9 top trends in international accounting for 2022
- •1. Fees On International Money Transfers
- •2. Increased Transaction Speed
- •3. More Automation and AI
- •4. Blockchain disruption (and regulation)
- •5. Changes in international tax laws
- •6. Continued E-commerce explosion
- •7. Increased attention on cyber attacks
- •8. Increased distributed workforces
- •9. International trade concerns
It’s no secret that accounting can be complicated, and international accounting can be even more complex. Thankfully, updates and changes in technology are making accounting activities even more streamlined and easier to use.
Accounting professionals continue to make adjustments in services and analytics to serve individuals and business owners better. These changes have been driven by the pandemic, where market forces are making huge leaps and bounds in the accounting world.
As 2022 inches closer, those considering making financial changes should be concerned about how the international accounting arena is changing so they can take full advantage.
1. Fees On International Money Transfers
It’s becoming easier than ever to move money throughout the world. What once took a huge amount of paperwork, red tape, and time can now be accomplished with a small fraction of the time and effort. Even mid- to small-sized businesses can make international money transfers. This is particularly exciting because they may not have had the resources to conduct these kinds of transactions in the past.
Fees are currently at an all-time low, and they are expected to remain low well into 2022. Pressure from bodies like the UN are helping make fees more manageable, forcing transfer companies to get more creative about how they can make transfers easier and more manageable for a wider range of customers.
2. Increased Transaction Speed
The pandemic has forced retailers and merchants to offer different ways to pay, from paying now and picking up later to digital payment methods. Tap to pay and paying with a cell phone are both relatively new payment methods gaining huge traction.
Part of this increase was fueled by COVID-19, as individuals and businesses attempted to decrease the amount of physical interaction between people and goods.
These new payment methods also have the added benefit of making the entire transaction faster. Tap to pay, paying with QR codes, or paying with a digital wallet can take just a few seconds, which is a small fraction of the time that a client would use to swipe a card or read a card chip.
3. More Automation and AI
Artificial intelligence will continue to have a huge impact on the accounting and finance industry. As companies increase their reliance on AI and robotic process automation to tackle more mundane duties, others are available to do more complicated financial and accounting tasks.
Accounting services rely more and more on software, and AI can be a valuable tool to conduct analysis, spot trends, and flag potential errors. When used properly, automation can increase ROI and general efficiency by huge amounts—more than 80% in some cases. As 2022 comes into full view, accounting automation is expected to be a huge focus area.
4. Blockchain disruption (and regulation)
Blockchain is increasing in popularity (with a 59% projected market growth between 2016 and 2024). In fact, businesses spent over $4 billion on blockchain solutions in 2020, and it is expected to be over $20 billion in 2024.
Expect fee avoidance and capital fluidity to further advance this already explosive trend while also bringing increased legislative scrutiny.
5. Changes in international tax laws
In an effort to address the unique challenges that international companies face, global tax laws are in development. In July 2021, several levels of negotiations took place at the Organization for Economic Co-Operation and Development (OECD).
Ultimately, those negotiations culminated in a general decrease in U.S. corporate taxes while corporate tax revenue in other member countries increased.
The United States is leaning toward increases in domestic corporate taxes and increased taxes on foreign source income. The tax on Global Intangible Low Taxed Income or GILTI might also change, with alterations to credits available in some industries—with the overall goal of decreasing investments made abroad.
Discussions are also in process to repeal the deduction for foreign-derived intangible income as well.
6. Continued E-commerce explosion
E-commerce is huge right now, and likely even more so because of the pandemic. There are serious concerns about the future of brick-and-mortar stores in many industries.
As e-commerce continues to be one of the most popular methods to shop, accounting professionals need to develop ways to track and keep up with online sales, product inventory, and various tax obligations—often across several countries.
Delivery is also changing accounting because of tipping methods, fees, and other related complexities that change the relationship between the consumer and the retailer or other business.
7. Increased attention on cyber attacks
As financial information continues to move toward the cloud and demands for increased accessibility for remote workers keep building, cyberattacks to access that information are expected to increase as well.
In response, there is an expectation that businesses will need to take steps to address security and plan for cyberattacks. This preparation involves increased internal security and more external regulations about what security is necessary to protect individual consumers.
Regulations are also expected at the international level. For example, the European Commission proposed the Digital Resilience Act in September 2020. It would bring third-party providers (like cloud service providers) under its purview and set higher standards for digital operational resilience testing.
The Monetary Authority of Singapore revised its Technology Risk Management Guidelines to address cyber threats as well, including requiring financial institutions to have a specific response plan if a cyberattack is suspected.
8. Increased distributed workforces
A distributed workforce means that team members can be located anywhere in the world. As these worldwide teams need increased access to information and each other, there is an expectation that accounting needs will also have to adjust.
For example, international business travel may increase, and the company may need to invest in more collaborative ways to track expenses and share information.
And one of the biggest potential issues — paying your distributed workforce.
Remote work and teleworking are slowing down anytime soon. And as workers realize they can work from anywhere, they are more likely to take full advantage of their ability to travel all over the world.
9. International trade concerns
U.S. relationships with other countries, including China, Taiwan, and Pakistan, can also affect international accounting. Economic sanctions and the like often have a huge impact on trade and finance in an individual country.
In addition, U.S. accountants use standard protocols known as Generally Accepted Accounting Practices (GAAP). Other countries also follow suit and use these as well.
However, part of the reason that other countries use GAAP is that the United States has been a world leader in business for decades.
As China or other countries have a less amicable relationship with the U.S. when it comes to international trade, it is certainly possible that they move away from GAAP and develop their own standards and rules.
In response to this concern, the International Accounting Standards Board (IASB) has been attempting to change GAAP to make it more in line with international demands.
If you are concerned about how international accounting will affect you and your business in 2022, consider Airwallex. We’re a solution helping companies operate without borders while seamlessly managing finances. Get started today!
Related article: How much does PayPal Business charge for international payments?
Evan Dunn manages the growth of Airwallex's SMB business in the US through marketing avenues. Evan is a generalist with expertise in SEO, paid media, content marketing, performance marketing and social selling. He also enjoys slam poetry and waffle making.
How to manage team expenses with virtual debit cards