If you read enough about tech news, you know the term "blockchain." Even if you do, you've perhaps avoided delving into what it does since it might sound too technical to use in your accounting business. You shouldn't avoid thinking about its usage, because it's not as complicated as you think.
Blockchain is already beginning to reshape the way digital finance works today. In accounting, it's even more this way in bringing better privacy, transparency, and efficiency.
It could revolutionize your business technologically, as well as bringing more trust between you and your clients.
First, though, you should get a real definition of what blockchain is. With many descriptions being written only for experts, here's a look at it in more basic terms, plus how it could impact accounting.
Defining Blockchain in Laymen Terms
No doubt you've read about the connection between cryptocurrencies and blockchain. The latter is basically a public ledger that shows all financial transactions taking place, no matter the currency. It's also the basic backbone to famous bitcoin and how it's traded across digital pipelines.
What's so great about blockchain is it can hold almost unlimited data amounts with continuous blocks added. As each new computer (or node) gets added to a cryptocurrency network, it gains access to blockchain, showing all transactions in chronological order.
For transparency, this is a great thing since it eliminates having to use a middleman during financial transactions. This is why it's become so popular in the financial industry to build trust and speed transactions. Now it's especially growing in accounting for more accountability.
Blockchain for Accounting Audits
Since you can't modify data on blockchain, the security aspects to it are turning a lot of CPA heads. How many audits have you had done, only to face possible security threats with data being manipulated?
Using blockchain, you'll be able to trace all audit trails, as well as automate all your audit processes. This is already going to save you time and prevent mistakes that could mean major violation fines.
Thanks to blockchain giving you transaction authentication and tracking asset ownership, you're going to nurture more trust with your loyal clients.
Security as an Element of Trust
Without proper security, a lot of the clients you've depended on may not want to keep giving personal financial details to you. Blockchain is going to give them complete security through a system that's impossible to hack.
In a time when hacking is so prevalent (and sometimes not even noticeable for a while), you can't get better peace of mind than with blockchain.
Providing security at this level for your clients provides a stronger competitive edge in the immediate term since not every CPA firm uses blockchain. With security available and transparency when transactions take place, you can foster a symbiotic trust. Your clients trust you, and you can trust your clients with the financial information they give you without fraud potential.
Sharing Information On the Go
Another great aspect to using blockchain is the connectivity aspects and being able to share financial information through a private network on mobile devices. If you need to share financial data with a client while you're unavailable or traveling, you can do so without worry about it being infiltrated by data thieves.
All blockchain transactions go into the digital ledger to prove when you sent something and when the client viewed it. Again, this opens further trust levels without having to constantly meet up in person to get on the same page.
Keep reading us at Lorman Education Services as we explore technological aspects to various industries like accounting and construction.