Blockchain is an emerging technology that allows data to be stored in a distributed ledger and continuously verified by network nodes that secure and process block transactions. Because a blockchain records all transactions between a company and its vendors and customers, it creates an immutable record of transactions without the need for third-party validation.
What does this mean for the CFO?
Today, every order-to-cash (OTC), record-to-report (RTR) and purchase-to-pay (PTP) transaction necessitates one set of verification records on the seller side and another set on the buyer side. This means both companies have versions of order confirmations, receipt verifications, discrepancy follow-ups and payment verifications. Blockchain allows a buyer and a seller to share the same version of the transaction, improving transparency in the F&A function and eliminating clearing requirements. For F&A leaders who oversee these processes, blockchain offers the potential for increased data integrity, instantaneous or significantly quicker reconciliations, reduction in close time, increased audit efficiency and improved real-time financial information.
This ISG white paper How Should a CFO Think about the Potential for Blockchain in Finance & Accounting? explores how blockchain will impact F&A – and how an organization might determine its needs for this new technology.