Budget Planning and Cryptocurrency: How to Use New Knowledge
Distributed Ledger Technology or blockchain, the driving technology behind cryptocurrency, offers immense benefits in streamlining company data and transactions. The distributed ledger helps simplify and enhance cybersecurity of company transactions that include such important documents as smart contracts and budget planning.
Every member of the budget planning team receives an identical copy of the ledger. Each member can make changes or add their input that is then reflected and copied instantly to others while remaining a permanent record.
This makes it easy and safe for departmental heads to contribute to the company’s budget planning remotely.
Consolidated General Ledger
Budget planning using traditional spreadsheets and formulas can be challenging, time-consuming, and error-prone. Getting all the requisite reports that aid in budget planning is also a daunting task without an accurate general ledger that can compile a cash flow statement and a forecasted balance sheet.
It is also nearly impossible to make journal entries from multiple budget heads into a spreadsheet and harmonize with operative formulas. This situation leaves the budget planner to make approximations and assumptions that are then annexed on a supporting report.
Having a General ledger solution that harmonizes all the facets of the planning process is the dream of any finance accountant in a company. The actual accounting process tracks all account balances automatically and manually through journal entries in the general ledger. This is why the general ledger is critical to the budget process as it supplies vital data to rely on.
Retrieving and collating all these data manually is the challenge accountants face. However, some software addresses this problem and incorporates the general ledger on the same principle as a distributed ledger at its core to simplify budget planning.
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Faster plan iterations
A common challenge with traditional budget planning was the inordinately long and tedious process that took so many resources to accomplish. Adopting digital ledger technology can help simplify the process, produce accurate data, save resources, and improve productivity.
Digital ledger allows for automated consolidation and distribution of budget planning reports and contributions across multiple levels within the company structure seamlessly. The distributed ledger platform's added security protocols guarantee the sanctity of the data while keeping a record of all changes along the way.
Since everyone on the team has the same copy of the planning document, there is no need for alternative communication media to share individual iterations. Every participant on the restricted access network can make iterations that are instantly noted by colleagues on the team. The controlled access allows participants to change or add only that information that is within their responsibility.
The ledger software then synchronizes with other participants so that everyone sees the same document at the same time. This digital ledger process has complete access control of sensitive financial data, keeping an audit trail and record of changes stored in secure blockchain.
Integrity of transactions
One key quality of distributed ledger technology or as also known blockchain, is the inherent trust in the traceability of its digital audit trail.
The audit trail validates the authenticity of transactions carried out in the blockchain, negating the need for the traditional historical audit. This is why crypto transactions have been successful and trusted by traders lending credibility to market leaders Bitcoin.
Distributed Ledger Technology was designed for ironclad secure accounting and is bound to revolutionize office finance, international financial markets, and big data. Investors are the unlikely big winners here, especially against financial statement fraud when investing in or taking over businesses as the blockchain statements are non-modifiable.
Cross-border payments on DLT are greatly improved with better security and speed in transactions. The nature and security of blockchain transactions translate into cheaper costs for the customer and interbank payments.
Conclusion
Budget planning is a core process for any organization and getting it right is vital for the success of the company’s business. Having the process simplified and yet secure and accurate is fundamental to business standards. Distributed Ledger Technology or blockchain raises this important process to a new level to meet the demands of the emerging eCommerce. CPAs must train in DLT to adapt to the new world.
Author Bio:
Helen Birk is a freelance business consultant in accounts and finance and works with some of the best corporate houses. She’s a great researcher and writer and helps students write high-quality essays, thesis and dissertations. In her free time, she likes to listen to rock music, prepare different cuisines and play basketball with her friends.