Bookkeeping for Small Businesses Has Completely Changed

And where it's going from here...

The basics of bookkeeping have been the same for centuries…

Until about 10 years ago.

Since then, there have been more changes to bookkeeping than have occurred in the prior two centuries.

Here’s the prime reason why the practice of bookkeeping has totally changed nearly overnight… and one huge trend that will continue for the next 2 decades.

Bank technology has improved the speed of transaction reporting dramatically.

Banks are basically becoming software companies.

It’s only in the last couple of years that our banks’ data flow into accounting systems like Quickbooks Online is now actually highly reliable, consistently functioning, and thus useful.

But what this actually means is that Software is EATING bookkeeping alive.

Yes… in the near future, the old processes bookkeepers have used will become far less useful, and software will handle nearly all of it.

That said, here’s a question to ask yourself:

Is your bookkeeper working with this shift? Or fighting against it?

Working with this shift means your bookkeeper is providing clean, accurate data for your business, and on a much faster cadence. Not monthly reconciliation and quarterly reports — but daily reconciliation and weekly reports.

A bookkeeper who’s fighting against this shift, however, will clog your business with unnecessary and antiquated methods for reporting and reconciliation.

Here’s the huge trend you need to know about: this shift from slower data to faster data is not going to stop or slow down.

We’ve moved on from mailed statements to digital ones. We’ve moved over to a system of daily reconciliations for bank feeds.

But financial transaction data — the stuff that bookkeepers handle — is on a trajectory toward instantaneous reconciliation.

Which is to say: shared knowledge, in multiple locations, of high accuracy, of any transaction, at any time… with no wait, no escrow, and no holding times.

I suspect it will take 20 years to get there, but it’s distributed ledgers that will get us there.

This is what’s called Blockchain technology.

(Perhaps more on “Blockchain” tech in a future post.)

For now, the only thing you need to know about Blockchain is that it’s a technology that is going to rise over time and make transactions between parties immediate.

That means instantaneous reconciliation.

That literally means no bookkeeping as we know it today.

And that’s why we do Everything Every Week.

It’s a nod to the reality that bookkeeping had better speed up… and well before we hand the baton complete over to Software, little by little, over the next couple decades.