The digital age is in full swing, and it’s just a matter of time before traditional recordkeeping and paperwork finally go completely extinct. This rapid shift into digital has many byproducts, including the increasing volume of digital information created, stored, shared, and processed on the internet and various electronic devices. Collectively, this massive stack of digital information is known as big data, and it has a significant impact on your organization’s accounting. You can benefit from big data in several ways, but before that, you should understand precisely what Big Data is and how it affects your accounting.
Why do we have so much data?
There’s a shocking amount of data out there, and it’s growing at an exponential rate. As you can see, it’s not just the amount that’s increasing, but also the rate of increase. The amount of data that humans are producing right now is ten times what it was in the past, and three things are responsible for this acceleration.
Growing computing power
Computers and data centers have become capable of computing data regardless of complexity and size. Back in the ’80s, the ability to store 100 megabytes of data was already a big deal for NASA engineers. Today, we have a repository of hard drives that can hold up to 120 petabytes or 120 million gigabytes.
New data sources
Since the internet’s discovery, new data sources have emerged like search engines, social media networks, video streaming channels, and many more. You can now upload and download large files on the Internet hassle-free. You don’t even have to sit down and surf on your computer since mobile devices have similar capabilities.
Evolving digital infrastructure
A complex digital infrastructure filled with big data is now a major part of our lives. Just a decade ago, the age of sharing replaced the age of information. Now, we are in the age of gathering. While gathering data can be a powerful tool for businesses, you should use the information ethically, responsibly, and transparently.
What does big data mean in accounting?
Nowadays, financial transactions are too big to audit using the traditional approach. However, if you want to make accurate predictions and analyses with big data, you’ll have to take a new direction. The conventional way of basing analyses and forecasts on a small sample is no longer as reliable in today’s world.
Thankfully, you can use data analytics software to help you out. In addition to detailed manual analysis of smaller data samples, you can program the app to perform the heavy lifting. Data analytics tools, especially when connected to the blockchain, can carry out computations, predictions, and even recommendations faster and more accurately.
3 Benefits of Accounting with Big Data
Some may look at big data as a growing challenge. After all, the more data they have to process, the more complex accounting infrastructure they have to build and maintain. However, there are benefits that your organization can enjoy if you handle big data properly.
Better understanding of your organization
With more information in your arsenal, you can clearly view what’s going on in your organization. You can determine the risks involved in each project you are implementing and accurately pinpoint the demographics you need to be targeting. Unlike data gathered through traditional methods, big data is nearly real-time. The only problem with real-time data is it is harder to verify, but with a proper information management system in place, you can handle the risks just fine.
More accurate and reliable forecasts
Using big data, you also have a better chance of predicting where your organization is headed. Running new information on an accounting analytics software will produce more reliable forecasts to help you make big decisions more efficiently. For instance, you can determine how long your assets will last before they reach the end of their useful life.
Less reliance on manual execution
One of the biggest challenges nonprofit organizations face is the massive paperwork involved in regular accounting and auditing. They deal with this by working ahead of time or auditing each project as they finish. This approach causes a delay in decision-making, and administrators have to rely on guesswork until the analysis is ready. Incorporating modern accounting tools helps automate the process and produce a reliable outcome in almost real-time.
Use Big Data to Your Advantage with the Help of LTD Global
Big data is your nonprofit’s ticket to the fast-paced digital age. Investing in digital infrastructure can help you minimize the time you spend on work, while ensuring excellent output. However, it can be costly, considering how much you need to put into its maintenance and upgrade.
You have a much better option—outsource your back-office accounting tasks to LTD Global. We have the infrastructure to handle your big data and provide you with a reliable outcome. By handing over your accounting and auditing tasks to us, you can focus on your core responsibilities. We are happy to chat with you and answer any questions that you may have about accounting. Reach out to us here.
Sources:
Merging accounting with ‘big data’ science, JournalforAccountancy.com
https://www.journalofaccountancy.com/issues/2018/jul/big-data-and-accounting.html
Role and Impact of Big Data in the Accounting Industry, Aeologic.com
https://www.aeologic.com/blog/role-and-impact-of-big-data-in-the-accounting-industry/