Aug 20 2018
Terms like bitcoin and cryptocurrency pop up often enough to cause those outside of the financial sphere to start scratching their heads. The more people learn the more they debate. Is it a trend? Is it credible? What isn’t debatable is the underlying technology that facilitates digital currencies. Blockchain is revolutionary and its applications will be talked about in the future the way we currently talk about computers; so jaded by their presence in our everyday lives that the fact it even exists is nothing special. So while many are asking to learn more about “crypto,” what they should be asking about is the technology of blockchain and the reason is because industries are already being disrupted by its presence. One industry that has taken notice and started the evolution process promptly is Accounting firms. The traditional role they served clients is changing and will continue to change and those with enough foresight will see these changes as a positive.
Blockchain (finally) explained (in a way that actually makes sense)
A brief explanation of blockchain: Digital industry leader Michele D'Aliessi explains blockchain using the analogy of a small wager. If two friends make a $50 wager on whether it will rain or not the following day, there are several ways to handle the transaction. Either they rely on trust, a contract, or a third party. All options, although the only options civilization has ever had, are not optimal and carry risk. A contract can be broken resulting in legal fees. A third party might demand a percentage or disappear with the money altogether. With blockchain, a line of code is written and once it enters the “blockchain” it cannot be amended. The code checks the weather the following day and transfers the money to the winner based on the data. This technology, the ability to create truly secure and binding contracts and transactions, incorruptible by the human factor, has endless applications and is already being taught in the country’s leading universities.
It’s easy to see how blockchain will play a role in accounting, an industry of bookkeeping and the analysis of transactions, but how great of an impact will it have? It’s safe to say that this new tech won’t ever fully replace a professional human being, but it is forcing accountants to reflect, review, and revise their role and the value they provide their clients. It’s a matter of adaptation vs. extinction and understanding how to not only fulfill a client’s “needs,” but also their “wants.”
Business Wants vs. Business Needs
Businesses are driven by a series of wants and needs. Needs motivate actions that allow the business to maintain operation, something as simple as paying the rent for offices or providing employees with appropriate tools so they can do their job. What decision makers “want” is to elevate their business from simply being operational to successful growth and possible expansion. A business owner needs to operate within the laws and therefor needs to properly file taxes. This is a need that accountants have serviced since the occupation first came into existence. What a business owner wants is to lead the industry they’re in. Navigating an industry requires information and that information is a value service that accounting firms can supply.
Accounting firms have been serving client’s needs for a long time. The ability to also serve their wants is what can elevate a firm from simply being a service vendor to a business partner, helping navigate obstacles and opportunities. Blockchain, along with the rest of the digital revolution, is actually a great benefit to accountants because it’s giving firms an opportunity to build tighter relationships with their clients.
A client is an owner of several pet stores in the southeast region spanning several states. They are debating expansion but are unable to make a decision on the new location. There are specific data points that can be shared that might help make a difficult decision, such as investing capital and opening a new location, easier. Compare annual growth from 2012-17 to the projected four year annual growth for 2017-2022. It’s a drop from 1.4% to 1.3%. On its own this data can be read as a decline. Compare that to the national figures and a fuller picture starts to develop. Nationally the annual growth declined from 2.7% to 1.8% showcasing that the industry is much more stable in Florida. The level of competition is also lower in Florida compared to the rest of the US. Trends show that millennials pamper their pets and that bodes well for the industry as the demographic continues to grow.
This kind of information is vital for better, faster business decisions and decision makers look for sources of helpful information. The time is right for accounting to provide not just number crunching, but insights on how to beneficially impact those numbers.