efficiencies, directly affecting employees and clients, prompting many to leave.
Embracing data-driven solutions
Firms are actively embracing advanced AI solutions integrated into modern tax and accounting platforms to mitigate this labor shortage and combat the additional challenges posed by legacy systems. These AI tools partner with accountants, easing the burden without compromising service quality. Automating tasks like signature collection, data entry, financial reporting, routing and analytics, which accounting administrators once handled, allows CPAs to spend more time on strategic initiatives and building meaningful client relationships.
Modern software solutions may also provide real-time updates to tax laws and accounting regulations, ensuring that professionals work with the most current information and remain compliant. These systems can also integrate with other business software tools, such as CRM systems, financial analytics and project management software. This leads to a comprehensive view of a client’s financial landscape.
Streamlining data management with gen AI
Transferring historical data without sacrificing integrity may seem daunting when moving from a legacy system to an end-to-end platform. Still, it is possible with the right technology, such as generative AI. Gen AI can generate paragraphs and texts, facilitate automated document reviews and redline comparisons. It can also produce authentic and realistic data across financial documents like statements, invoices and expense records.
After extensive training on datasets, these AI models grasp the inherent patterns and structures underlying tax and accounting information. This proficiency is particularly valuable for scenario forecasting, risk assessment and compliance audits.
Another significant capability of gen AI is improving the search experience. AI-assisted search capabilities eliminate the need for complex and lengthy queries. Instead, users can engage in more natural, conversational questioning and receive relevant search results. This streamlined approach significantly enhances the discovery of information.
Charting a new course
Organizations that embrace the transformation from legacy systems to modern solutions will simplify processes and unlock the potential for unprecedented growth and innovation. By recognizing the significance of this transition and investing in intelligent strategies, firms will position themselves for heightened productivity, reduced risks and improved service delivery in an industry that demands precision, security and flexibility. Most importantly, it’ll offer a unified portal for professionals and clients to collaborate seamlessly and establish user-friendly experiences.
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