Accountants are now using blockchain to get assistance in clarifying ownership over certain assets and existing obligations. This will help free up resources that could concentrate on other areas, such as planning and valuation. Because blockchain’s primary ability in accounting is to maintain a ledger of accurate information and analysis, this information could then be used to assess the real economic interpretation of records by joining the valuation of the economic reality.
Benefits of Using Blockchain:-
Helps in reconciliation Process
Blockchain can be the new and perfect replacement for tedious bookkeeping and reconciliation work. Still, not all accountants are happy because they feel that Blockchain could threaten their existence in their particular field of knowledge due to its overall faster process.
Ledgers are a core component of blockchain networks; all transactions are recorded immutably with precise timestamps. When “busy season” comes around, enterprises that use blockchain technology will be spared from painful reconciliations and enjoy huge time and cost savings.
Smart enterprises start using blockchain for internal activities, but the REAL savings emerge when the network grows to include external parties such as business partners and customers. BlockApps saw this first-hand as they helped an energy trading firm reconcile their trades alongside other regional partners.
Strong data standards emerged with multiple parties in the energy trade reconciliation network – driven by the need to codify complex, multitenant energy transactions on a truly immutable ledger.
Helps in Cash Flow Process
Blockchain technology is used to record transactions publicly, transparently. It is also an effective method for account reconciliation, recording cash flow, and tracking and storing assets. The accounting industry relies upon paper trails in order to perform transactional and accounting services; also meeting regulatory requirements. Auditors see these paper trails when it comes to reviewing accounting books.
Streamline Audit & processes
Changing or manipulating numbers is an old problem, but in the current time, blockchain could be the perfect technology to deal with this problem in a better way. With the help of blockchain, accountants and CPA firms can streamline the audit, and other vital processes as the entire data this technology provides is transparent and cannot be changed; thus, no-one could fudge figures. Blockchain ensures the information you have is accurate and reliable.
Helps to maintain financial records
Blockchain is a distributed ledger technology, and it introduces the real-time processing of financial information. The modern approach is where the accounting records are entered, maintained, and finally stored in a distributed ledger. This enables the financial information to be accessible to all relevant stakeholders.
Blockchain helps to provide a method of reconciling ledger by reducing costs of reconciling and maintaining the ledgers. While in traditional accounting, an accountant is responsible for maintaining and reconciling such ledger. This enables the accountant to focus more on planning and analysis of financial information and helping the accountant to involve more on strategy rather than just recordkeeping.
Finally, Blockchain can support triple-entry accounting, unlike traditional accounting, where we can only maintain double entry. The triple-entry accounting here refers to the additional step where all transactions are written and cryptographically sealed to protect the parties involved.
Helps in record keeping
With blockchain, you can register the transfer of ownership of assets and maintain a ledger of accurate financial information. The accounting profession focuses on the measurement and communication of financial information and the analysis of this information. By eliminating reconciliations and providing immutability over transaction history; Blockchain frees up accounting service professionals so they can concentrate on planning and valuation, rather than recordkeeping.
Blockchain also provides more transparency and confidence in the records. By using smart contracts in blockchain, it’s easier to guarantee compliance with pre-established business rules. This includes making sure rules haven’t changed along the way.
For accountants, blockchain provides clarity over ownership of assets and the existence of obligations. It can dramatically improve efficiency and accuracy.
Helps to reduce Fraud/Risk
With the right data, accounting fraud will be reduced to a great extent. It is a transparent technology with no chance of being hacked, and it is secure. Auditors are also happy about the technology as it is helping them automate most auditing functions, and the auditing time is also reduced. Blockchain is also helping in data entry and reduces the chances of human errors by automating almost all accounting functions.
Blockchain technology will stay forever and will continue to evolve, which will change the way accountants operate. With the blockchain technology, the accounting industry will become more efficient. It allows accountants to streamline their audits and other accounting processes as the technology has enabled them to have a transparent and immutable data record.