Today, technology is transforming the way businesses manage their finances.  The days when accounting meant piles of paper ledgers, manual spreadsheets, and lengthy data entry are gone.

Today, Automation, Artificial intelligence and Cloud-Based solutions are reshaping everything from bookkeeping to decision-making. The right technology can save you time, provide accuracy and give you insights that can help you grow your business.

But what is the future of accounting software? More importantly, how can small and medium-sized businesses (SMEs) benefit from these advancements?

In this guide, we will try to explore the key emerging technologies in accounting software, their impact on UK business owners, and how you can future proof your financial function.

 The Evolution of Accounting Software: A Quick Look Back

Before we dive into the future, let’s take a quick look at how far we’ve come.

• Pre-2000s: Accounting was largely paper-based, with businesses relying on paper ledgers and manual calculations.
• 2000s-2010s: Software like Sage and Xero revolutionised digital bookkeeping and made it mainstream.
• 2010s-Now: Cloud computing, AI, and automation have dramatically improved efficiency, accuracy, and accessibility.

The next phase of innovation promises to reshape everything even more. Let’s explore what to expect next.

 1. Artificial Intelligence (AI) & Machine Learning: Smarter, Faster, More Accurate

Artificial Intelligence is already a game-changer in accounting, and its influence is only set to grow. Here’s how it’s making an impact:

• Automating routine tasks: AI can handle invoice processing, bank reconciliations, and even expense categorisation—saving hours of manual work.
• Error detection: AI can spot errors in financial data, helping prevent fraud and ensuring compliance.
• Predictive analytics: AI-driven forecasting allows businesses to anticipate cash flow issues before they happen, giving them time to act.

What This Means for SMEs

AI can never replace accountants, but it will improve their efficiency and help them focus on high-level strategies, the human connection and judgements, and storytelling. AI can handle the repetitive and automative tasks so accountants can apply their experience and professional judgement to deliver personalised services, ensuring that they can understand clients’ unique requirements.

Many believe accounting is just ‘putting numbers in boxes’, however  it remains, and always has been, a principles and judgement led profession. It is rooted in morality, philosophy, and what it means to be a human, exchanging with other humans regularly, as part of a society.

The key takeaway? An accountant with AI can offer significant benefits to clients, by augmenting their naturally limited human capabilities, with cutting edge technology and unlimited potential. Blending technical tools to streamline processes and improve accuracy, with intuition and emotion, inherently human tools to provide strategic insights for the financial benefit of clients.

 2. Blockchain: Beyond Cryptocurrency More Trust, Less Fraud

You may think blockchain and associate it with cryptocurrency like Bitcoin, but in accounting it extends far beyond digital currencies. Why is it worth paying attention to blockchain:

• Tamper-proof records: Transactions recorded on a blockchain are immutable, meaning they can’t be altered or deleted.
• Enhanced transparency: Real-time access to verified financial data increases trust between businesses and stakeholders.
• Faster audits: With blockchain, audits can be conducted more efficiently, reducing time and costs.

Should SMEs Care About Blockchain?

While large corporations and financial institutions are already experimenting with blockchain, adoption in SMEs is still in its early stages. However, as technology becomes more accessible, expect blockchain-based accounting tools to become more mainstream. Early adopters will benefit from the ‘first mover’ competitive advantage, but timing is crucial to align with client expectations.

3. Cloud-Based Accounting & Integration: Work from Anywhere, Anytime

Cloud accounting software has been around for a while, but its advance features are evolving rapidly. The biggest shift? Seamless integrations. Tools such as Make and Zapier make it easier than ever.

