Over the years, new technology has transformed the accounting industry beyond recognition. In particular, the move from paper records to digital solutions like spreadsheets and bespoke accounting software has allowed thousands of small businesses to benefit from improved organisation, accuracy and accessibility.

But existing software is undergoing changes all the time. For example, a huge number of accounting software providers have moved to the cloud, making accounting more secure and collaborative.

However, it’s often technological developments in their early stages that are the most exciting. One of these is blockchain, a system that’s gradually being adopted by accountants around the world. But how exactly is it changing the industry and what does it mean for the future?

What is blockchain?

Blockchain also referred to as DLT (Distributed Ledger Technology), is a system that can be used to record the details of asset transfers. The assets transferred can be both tangible or intangible and blockchain will log any related data digitally. All transactions in blockchain ledgers will be visible from end to end, providing accounting professionals with transparent data that can be accessed immediately and distributed amongst carefully selected individuals.

What does blockchain have to offer the accounting industry?

The reason that blockchain is being observed with such excitement is due to the benefits it has to offer. Here are some of the ways that blockchain can make the jobs of accounting professionals easier:

Transparency

One of blockchain’s most significant benefits is the level of transparency it offers accountants. As part of their role, accountants often need to confirm the ownership, origin and history of an asset before a transfer is actioned to prevent fraud. With blockchain, every party involved in an asset transfer will have complete certainty that the asset in question is exactly what it appears to be and is being handled correctly.

It’s very difficult for anyone to fraudulently amend blockchain data as well, further adding to the system’s transparency. Making illegitimate changes takes a lot of time and can also be spotted relatively easily by other users that have access to the blockchain system, making fraud unlikely.

Efficiency

Blockchain takes automated accounting to a new level, saving accountants a significant amount of time in their days. While there will be a learning curve at the beginning, once professionals understand the blockchain system they’ll be able to process huge amounts of data much faster than before. This data can then be quickly sequenced and linked to other information when creating reports. Accountants will have more time to focus on planning and forecasting as well as interpreting the data that’s presented to them in digital systems.

Lower Costs

Thanks to blockchain’s ability to automate record-keeping, accountants will need to expend fewer resources on maintaining ledgers and logging data. This can result in lower costs, especially if these tasks were being outsourced. Many accounting solutions will now also come with integrated blockchain capabilities, reducing the need to rely on more than one type of software and pay multiple subscriptions.

Higher-quality audits

It’s not just day-to-day accounting that blockchain has an impact on, but company audits as well. Because blockchain is able to provide such a high level of transparency, auditors can spend less time confirming the financial status of a particular company or the assets in their possession. This allows them to focus on more complex issues, providing clients with a clearer picture and deeper analysis.

The future of blockchain and accounting

Blockchain has already made a mark on the accounting industry, but what kind of changes will it lead to in the future? It’s likely that the role of accountants will continue to shift as blockchain automates ledger maintenance and data logging. While some may worry that an accountant’s role will become redundant as time goes on, blockchain doesn’t pose a direct threat to the profession. Rather, it could force accountants to develop their skill set and adjust their focus. Accountants may be required less and less to perform administrative tasks, pushing them away from record-keeping roles and providing them with more opportunities to act in an advisory capacity. This could suit accountants already in these kinds of roles but may be challenging for those specialising in administration. However, before blockchain truly takes hold of the accounting industry, it must undergo a significant amount of optimisation and standardisation. Existing blockchain accounting solutions are still in the early stages and while they are being used by some accountants, research and development are very much ongoing. Accountants will likely have the opportunity to shape this technology with their expertise and insights.

Embracing change in accounting with blockchain

While transitioning to blockchain solutions may seem daunting, it’s undeniable that it has the potential to impact the accounting industry in a positive way. In the same way that accounting software has become the norm for businesses around the world, blockchain will likely make its mark in the coming years.

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• Source: Plato Data Intelligence: Platodata.ai