Today, it is imperative to stay informed and empowered when managing digital assets like cryptocurrencies for accounting purposes. Accountants and finance teams are still relying on spreadsheets which can suppress productivity and leave room for human error. When looking for the right crypto accounting solutions, rather than investing into the wrong platform, it is necessary to understand a company’s specific needs. Cryptocurrency is a new generation asset class, and with institutions spending billions on investments into financial technology the time to find the right platform is right now.
Like most things in the wonderful world of crypto, many things are easier said than done. Here are six features CFOs, finance professionals and decision makers should consider when looking for better ways to manage their crypto assets and portfolios:
Create An Audit Trail
Audit trails are often used as a means of verification and completeness for transactions, to ensure they are all properly recorded. When relying on simple spreadsheets, its exceptionally difficult to create a trackable audit trail that can actively monitor a series of sequential actions that take place when buying, selling, or trading in cryptocurrencies. Every trade or movement of assets is taxable and auditable, and following the trails of crypto assets is an industry challenge.
Crypto accountants and bookkeepers should be able to review and backtrack the movement of transactions, which allows finance teams to discover errors, prevent fraud, track asset movement and generate required financial reports.
The importance of creating an immaculate audit trail will prove invaluable should a company be audited for taxes, or in the case of fraud, protect the liability of the company.
Have An Overview Of Daily Balances
Monitoring daily balances have been around since the dawn of currency, and checking account balances is easily accessible on any device. But, how easy is it for businesses to view their entire financial balance across all their crypto accounts, wallets, and exchanges?
Imagine owning multiple large sums of crypto from seven different exchanges, four crypto wallets and over twenty types of coins. Integrating all of the above is a technical challenge that few companies have solved.
Ultimately, a daily average balance is also used to calculate interest before and after transactions, taxation decisions, and accounting purposes. For financial managers, it’s important to always have view their complete financial picture in a snapshot for an up-to-date, and accurate view into their crypto assets.
Classify Accounts & Transactions
Keeping track of accounts and transactions is a fundamental principle for any business. Traditional accounting and bookkeeping practices must keep a record of accounts and every transaction that occurs within a particular account. However, bookkeeping and accounting for crypto are inherently complicated due to the technical challenges and the lack of suitable and customized solutions in the market.
When transacting on different blockchains, the process results in Tx IDs, ‘hash’ info and alphanumeric strings of text which is used as an encryption method for anonymity. Every crypto account, wallet, exchange, and even passwords appear as a long and random string of text and sometimes, to decipher the information is a frustrating task, and keeping it organized is no easy feat.
The ability to label and classify every transaction and establish a simple chart of accounts can remove confusion and create an organized approach for tracking, managing and locating your digital assets.
Integrate With Existing Accounting Platforms
Whether you are an accountant or not, you have likely heard of account software such as Quickbooks and Xero. While those softwares are excellent for traditional accounting purposes, they lack the tools required for cryptocurrency accounting.
The platform businesses use to track and manage their crypto should have a seamless ability to integrate with other traditional accounting platforms to compliment the entire user experience. Additionally, exporting CSV files makes it far easier to facilitate reconciliation of records to ensure all is properly balanced.
Pro’s and businesses should look for a platform or service with features to export/import CSV files to provide finance teams with easy viewing, reporting and integration with other general ledgers.
Make Room For Collaboration
Finance teams are the backbone of any good business, and for large companies or teams that work remotely, they need the ability to stay collaborative.
Businesses should find the best conduit to keep colleagues connected. Finance teams are comprised of multiple roles and titles, management, operations, CPA, auditors and more. Enabling teamwork and collaboration tools can boost team performance and productivity, and the crypto accounting platform for businesses should cater to this emerging need.
Keep Your Information Secure
Blockchain as an industry is constantly improving its security and strength against bad actors, but there is not excuse for lack of security. When handling millions of dollars in crypto assets, professionals and businesses should feel at rest that their assets are protected.
Beyond setting up complex passwords and two-factor authentication, when providing an external company with access to sensitive data, that access can be made ‘read-only’. This ensures limited access to crypto accounts and prevents any actionable events by distributing the right permissions. Discovering a platform that does not emphasize the importance of security is an instant red flag. The platform selected to track and manage private financial data must take a security-first approach.
There is no shortage of traditional accounting tools and platforms available in the market. But, in the new age of digital assets of crypto and blockchain, the platform of the future must not only provide traditional tools, but innovative crypto-specific tools as well. While some may offer a select few features, always aim to find the most versatile platform that suits a company’s specific and individual needs, as anything less is simply not good enough.
Interested in learning more about these great features, and how they can help your business? Click here for your free Blox Pro account today!