How Blockchain technology could change an accountant’s role.
According to Deloitte, there are several specific-use cases where Blockchain technology can prove to be useful for a company’s accounts department. Some of these are listed below:
1. Budgeting and Forecasting — allowing transfer of value/cash between departments, as indeed IBM is doing, using the Stellar cryptocurrency. The use of Blockchain also creates better transparency and internal accountability.
2. Inter-company reconciliations — eliminating inter-company entries. Blockchain technology can potentially replace double entry book-keeping systems, as it creates single records for all transactions. The immutable nature and the historical record maintenance enable accurate consolidation of financial reports, enforcing documentation of intercompany transactions.
3. Financial Audit — all financial records are maintained in real-time, so potentially enabling daily, not monthly, management accounting. As there is one record which does not need to be verified by third parties, costs can be removed (such as audit) whilst also offering greater transparency of a company’s, and potentially a supplier’s, financial records.
4. Vendor Management — Smart Contracts allow one to create requisitions and manage vendors. Smart Contracts can be created to automatically make and receive payments, thus improving cash flow and eliminate the need for reconciliation.
5. Shareholder Voting — As reported by the FT, Santander was the first public company to use Blockchain technology to allow its shareholders to vote. Making voting digital using Blockchain technology, enables people to vote via mobile devices, reduces errors from manual-paper based systems and allows real time analysis and updates of whom and how votes have been cast.
It is highly likely we will see even the accounting world increasingly adopt Blockchain technology, replacing the traditional double entry bookkeeping with one ledger of data that does not need reconciliation. However, we have a way to go before we see full scale adoption, although there will be increasing pressure on organisations to change, given the increasingly digital age we find ourselves in and the desire for information to be provided ever faster and faster. As Accountex recently said,“The challenge for blockchain is not that it isn’t useful — there are many use cases for the technology in financial services and outside of accounting such as ID verification in Estonia — it’s whether accountants are willing to go through another innovation and change in their industry”.
Alongside this, Blockchain technology also provides a platform for other technologies such as Internet of Things (IoT), machine Learning (ML) and Artificial Intelligence (AI), all of which will enable data to be collected and managed more efficiently than much of the current accounting software, let alone pen and paper records! The Institute of Chartered Accountants in England and Wales (ICAEW), itself, summarised, “Blockchain could help accountants gain clarity over the available resources and obligations of their organisations, and also free up resources to concentrate on planning and valuation, rather than record keeping”.