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How Has Accounting Software Saved Small Businesses During Covid?

COVID-19 was a nightmare for small companies in the U.S. More than 80% of small business owners said they had lost revenue due to the pandemic in a Wi...

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This story originally appeared on ValueWalk

COVID-19 was a nightmare for small companies in the U.S. More than 80% of small business owners said they had lost revenue due to the pandemic in a Wiss and Sapio Research survey. Further, 27% stated experiencing a dramatic income loss, and 20% turned to savings or borrowed credit.

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However, the crisis was also the pot in which several innovations to save SMBs were cooked. One of those is Quickbooks Online Payroll, an accounting software bundle led by IT product manager at Intuit Inc (NASDAQ:INTU), Ruming Zhen.

An Outstanding Solution

Quickbooks Online Payroll allows businesses to manage payroll via a platform while providing access to integrated employee services.

With the Quickbooks bundle, small companies can track income and expenses, accept payments, manage invoicing, and track sales and sales tax. At present, the accounting software offers these and more features to around 15 million businesses in the U.S.

But the software does more than that. Some of those features helped Intuit’s millions of small business customers “leverage the federal and state level acts and new policies, postpone tax payment responsibility, apply for funds and retain employees.”

Ruming Zhen, the man behind the Quickbooks team, explains that the software spawned “record-breaking business results, improvement in retention, revenue, product experience, and marketing value proposition.”

During the pandemic, technology has become critical in ensuring efficiency and productivity, especially among remote workforce, and low-code technologies allow businesses to customize and implement services with little software development investment.

Competitive Environment

The pandemic’s impact on revenue and remote workforce management spawned a disruptive drive. Many companies turned to harness digital systems that facilitate automation and keep up with online customer servicing.

While these solutions are not completely new to the world, “the increased focus on automation and the rise of decentralized business operations during the pandemic have led to its rising demand,” says Zhen.

Amid COVID-19, around 70% of businesses in the U.S. are increasing or maintaining investments in digital innovations of this kind.

So, FreshBooks –QuickBooks’ fiercest rival– announced in July a data-sharing partnership with the Ontario government to “share data and insights regarding small business recovery trends,” as informed in a press release.

The move “will help small businesses and entrepreneurs by using FreshBooks’ data to help identify weaknesses and gaps in government programs to support timely and impactful decision making and policy development.”

Also, in July, Bookkeper360 launched its Bookkeper360 App Marketplace, an offering based on artificial intelligence devised to help SMB owners access services like capital and payroll.

According to CEO Nick Pasquarosa, “the company also prequalified for $9 million in funding for customers that will help it grow during its pilot period.”

The proliferation of these solutions has come to compete in tandem with those by computing giants like Oracle Corporation (NYSE:ORCL)’s NetSuite, SAP SE (NYSE:SAP)’s Business One, and Microsoft Corporation (NASDAQ:MSFT)’s Office Accounting.

Market Trends

According to Mordor Intelligence, the accounting software market was valued at $12.01 billion in 2020 and is expected to reach $19.59 billion by 2026 at a CAGR of 8.5%.

The agency reports that the growing development of SMBs partnering with e-commerce players and the integration with other online applications –automated bank feeds and automated billing features– are expected to facilitate the adoption of accounting software.

Cloud-based offerings have exerted the biggest impact in the last 20 years, with a good share of vendors “ leveraging the cloud's cost benefits.”

Moreover, “One of the notable strategies exhibited by these accounting software new entrants is the inclusion of advanced features, such as artificial intelligence, for applications, such as planning, learning, problem-solving, and speech recognition.”

The pandemic has amplified the demand for nifty remote access to financial records and systems.

The advent of these applications is also having a significant impact on employment trends among accountants and related professionals, since according to the Bureau of Labor Statistics, the number of bookkeeping, accounting, and auditing clerks employed in the U.S. has dropped from 29 to 1.51 million between 2016 and 2019.

A New Role For Accountants

Software and cloud services have also changed the role of accountants within organizations, ever since they began to replace Excel documents with desktop apps –which also allowed them to record the data.

However, in the beginning, the software was tied to the computer and the information was not as portable as desired.

Now, the software has evolved to transfer data to the cloud, allowing complete information mobility, connectivity from anywhere –as long as there is a stable internet connection– and data collection in real time.

It is undeniable that digital transformation and technological advances have spawned tools and platforms that have automated and sophisticated administrative and accounting processes.

The role of the accountant and its functions have been forever transformed, and they are becoming more like financial advisors with the knowledge and tools essential to make projections, analysis, and make decisions in favor of any business in any sector.