The key feature of blockchain technologies is the control it offers. Entries are permanent, or as good as, and confirmed by consensus.
All parties have access to the entire chain and the system cannot suffer outages.
The chain holds its entire history of transactions, making it self-auditing and fully traceable. It removes the need to reconcile disparate ledgers. The system is entirely trustworthy.
These attributes can provide key benefits for business and specifically for finance:
| Business benefit | What it means for finance |
|---|---|
| Enables near real-time settlement of recorded transactions. Reduces friction and risk. |
Instant visibility of the cash position and reduced need to allow for delays in the accounts payable process. |
| Uses crypotographic proof instead of trust. Allows two parties to transact directly without the need for intermediary. |
Reduced bank fees, cycle time and people effort to verify cash into or out of the bank account. |
| Records an accessible public history of transactions. This distributed ledger preserves proof of transaction, but not identities. |
Improved visibility of purchases in the inventory cycle, though a current and synchronised record of trade. |
| Holds immutable, verifiable records of every transaction made. Prevents double spending, fraud and abuse. |
No independent trade records, reducing reconciliations between invoices and purchase orders. |
| Security measures ensure blocks cannot be reverted or altered. Provides a censorship-resistant, trustable record of trade. |
Reduced people-based investment in risk controls and reconciliation to ensure trust in the records. |
The wider impacts of blockchain on finance
While not imminent, blockchain has the potential to change some aspects of accounting, reporting and auditing.
1. Bookkeeping/Accounting
Increasing the efficiency of accounting for transactions and assets, with the transaction recorded faithfully, verifiably and identically by each party. Blockchain technologies would offer a system of ‘universal entry bookkeeping’.
2. Assurance/Audit
Blockchain can move the profession closer towards a real-time, data-led audit. This represents a fundamental shift from a sample testing approach to focusing on areas of most risk, and then easily sharing details with relevant parties.
3. Corporate reporting
The technology can improve the efficiency and timeliness of corporate reporting and increasing the speed of consolidation within groups, (particularly where there are multiple participants), providing a single trusted source of the trust.
Find out more about blockchain
Learn more about blockchain by completing ICAEW and Deloitte's eLearning module. This resource includes more details on the technology and its potential impact on finance teams and businesses.
Finance in a Digital World
Make sure you're ready for the changes that digital technologies are bringing to finance functions and accountancy work. Complete eLearning, watch webinars and read bite-sized summaries on the opportunities and challenges brought by automation, artificial intelligence and big data.
Understand the impacts of blockchain
This eLearning module outlines how business is beginning to explore blockchain technologies and what that might mean for finance. It explores the benefits and challenges of implementing blockchains, and outlines how to get started in using the technology.
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