Top 5 Accounting and Finance Trends for 2024

The economic landscape in 2024

It seems that every New Year is heralded by a raft of industry commentators telling finance professionals that this year is going to be one of momentous change.

From an economic point of view, 2024 is looking like a classic year of change as high interest rates start to wane and inflation reduces.

As we look forward to 2024, it is becoming clear that finance and accounting professionals are likely to be impacted by several trends and developments in 5 main areas:

1. Finance technology (FinTech)
2. Compliance
3. Remote work
4. Skills and development
5. Data protection

Read on and find out how we see the next 12 months:

1. Adoption of new Finance technology

Emerging trends in finance and accounting technology take centre stage. The ongoing integration of advanced technologies like Artificial Intelligence (AI), machine learning (ML), and blockchain will continue to transform the finance and accounting landscape.

Whilst large systems will continue to be the most capable, especially for big, complex organisations it is also true to say that an increasing number of micro apps will extend the capability of base systems.

Connectivity will be the watchword in 2024 and systems that can’t connect to outside services or data will become more and more outmoded as their competitors forge ahead.

To stay ahead of the competition this year, finance professionals will be leveraging technologies such as:

Cloud-based accounting

Cloud applications tend to be much more secure, with the software provider taking care of encryption and access control rather than the company.

Old accountants will be able to tell many war stories about the old days when accounting software was last in line for IT security patches.

The main attribute of cloud computing, the idea of having a central location for the app and storage, also lends itself to information distribution.

Arguably the biggest reason for the rise and rise of cloud accounting has to do with connectivity. Cloud applications live in a world where connectivity is the norm rather than an exception and the development of APIs was probably an obvious move.

Good examples of cloud-based systems that either use accounting information or report back into the ledgers would be:

• Expense management apps
• Payroll software
• CRM systems

Ultimately, understanding the specific requirements financial systems must be able to meet is critical for selecting the best software for your finance team.

AI in finance and accounting

In 2024, finance automation is likely to continue its march, which means that finance professionals will definitely feel the effects of the increased use of AI and machine learning for routine tasks even if they can’t immediately see it.

What is AI in accounting?

Artificial Intelligence (AI) is any form of digital application with the ability to learn and adapt its behaviour depending upon current circumstances.

AI has been the darling of the software world for a couple of years now and many companies have fully embedded this within their operational model.

The result is that it has become an accepted part of everyday life, so much so that many people don’t even realise they are using it.

The benefits of AI for finance professionals

AI requires an investment in time and money for any business that is looking to develop and implement an operational solution.

So it is important to note that AI brings many benefits to finance professionals, such as:

• Enhanced efficiency
• Increased speed of reporting
• Massive data reach
• Better pattern identification

Examples of AI in Finance

AI in accounting and finance is supremely suited to pattern spotting and this is something that will pay dividends in data analytics, either by increasing the speed of report production or by being able to process huge amounts of data to produce more robust conclusions.

For instance, AI can learn quickly how cash flow works in any particular organisation and can forecast balances and develop methods of improving cash flows.

Below are some of the most innovative uses of AI in finance and accounting for 2024:

• Fraud detection - an area where AI is already making great strides because of its two great attributes; the ability to spot patterns and analyse vast quantities of data rapidly.
• Credit history - While AI is ideally suited to bringing in more than just standard credit scoring data to decide an application but a purely automated process is something expressly forbidden by GDPR.
• Trading - To investors speed and information mean money and AI has been deployed by many trading houses to allow them to rapidly spot market trends but also analyse company data to find opportunities that humans may otherwise miss.
• Risk management - A double-edged sword here. Whilst AI can assist greatly in risk management both in identifying risks and developing mitigation strategies, it is also in itself a risk.
• Compliance - another area that has benefitted from AI is compliance with Gartner estimating that by the end of last year, more than 40% of compliance tech included an element of AI.

After all, AI and automation are not here to replace jobs but shifting the focus towards more strategic and analytical tasks where human intelligence shines. Discover how automation can enhance Finance roles, not reduce them.

Business analytics

For any modern business the days of monthly reporting on the 24th of the month are long gone.

