Blockchain technology has the potential to transform industries completely. Blockchain has sparked interest in various industries and sectors, particularly finance.
Fremont, CA: Blockchain has been referred to as the "future of financial services infrastructure." While the financial industry has dominated the news in recent years, other sectors are starting to embrace this technology to democratize markets.
Blockchain: The Saviour is Here
Blockchain can improve the accounting industry even further by lowering the costs of maintaining and reconciling ledgers and providing absolute certainty over asset ownership and history.
Companies using blockchain can write their transactions directly into a joint register, creating an interlocking system of enduring accounting records rather than keeping separate records based on transaction receipts. Because all entries are distributed and cryptographically sealed, it is nearly impossible to destroy or manipulate them to conceal the activity. This is the same as having the transaction verified by a notary — only in an electronic format. This enables auditors to verify many data points in a short period.
Accounting Benefits of Blockchain Technology
Blockchain technology promises numerous benefits for accounting firms of all sizes. Here are a few of the advantages:
Error Reduction: One of the most significant advantages of blockchain in accounting is making almost negligible errors. Once data has been entered into the chain, smart contracts will automate many accounting functions, reducing human error.
Increasing Efficiency: Blockchain is a powerful and fast database. Using blockchain, data can enter and exit the system more efficiently than interacting with legacy accounting software applications.
Reduces Costs: Blockchain will increase efficiency and reduce errors, eventually leading to cost savings. As a result, accounting firms can expect to see immediate cost savings over traditional accounting systems after the initial adoption cost.
Reduces Fraud: It is tough to perpetuate and manipulate because blockchain is immutable. To change a record, the exact change must be made on all copies of the distributed ledger simultaneously, which is highly impractical.
Reduces Time: One key feature of blockchain that should excite accountants is its ability to reduce audit time. Many auditing functions can be automated using smart contracts, reducing the amount of time an auditor must devote to the task.
