By Hitendra Patil
Accountaneur: The Entrepreneurial Accountant
Stock exchanges and banking systems have worked on similar fundamentals in handling and creating what are known as “non-repudiable” transaction records: straight-through processing (STP), electronically connected networks of intermediaries in their “ecosystem,” etc. But unlike bitcoin, the stock exchange and banking systems are highly regulated and centrally owned.
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More recently, bitcoin technology has created a similar “distributed shared ledger” ecosystem.
In other words, blockchain-type systems have existed in professions that involved various degrees of public participation.
How this will happen in accounting is highly complex for this post to discuss but what is more important is what blockchain can and will do to the accounting profession.
Let us not worry, for the time being, who will create and own this public/private technology infrastructure. Let us also not worry about how this blockchain accounting technology will be designed and created.
Here’s a sneak peek into the future of how blockchain can transform clients’ experience of accounting.
P.S.: Please do NOT try to figure out the “how” yet. Just read on and try to visualize the future as described below.
- Eventually, accounting firms will go away, just like bookstores.
- An accountant will NOT become extinct. She will be just doing something (absolutely, totally) different (and surely more valuable work).
- Auditors, rather the current way audit processes work, will go away too.
- This is because “audit” will be easy and highly cost–effective with access to a public shared ledger.
- A client will NOT provide information, data and documents to the accountant – ever.
- Gone forever will be the days when a client sent a shoebox full of receipts to the accountant.
- Client’s accounts books, and the blockchains – the shared ledgers – will get created constantly and automatically, as and when transactions are taking place. Sometimes even before they happen!
- Just like the doctors and nurses who monitor the patients’ health, accountants will monitor financial health of clients, but online, in real time and almost always remotely.
- Clients will NOT need to file tax returns. This is because the government will have the information already and the government will refund the extra taxes deducted from financial transactions. People won’t be able to avoid or evade or pay fewer taxes than they owe – ever. So, people will NOT ask accountants to prepare tax returns. Instead, they will seek advice to “prepare for” optimized tax deductions.
- Clients will NOT run out of cash to run their businesses – at least not fast. This is because banks will release cash automatically into their checking accounts when needed, as financing on their “preauthorized linked assets” will be created automatically, online, in real time.
- Accountant will tell clients the precise time when they will lose those assets if the bank keeps putting cash into their checking account.
- Clients can see the future of their business. Every day. Every minute. At the speed their business operates, their accountant will show them the balance sheet of future months and years.
- If a client’s business has started to go downhill, his accountant will tell him precisely how many days or months he has before he will lose everything.
- If a client’s business is on an upswing, she will know precisely when will it reach stagnation stage based on performance of her industry peers and as the impact of new technologies and regulations kicks in. In other words, her accountant will tell her how much time she has to create a new product or service to keep the upswing intact.
- Clients will make and receive fewer payments. This is not because their business is slow but because vendors and customers will settle monetary transactions on net basis, not on gross basis – because everyone’s accounts books will be networked.
- Clients’ books will tell them, automatically, who are their “currently good” customers who are likely to be bad ones in the near future, even when revenue from them is growing, as their books will be synced with their customers’ books.
- Client’s books will also tell them, automatically, who are their “currently bad” customers who are likely to be good ones in the near future, even when revenue from them is actually reducing, as their books will be synced with their customers’ books.
- Clients’ books will tell them automatically which of their customers and vendors are likely to go out of business and by when, because their books will be networked. And of course, they too will know, online, in real time, if their accountant’s business is doing well or bad.
- Hold on! Clients’ accounting is NOT going to be emotionless robotics. Just the data and information handling will be robotic. Clients will still have their accountants as their even more trusted advisor, in the flesh.
- Clients WON’T have to make appointments with their accountants anymore. Clients can ask an accountant or a financial advisor – online or by phone, in real time – by picking the one they want from several out there. Clients won’t even have to send any accounting data to them. Clients will just share it with accountants while the online session lasts.
- Today’s accountants will be tomorrow’s business strategists and growth directors for their clients.
- And yes, there will be NO fees to be paid for “accounting.” Clients will pay their accountant only for use of her knowledge, experience and wisdom to help them navigate their business and financial situations.