Even for multi-entity groups, fast reporting has become the norm and the desire to access information quickly will only get stronger. AI and machine learning will turn vast amounts of unmanageable data into insightful information for companies and financial institutions, from start-ups all the way to the UK's central bank.

Whilst the tech teams will continue to develop highly capable apps, managers will need to spend time on personal development and upskilling to ensure that they are able to produce perceptive and imaginative responses to issues and opportunities.

Open banking

The advent of open banking in the UK has increased the availability of information for businesses and will transform instant payment services. The availability of data will also help enhance the security around payments.

The UK government has produced its open banking roadmap for 2024 and beyond and this focuses on developing the infrastructure at scale to allow full open banking in a secure, scaleable and competitive way.

Blockchain technology

As many have come to know, blockchain technology refers to a decentralised digital ledger that facilitates the transparent and highly secure recording of transactions.

But blockchain is so much more than simply a way to sell questionable investments to the gullible.

The development of blockchain interoperability protocols will mean that instead of siloed applications, the industry will move towards a much more connected future.

2024 will see an extension of the fight between hybrid and monolithic blockchain systems with the former trying to bring best-of-breeds together and the latter feeling that a single system is the best way to provide a great user experience.

Process automation in Finance

Business Process Automation (BPA) using ‘dumb’ automation and simple machine learning is now reasonably mature and in use across all sectors.

Rather more interesting is AI-based RPA (Robotic Process Automation).

With RPA, bots monitor transactions and ‘learn’ how humans deal with various situations, becoming ever more intelligent and capable.

Audit and compliance are two areas that could certainly benefit from some automation features and it is not without the bounds of possibility that AI will make inroads into the audit function in the next 12 months.

With Access Financials, KLM Engineering has seen a saving of 2.5 days on month-end processing by automating manual processes. Read the full KLM Engineering case study for more insights into the benefits of automating financial processes.

2. Focusing on Finance compliance

Finance leaders always have one eye on compliance and that certainly won’t change in 2024. Compliance will always be a very important aspect of the finance team’s responsibilities so what do we expect to see next year?

What is compliance in finance and accounting?

Compliance in finance and accounting is the practice of ensuring that the company complies with rules and regulations whether they be external laws or internally developed policies and procedures.

For financial services companies, the FCA has already released its new regulatory initiatives grid and whilst most of the themes relate to FS-specific issues such as Basel 3.1, many of the headings could easily relate to any business or not-for-profit.

Typically, businesses will need to be much more aware of issues around consumer duty of care, ESG reporting, regulation of buy now, pay later products, and greenwashing.

Challenges of ensuring compliance

It may seem counter-intuitive but compliance management in finance is actually less about rules and more about people.

If we want to ensure that our systems and processes are developed and managed with compliance in mind, we need to start with a compliance mindset.

When all is said and done, compliance can only be improved if people understand why they are being asked to do things a certain way and what the benefits are.

A clear understanding of why compliance is important also tends to stop people from trying to find workarounds and shortcuts, both of which can undo the good work of everyone else.

How to efficiently manage compliance in Finance?

Good compliance practice starts at the top so the first thing to do is to make sure that the directors and managers of the business understand how important it is to lead by example. After all, if the senior manager is using the expenses system incorrectly, then why should their direct reports follow the rules?

Communication is vital when you are looking to improve compliance practice so clear and concise what, why, where and how comms will help. Identifying a compliance lead so that everyone knows who is in charge and who to speak to is also valuable.

3. Strategic approach to remote work in Finance

In 2019, remote working was often seen as a curiosity that couldn’t be implemented within most organisations. One year later, all of that had changed and, within a few weeks, businesses were forced to develop ways of working that allowed people to stay remote.

Is remote working more productive? The evidence seems mixed and is often tainted by personal bias one way or another but what does seem clear from academic studies is that team productivity is lessened whilst individual productivity is greater:

• From a technology point of view, we expect further development of connectivity and productivity apps in 2024.
• The cloud, thought of as a technological curiosity only a few years ago has now become central to modern business life.
• We expect that the vast majority of apps developed in 2024 will offer at least some level of cloud storage.
• A prime benefit of cloud storage is the increase in collaborative apps that allow the sharing, discussion and editing of apps by multiple people wherever they may be.