• Real-time financial management: Cloud software connects to your bank, payroll, and payment systems, giving you instant access to up-to-date financial data. This gives you the ability to make quicker, more informed decisions and allows you to be more proactive.
• Scalability: Whether you’re a sole trader or a growing SME, cloud platforms can adapt to your needs. You don’t need to upgrade hardware or outgrow your software. You can integrate it with other tools and software whether you are using a CRM, project management software or online payment systems, cloud accounting can pull everything together and make your financial management smoother and more efficient.
• Collaboration: Your accountant can access your books in real-time, making remote financial management easier than ever. It also allows your accountant to access your books in real-time. Cloud accounting systems integrate with RTI compliance for payroll, which is going to become ever more important as HMRC moves towards Making Tax Digital and real time reporting. This helps streamline tax and NI reporting which is mandatory for UK businesses with employees, and moves the UK one step closer to being as digital and synchronous as some of its European counterparts.

How SMEs Can Benefit

If you’re still using desktop accounting software or managing finances in Excel, switching to a cloud-based system like Xero or NetSuite can significantly streamline operations. It’s not just about convenience—it’s about having better financial visibility and decision-making power. It is also about future proofing your setup, and having access to more API integrations and customisations.

4. Open Banking & API Integrations: Streamlining Payments & Finances

Open Banking is transforming how businesses handle finances by enabling different systems to ‘talk’ to each other, offering a level of connectivity that wasn’t possible before. This means:

• Automated bank feeds: Your transactions sync instantly with accounting software, eliminating manual data entry. This means that your financial transactions, such as income, expenses, and payments are automatically updated in your accounting system. It reduces the risk of human error, saves time and ensures financial records are up to date.
• Smart financial management: AI-driven budgeting tools provide real-time spending insights. You can instantly review your cash flow, identify spending patterns and achieve your financial goals. This can help you keep track of your financial health and decision-making.
• Seamless payment solutions: Businesses can accept payments directly through accounting software, reducing admin time. You can accept payments from customers via different payment platforms or direct bank transfers. Credit Management can also be smoother and more seamless, helping your business to have healthier cash flow.

The Impact on SMEs

Open Banking makes financial management faster, more accurate, and less stressful. If your accounting software doesn’t integrate with Open Banking, now might be the perfect time to consider a switch to one that does. The convenience, efficiency, and enhanced control over your financial data can make a significant difference in how you run your business.

 5. RPA (Robotic Process Automation): Automating Repetitive Tasks

RPA is another emerging trend in accounting. RPA uses software “bots” to carry out tasks with precision and speed, eliminating human error and freeing up time for more strategic work. It involves software robots automating high-volume, repetitive tasks such as:

• Invoice processing: RPA can automate the entire process: from extracting invoice data to matching it with purchase orders, to recording the transaction in your accounting system. This helps with a faster Accounts Payable (A/P) cycle but also improves accuracy by eliminating occasional human errors that can occur during manual entry.
• Bank reconciliations: RPA can automatically match your bank transactions in your accounting software. The bots quickly flag any discrepancies, making it easier for you to resolve them without spending hours. This leads to more accurate financial statements and better cash flow management.
• Payroll calculations: Payroll can include a lot of repetitive tasks, from calculating wages, tax deductions and benefits, to generating payslips and ensuring compliance with HMRC. RPA can streamline this process if a business has relatively consistent data most of the time.

How SMEs Can Use RPA

For SMEs with growing transaction volumes, RPA can help reduce manual workload and minimise errors. While larger companies are leading adoption, small businesses can leverage RPA tools integrated into modern accounting software.

6. The Rise of No-Code & Low-Code Accounting Apps: Customising Finance Without the Code

• Many small businesses struggle with customising software to fit their specific needs. Cloud accounting can be enhanced with No-Code and Low-Code apps to help automate tasks. These platforms are helping businesses automate specific tasks and customise their software to suit their unique requirements.

Key Characteristics of No-Code/Low-Code Accounting Apps:

• Customisation: Let users design their own workflows, automate tasks, and integrate with other business tools without needing to write complex code.
• Automation: Automate processes like expense approvals and invoice tracking. Mainly can help automate repetitive tasks and help reduce manual workload.
• Integration: These platforms Integrate apps easily with accounting software and multiple systems. This helps improve efficiency and workflow.

