Accounting and pre-accounting– india vs the world (developed countries)
Back in time, accounting was perceived to be an activity limited to just keeping debits and credits. It has come a fair way since then, evolving into a system where accountants help the public understand the complexities of finance by translating them into logical and consistent forms. The present state of accounting and pre-accounting activities across countries provide a distinction that is reflective of the growth of their financial sector in the twentieth century. The developed nations adopted methods of capital generation and liberal business practices while India was mired in internal struggles left behind by the partition and following policy decisions. Nevertheless, accounting language dates back thousands of years. It is believed that the Mesopotamians kept the earliest records of goods traded and received in ancient Egypt and Babylonia. In India, it was the renowned philosopher and economist Chanakya who penned “Arthashashtra” around the 2nd century B.C and presented formative knowledge of accounting. Fast forward to 1890 when accountants started using the adding machine to ease their work. It was groundbreaking but not for long. In 1952 came the first IBM computer and accountants showed immediate interest. From there on, it has been a period of rapid technological developments with various accounting software that offer quicker, more accurate and much more intuitive financial handling.
India catching up with the developed world
As the present day developed countries sped their way through innovation in the 1990s and the following two decades of 21st century, they adopted various highly automated and smart accounting tools. Accounting software like Quickbooks streamlined the entire process with cloud accounting, real-time tracking, cash flow management, online banking, mobile apps and real-time support. If this was not enough, these tools, then expanded to pre-accounting activities which are in fact, the lion’s share of manual work. Pre-accounting involves collecting invoices, organising data, coding and submitting the final financial information for accounting. Because of its manual nature, the process is fraught with chances of manual errors. Thus, requiring extra care through multiple checks.
On the other hand, India started growing to its true potential only after 1991. Businesses started innovating processes but due to the availability of abundant manpower, technological adoption remained sluggish. Accounting software like Tally were present but were catering to a limited audience. It was with the onset of the 21st century that Indian businesses started realising the potential of automating various processes and started adopting integrated automation whole-heartedly. Let’s look at some areas where India’s catch-up game is now competitive with the world.
i. Automated Accounting Software: The inevitable push for automation pushed Indian businesses to invest in the best accounting software. Studies show that the demand for billing software in India for small accounting is going to increase. Automation allows data-backed decision-making in a highly secure and organised ecosystem.
ii. Cloud-based Accounting: With cloud computing becoming the norm, companies are looking to leverage this anytime-anywhere tracking of financial data. Indian businesses realised this and through essential government support for required infrastructure, the number of cloud-enabled services is booming rapidly.
iii. Outsourcing: Business owners want to reap more benefits, save costs and do away with talent hiring, training and retaining hassles. India has already established itself as a BPO destination and is now ready to reap the rewards of the increased trust in offshore financial data handling. This presents a win-win situation for the business in a developed country and accounting firms in India. This networking will also enable Indian accounting firms and professionals to stay up to date with global standards and adopt latest technologies.
iv. Understanding and automating pre-accounting: It is exciting to see Indian accounting firms now realising the need to streamline the data collection process before accounting actions are performed. Present day accounting requires collecting information through e-mail, slack or even WhatsApp (in case of small businesses). This scatters the data and adds to the manual drudgery of accounting professionals. Pre-accounting tools will allow organised and secure data sharing while offering integration with commonly used accounting software like Tally.
v. Remote working for business continuity: The successful experiment of remote working in the second most populous nation during Covid-19 can be called a success. Indian firms ensured business continuity not across India but across the world for their offshore clients. This is going to be of great significance in times to come as the changing working population worldwide forces evolution in working culture.
To quote CA. Atul Kumar Gupta, President, ICAI, “Technology is changing by leaps and bounds and transforming the world around us. The accountancy profession is no exception and with the introduction of Artificial Intelligence, Robotic Process Automation, Blockchain Technology, IOT among others it becomes imperative for all to be vigilant and respond to the technological innovations to continuously improve business operations.”
He emphasized the importance of upskilling and training finance teams in order to thrive in this new environment. India’s catch-up with the developed world in automated accounting and pre-accounting services needs the finance staff to have the right attitude, embrace change and be open to learning new skills. Thus, pushing India to the global pedestal.