Accountancy has been a feature of business for thousands of years but it has evolved significantly over time. As Winston Churchill once said ‘the farther backward you can look, the farther forward you are likely to see’. So what are some of the accounting milestones throughout history and are we set to see another one in 2015?
Accounting is nearly as old as the concept of money itself. Its early development dates back more than 7,000 years to ancient Mesopotamia. People used clay tokens to trade goods and would then document their expenditures and goods received and traded.
It was clear even at the birth of money that having a comprehensive view and strategy of finances was vital. Regardless of quality of stock, service or sales tactics, systems needed to be set in place to keep an eye on the financial health of the business and this remains true today.
Medieval mathematician Luca Pacioli is often viewed as ‘the father of accounting’ as he detailed the foundation for how double-entry bookkeeping is applied in present day within his notable work, ‘A Review of Arithmetic, Geometry, Ratio and Proportion’ in 1494.
The historical origin of debit and credit, Pacioli developed this method of accounting that was already being used by merchants in Venice during that period. He worked to formalise and publish the theory which businesses use even today.
Ability to scale
Accounting progressed into an organised profession in the nineteenth century. The growth of large scale manufacturing and logistics demanded reliable accountancy and the profession became an integral part of the business and financial system.
As a result, accountancy practices developed innovative ways to do their jobs faster. In 1885, William Burroughs invented the first adding machine, which accountants could use to reduce the time it took to make transactions freeing them up to focus on growing practices and diversifying services.
Technology has changed business operations forever. When VisiCalc, the simple spreadsheet programme, was introduced 40 years ago, it transformed the industry. The basic software could take 20 hours of work and turn it around in 15 minutes.
So what’s next?
So what are the main things to watch out for in 2015 and beyond?:
- 71% of accountants expect their role to evolve into that of a financial adviser in the next five years
- Cloud computing will enable accountants to work as consultants to their clients with real time collaboration and integration with banking software
- Higher profits for accountants with the increased value of consultancy
The advances in accounting have been spread out over many years but we’re on the precipice of the latest major shift, enabled by tech and the resulting change in the way accountants view their role within clients’ businesses. With any change comes opportunity. The challenge for accountants in 2015 is to embrace this growing trend and make it profitable for their practice.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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