You could be forgiven for questioning what the Internet of Things (IoT) has to do with accounting, however given that the IoT involves the interconnection of devices and sensors, enabling them to send and receive data, the potential applications for accounting are considerable.
The IoT is starting to boom and is set to grow exponentially over the next few years. According to Cisco, the market for IoT could be worth $19 trillion within the next decade. In addition, Gartner has predicted that by 2020 there will be over 26 billion connected devices, including an estimated 7.3 billion smartphones, tablets and PCs – one for every person on the planet.
The IoT is already having a significant impact in areas such as health, retail, manufacturing and also finance. According to PwC’s 6th annual digital IQ survey, financial services is one of the top 10 industries that has been investing in sensors for potential IoT innovations.
However, in the accounting space IoT is still maturing, although it won’t be long till it catches up to other more consumer-facing finance segments, like insurance. Some of the ways the IoT is likely to impact accounting include the following.
Dealing with more data
As the IoT brings in data from multiple sources, be it transactional data or data from cloud ERPs and accounting platforms, there will be an even greater influx of available data which will need to be incorporated into reporting systems.
The majority of the data will also be supplied in real-time displayed through intuitive dashboards that can help to greatly aid decision making and planning. This wave of instant data is likely to pave the way for more automation tools to help process and analyse data.
New accounting models
How people will consume products and services will be impacted by IoT with more pay-for-what-you-use models with sensors tracking actual usage. This will require new pricing and accounting models.
The IoT will also impact business processes, impacting areas like invoicing and reporting. For instance, it will allow business to collect behavioural information in the areas of buying preferences and stock movement. For example, warehouse shelves are being fitted with sensors that can detect when inventory gets low, then an automatic reorder request is made and sent directly to suppliers.
IoT will also impact the way audits are carried out. The availability of real-time data coming from multiple sources and automated analysis will only increase the need for continuous auditing. However, the upshot of this is better risk management and detection of issues.
Better advice to clients
For some time now the accountant’s role has been shifting from providing manual services to providing expert advice on financial matters, like tax planning, financial management and analysis. The IoT will accelerate this shift but also leverage it.
As the IoT is allowing accountants to see more of their clients’ financials and financial activity it puts them in a stronger position to provide advice. Whether it’s information from tie-in accounting services from banks or cloud-based order and inventory management processes, this data can help an accountant get a better picture of a client and therefore offer the best advice.
The IoT has numerous implications for the accounting sector. Accountants that stay on top of technology trends, like IoT, and are able to adapt to incorporate these types of changes, will be the ones in the best position to not only incorporate change, but to leverage it for future growth.
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