Blockchain: A New Way To Think About Accounting
What blockchain accounting stands for?
Blockchain accounting is the accounting technology that avails the transfer of asset ownership and maintaining financial transactions. It displays obligations and aims to excel the efficiency of the ongoing accounting process.
The blockchain will surely consume most of the work aspects in the near future and will heavily impact the accounting industry.
How To Move Beyond Regular Accounting With Blockchain
1) Blockchain implementation for auditors
Blockchain can improve the efficiency of the external audit making it easy for the auditors to calculate the financial status of the company. When all the underlying transactions are visible, it will be easy to do the audit work. Inculcating blockchain solutions with the right procedures like data analytics can uplift the efficiency of transactional queries and the auditors could use their skills on better work.
With blockchain accounting, it becomes easy to calculate the overall cash transition and single-handedly manage multiple data. Blockchain accounting also ensures better outflow caused by sales, payment to the creditor, and creating assets.
Since, auditing not only is about keeping records of the transactional details but it also needs classification and record of the overall data. Blockchain provides a complete knowledge of business and thus, the auditor can focus on important aspects.
2) Looking for the triple- accounting era with blockchain technology
The blockchain technology will move accounting to the next level with the introduction of triple-entry accounting. Double-entry bookkeeping involves a corresponding and opposite entry to another account but in triple-entry bookkeeping, all the transactions will be mapped in blockchain. The bookkeeping entries of the parties will be congruent and will be cryptographically sealed by a third party.
Triple accounting will ensure transparency by keeping an unbiased record.
3) Smart contracts with blockchain
Smart contracts, a computer program that can be built with blockchain is another useful creation for the accounting industry. The computer programs can build rules, contracts, and can then enforce the agreement once the rules are met. This is a plus for the accountants as they don’t need to do the normal financial transactions. Basically, the smart contracts are as similar as the traditional bond, the only difference is the automation.
4) Blockchain helps in instant accounting transactions
Keeping accounts updated and managing financial transactions is indeed a difficult task. The accountants close the books and accounts at the end of every month and for larger organizations having complex accounts, it becomes difficult to manage the transactions manually taking multiple weeks or days.
Using blockchain technology, the work can be done with real-time processing and the transactions can be handled on time. The digital records incorporating blockchains can perform real-time settlement through the network. The transactions that are taking two-three days could be completed without delays and errors.
5) Cost savings with blockchain technology
Blockchain technology reduces errors in the accounting processes and also improves efficiency which surely reduces cost. Using conventional accounting systems along with blockchain can help organizations save quite a lot of money.
6) Blockchain reduces accounting fraud
With blockchain technology, accounting frauds can be reduced to two-fold. When doing traditional accounting, the person has to make the same changes on different copies of the distributed ledger but with blockchain adoption, it can be done feasibly.
Blockchain and accounting can be a great team and with this, the accountants will be providing unbreakable security and safety to their clients' data.
The accounting industry still needs skillful accountants to interpret and reform the information before entering into the blockchain to have improved results. Yes, the technology makes things better but still, the need of accountants and bookkeeping professionals is the priority if transparency, permanency, and efficiency is the need of the accounting industry.