4. Emphasis on skills and development

Go back 20 years and you won’t find jobs advertised for app developers, social media managers or drone operators. It is a good bet that, with the continuing pace of change, more new job roles will be developed in the next few years.

For example, we are already seeing AI prompt engineers in high demand so the effect of new technology is already being felt.

Why is professional development in Finance necessary?

From a strategic point of view, finance leaders need to have a broad understanding of new technology to allow them to contribute positively to the direction of the business.

If the CFO doesn’t understand the tech then it is highly likely that the company will lose any competitive advantage, at least within the data analytics field.

What skills do finance and accounting professionals need in 2024?

Continuous learning and upskilling will be essential. Professionals should be proactive in acquiring new skills, such as data analytics, to stay competitive in the evolving job market.

5. Enhanced data protection in Finance

Almost the twin of compliance, data security is another area that is dear to the finance professional’s heart. We think that in 2024, the cybersecurity landscape will see a sea change in the way that threats emerge and how they are countered.

What is cybersecurity?

Cybersecurity is the practice of ensuring that access to data and systems is confined to only authorised people and applications.

We have already looked at both AI and compliance and cybersecurity is an area where these functions meet finance. Think of a Venn diagram with finance sitting squarely in the middle.

It would be naive to think that the development of AI will only be used for noble purposes and we can expect ever more sophisticated cyber attacks.

One mistake that many businesses make when looking at cybersecurity is thinking that it is a purely technological problem with a corresponding tech solution when in fact, so much of cybersecurity focuses on human interaction with systems. We’ll explore this a little more in the following sections.

How are cybersecurity and finance connected?

There are very few, if any unconnected finance teams nowadays.
Even if your company is using an old-school, on-site installed finance system you will probably still be using email and internet connectivity to do your daily work — a perfect way in for fraudsters.

Finance spends a lot of time considering risk, whether that be for systems and process security or through their involvement in compliance and risk management.

And of course, the very nature of the finance team means that it is a key target for cybercriminals from a low-tech phishing attack or a more complex systems fraud.

So finance has the unenviable position of being both a main target for attack and being the people who are tasked with stopping any issues occurring.

Cybersecurity challenges in finance

The larger the company, the wider its vendor and customer network and this simply increases the cybersecurity risk landscape.

The problem is compounded when third parties have access to systems or are required to use apps to carry out their work.

Finance generally has the ‘keys to the safe’ when it comes to data so quite apart from the risk of monetary theft, data breaches are also an area that needs to be attended to.

The cybersecurity skills gap is a very real issue and finance is no exception in this respect.

Examples of finance cybersecurity done right

The best way to improve the risk levels that a company faces is to understand the risk, take it seriously and train its people to respond appropriately.

The starting point has to be a cybersecurity risk assessment that highlights areas that are in good shape but also points out systems and processes that need addressing.

At the very least, every UK company should sign up to and meet the requirements of Cyber Essentials.

The audit facet of the Plus certification means that the company is then starting to prepare for much more in-depth security work such as ISO27001 (data security) or ISO/IEC 27032 (cyber security).

But above all, the most important part of preparing a business cyber threat response is to make sure that it is supported from the very top.

2024 accounting and finance trends in review

2024 is shaping up to be an exciting, challenging and interesting year in the world of financial services industry.

We expect to see quite a number of developments in a variety of areas, some of which will be welcomed by finance professionals and some which will prove more difficult to navigate.

As we look forward, we anticipate:

• Greater development of existing AI apps, improving the quality and speed of output
• The introduction of new, more powerful AI that will revolutionise some aspects of accounting
• More requirements for compliance with greater regulation, especially in financial services
• An expansion of open banking with better infrastructure and security
• More and varied cyber threats, often driven by AI
• More development in blockchain technology with enterprise-class applications coming on stream
• The further maturity of remote and hybrid working in many organisations and across financial services sectors.

A push towards upskilling current finance teams as the worldwide jobs market tightens.

A wide and varied list indeed and certainly, finance teams will need to be on top of their game to cope.

But for finance leaders, there is one quote we’d like to leave you with, from entrepreneur Arnaut Henneville:

We wish you all the best for your 2024 finance year!