How Blockchain is Going to Change Accounting Forever

By Eric Rosenberg

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Blockchain came to the world’s attention thanks to its role as the underlying technology behind Bitcoin, the most popular cryptocurrency. However, Blockchain has much farther reaching possibilities than digital currency. Blockchain, a distributed ledger technology, has the potential for applications in the stock market, banking, and beyond. One industry that is sure to see disruption from Blockchain is accounting. From audit to bookkeeping, Blockchain has the potential to improve efficiency, reporting, and data access in a way never before seen. Let’s dive in and take a look at how Blockchain is going to change accounting.

Near instant transactions

At the start of a new month, accountants around the world close the books on the prior month. At large companies, this process takes anywhere from a couple of business days to a week or longer. With the release of new technologies and financial systems, the time required to complete the close cycle is shrinking. One of the biggest holdups in a faster close is a lag in transaction completion times. In my days as a Senior General Accountant, I spent hours every month accounting for transactions that were in limbo between various steps in the billing, invoicing, and payment cycle.

With the distributed Blockchain ledger, there is no need for transactions to sit in limbo. There is no need for a delay in processing while systems catch up and run overnight processes. In a world of instant transactions, many month end close processes will be cut down or eliminated completely. Thanks to to speed transactions will be completed, accountants will spend a lot less time worrying about ensuing transactions are reported in the correct month, as they will already be reported when the month closes. And, once transactions are completed, they are locked in and recorded forever. There is no going back to tinker or adjust past transactions in a blockchain.

All assets become trackable

Businesses that focus on assets like stocks, bonds, mutual funds, titles, deeds, and even inventory can be tracked with Blockchain. In fact, assets become more secure and trackable than ever before. As transactions take place with Blockchain technology, it is recorded in the local ledger and then shared across other copies of the same ledger stored by many computers around the world. Each time a transaction takes place, it is sent to every copy of the blockchain for that specific asset or use case.

At this point, everyone has an undisputed copy of the history of that asset. If a share of stock is bought, sold, bought, and sold again, a record is created that can be traced back to the beginning of its existence in Blockchain. Fraud and asset theft will be dramatically reduced with this tracking system, and accountants get benefits too. When trying to track or audit an asset, phone calls, emails, and other detective skills are no longer needed. Just type a few buttons and you can view an entire history of the asset perfect for building an audit log.

Automated reporting and Go to the full article.

Source:: Business 2 Community

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