Why This Matters for SMEs

No-code tools make automation accessible to everyone—not just large corporations with IT teams. If you’ve ever thought, “I wish my accounting software could do this,” no-code solutions might be the answer. These apps and platforms offer no-code and low-code options that allow small businesses to automate, customise, and optimise their financial workflows without needing advanced technical knowledge.

7. AI-Powered Chatbots & Virtual Assistants: Instant Insights, Smarter Support

We’ve all used customer support chatbots, but AI-powered finance assistants are taking things further:

• Instant financial insights: Ask a chatbot, “What’s my cash flow this month?” and get an instant answer. AI can pull up specific financial information, giving you the insights you need, exactly when you need them, without sifting through reports or spreadsheets.
• Automated reminders: Never forget a tax deadline or unpaid invoice again. AI-powered tools can send you reminders for important deadlines or overdue invoices, so you stay on top of your financial obligations.
• Voice-activated accounting: Some platforms now allow voice commands for basic finance tasks. Imagine simply saying, “Record last month’s expenses” or “Create an invoice” – these voice features can help make tasks faster and more efficient.

What’s the Takeaway?

While still in the early stages, AI assistants are becoming more intuitive and useful. Expect to see them integrated into most major accounting platforms soon.

8. Cybersecurity in Accounting Software: Safeguarding Your Financial Data from Threats

With great technology comes great responsibility. As financial data moves online, cybersecurity threats are increasing.

For example, in 2020, the cybersecurity insurance market was valued at approximately $4.1 billion.

By 2022, this figure had tripled to about $12 billion.

Projections indicate that premiums will continue to rise, potentially reaching $23 billion by the end of 2025.

Businesses need to be aware of:

• Data breaches: Hackers targeting sensitive financial information. With more businesses storing sensitive financial data digitally, protecting it from cybercrime is essential to prevent costly breaches and legal complications.
• Phishing attacks: Fake emails tricking users into giving away passwords. These spams and phishing emails and messages can appear to come from legitimate sources, but they’re designed to steal your login credentials—so be vigilant when accessing your accounts online.
• Ransomware: Malicious software locking access to your financial data. Ransomware attacks can prevent access to critical financial records unless you pay a ransom, making it important to take proactive security measures.
• Identity Impersonation: Sophisticated fake AI video and voice generation. This is happening more and more, with individuals and companies being tricked into sanctioning large financial transactions, because they appeared to come from someone they already knew and trusted, within their company. 

How SMEs Can Stay Safe

• Use multi-factor authentication (MFA) for all accounting software logins.
• Ensure accounting platforms use bank-level encryption.
• Regularly back up financial data in case of a cyberattack.
• Confirm identities using several different mediums.

What Does This Mean for You?

Emerging accounting technologies are not just for big corporations. Small businesses that embrace innovation will save time, reduce errors, and make smarter financial decisions.

Here’s what you can do today:

1. Move to cloud-based accounting if you haven’t already.
2. Explore AI-powered tools to automate routine tasks.
3. Review your cybersecurity measures to protect financial data.
4. Look for Open Banking integrations to streamline payments.

By staying ahead of these trends, you’re not just keeping up—you’re setting your business up for long-term success. You can use these technologies to make your finances easier, more secure, and more efficient.

Looking Ahead: Your Next Steps

Accounting technology is evolving to make finance simpler, smarter, and more accessible for businesses like yours.

The key is to adapt, rather than resist.

If you’re unsure where to start, we’re here to guide you every step of the way.

At RedBrick, we help businesses build a stronger financial home, where innovation meets simplicity and security, and build upon solid ethical foundations. 📩

You can read more about our Digital Transformation service here – https://redbrickaccounting.com/digital-transformation/

For a better home for your business finances, email: hello@redbrickaccounting.com or Contact Us.