By Caroline Kelly
Blockchain is no longer the new kid in class and this technology has earned its seat at the table in recent years. But for those who are still unclear on what, exactly, Blockchain is and how it can benefit the accounting industry, this blog is for you.
What is Blockchain?
In a nutshell, Blockchain is a database. If we look at it in these terms we can begin to understand what it’s capable of and how to get the most from it. Considering the characteristics of a database, Blockchain can be summarised as follows:
|Information and data stored in table form on a computer system||Easily searchable for specific information||Built to be accessed by a large group of people (unlike a spreadsheet)|
But while Blockchain does share these similarities with large databases, there’s more to it that makes it unique. Specifically the way it stores data into blocks. These blocks are limited in the amount of data that can be filed and once full become Blockchains, linked to the next block of data and so on.
So while a database files its data into tables, Blockchain files it into blocks, linked together and featuring an irreversible timestamp.
There are many advantages to using Blockchain technology. It’s safe, transparent and not easily tampered with for a start. It allows for digital information to be widely distributed and accessed but not edited, making it a hugely reliable source of first-hand data. It also makes it possible for cryptocurrencies, such as Bitcoin, to exist and trade.
But how does it help today’s accountant? Here are seven benefits:
1. Reduces Fraudulent Activity
The superior security that inherently exists within Blockchain means it’s very hard to make changes to the data in order to scam or defraud someone.
Changing the data would require the user to source the block it originally appeared in and then change each subsequent block from there. This action is not only extremely time consuming but highly risky due to the likelihood of a shared user spotting the changes made to the shared Blockchain database.
It’s one less security issue when you’re already having to decide which antivirus software to choose from to prevent malware attacks.
2. Gives Accountants Back Their Time
While it might take a while to get a Blockchain database into some kind of standard operating procedure, once there the benefits are enormous. Large swathes of data can be processed and logged far more quickly using this technology and linked in a logical sequence to corresponding data points.
With all the data in a logical and secure structure, routine tasks such as auditing are made all the more straightforward. This frees up the accountant to concentrate on more complex tasks and is well worth the time it takes to get to grips with Blockchain technology.
3. Blockchain Builds Trust
The double-entry system of bookkeeping made it easier for accountants and their clients to trust their own entries, this technology does much the same. Each piece of data is uniquely time stamped and it’s possible to generate a hash string for each file, which acts as a kind of unique fingerprint. By generating these fingerprints, it’s possible to compare them to the original files to check their integrity.
Outside auditors using this technology no longer have to fight their way through a mountain of spreadsheets that at any point could have been altered or chase a paper trail of lost receipts and invoices.
An account using Blockchain technology will help their client become a trusted source for outside audit and speed up the process considerably.
4. Provides an Opportunity For Upskilling
As a working accountant, you know the importance of maintaining your continuous professional development for several reasons. It keeps you relevant in a highly competitive marketplace. It provides you with the skills required in a fast-changing, client-focussed environment. Lastly, learning new skills keeps you curious about your job and interested in all it entails.
You can’t put a price on the satisfaction gained from learning new skills at whatever stage of your career you find yourself. And if you’re thinking of embarking on a career in accountancy, hit the ground running by acquiring some additional strings to your bow.
5. Has a Knock-On Effect to Business Models
When you implement Blockchain into your accounting practices, it’s not a move that happens in a silo. Upscaling the technology will make significant waves around the rest of the business.
From administration duties to tax preparation, installing upgraded technology and implementing Blockchain training – it’s a challenge. Done well this is the perfect moment to streamline business practice, upskill your teams and change your daily, monthly and annual modes of business for the better.
6. Opens Doors For New Customers
While you might have your regular clients who keep your accountancy business ticking over, there’s no harm in looking to a more diverse client base and Blockchain technology will help you do just that.
By demonstrating an understanding of Blockchain and the global trends of investing in cryptocurrencies, the Millennial generation will look to your mixture of experience and expertise to guide them. You’ll be able to advise on how to incorporate cryptocurrency into Blockchain accounting, how to manage it as a payment service and how to file it correctly. While your traditional customers will always need you to do things the way they’ve always been done, the chance to diversify is a rare opportunity and one not to be missed.
7. It Gives Accountants The Opportunity to Set The Pace
Blockchain technology isn’t going anywhere but for many businesses, of whatever size, it asks more questions than it offers answers and that’s where the accounting industry needs to step up.
This is an opportunity for an industry, sometimes known as a slow mover, to grasp the nettle and set the pace. Accountants have a unique moment to shine, to implement and train others in Blockchain technology and to demonstrate their own expertise. For a service that at times just feels like a necessary evil this allows accountants to demonstrate the added value they bring as innovators.
The fact is Blockchain technology and its associated partners are not going anywhere. If anything, our reliance on it and on cryptocurrency will only grow stronger. The future of accountancy is looking positive but to survive in such a competitive space accountants must stay relevant and demonstrate a willingness to meet customers where they are.
It’s time to get in on the ground floor and grasp hold of a technology that’s going to revolutionise working practices on a global level. Greater transparency and security, streamlined processes and plenty of new customers waiting to experience your expertise. Don’t get left behind, this is an innovation that’s not waiting for anyone.
About the Author
Caroline Kelly is a journalist and copywriter who loves to write and run. Trained up in the newsrooms of her native East Sussex, England, she has lived and worked in Switzerland and Singapore. Obsessed with research and story-telling, Caroline writes in financial niches for print and online publications. Her website can be found at: https://carolinekellywriter.com/
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