I’ve written before about the possibility of a blockchain-centered accounting system that would automatically pinpoint assets, liabilities, revenues and expenses. This system, utilizing a financial code called XBRL (or something similar), would be able to tag every transaction that occurs in the world and match it to the correct company’s books. Not only would this automate the mundane tasks of bookkeeping but it would also provide valuable anonymized datasets to set benchmarking for good or bad companies.
Today, I read an article on TechCrunch about a bookkeeping company called Pilot that just raised $15 million in their Series B. Pilot is run by three MIT graduates and thrh seem to have figured out a way to integrate the many data points from banks to accounting systems to credit cards and combine them into an accounting system. It seems like accounting nirvana.
I wish it were true. As much as I want to hope they’ve found a viable solution, it’s nearly impossible to do. We live in an ever-changing world with APIs that fall apart without consistent upkeep. Even Xero, probably the best accounting system I’ve seen for bank feeds, has its limitations based on API plugins and pulling data from banks. On top of that, you have to be constantly monitoring changes companies make to their UI. It’s an extremely complicated task to create the accounting nirvana today with our current systems.
Additionally, I’ve never seen a company with perfect books. There will always be an error that has tossed the books into chaos and getting down to zero reconciliation is nearly impossible. There are ways of correcting the books but simply adding data on top of bad data won’t fix everything at once.
I believe the solution is to re-think our systems from the ground up. Everything needs to be built with a systematic approach where everyone’s accounting system is in communication with one another. Integrating a bunch of datasets may seem like a solid idea in the short term but it isn’t sustainable in the long term. There are too many moving parts.
Accounting isn’t a sexy field. There probably aren’t many people who care about what I’m writing. But it’s these things that I see on a daily basis that will need to be solved to make our monetary system more efficient. There’s opportunity here, hopefully we find a way to seize it.