Many of the vendors you work with may be among the more than 2,300 U.S. businesses that accept the cryptocurrency bitcoin, according to a report from Deloitte.
There may be even more businesses exploring cryptocurrency right now because, unlike cash, it’s not subject to devaluation from inflation.
For A/P transactions, virtual currencies and blockchain technology can provide improved security and real-time payment capabilities. For example, the blockchain general ledger is used to verify and record every transaction, which can make identity theft difficult.
If you pay vendors that are overseas, cryptocurrency can help you avoid international currency payment fees because it isn’t tied to a country of origin or national bank.
On the A/R side, accepting virtual currency may unlock an untapped younger customer base for your company. It should be noted that purchase amounts by customers that pay with crypto tend to be twice as high as those paying by credit card, said a study conducted by Forrester Consulting.
The reason crypto users are spending more? It could be security confidence. Cryptocurrency’s theoretically more secure than credit and debit card payments because data isn’t stored in a centralized hub where data breaches can occur.
But adopting cryptocurrency is a complex process involving new processes and controls. There are also potential costs, risks, system requirements and other factors to consider.
Before jumping on the cryptocurrency bandwagon, there are some important business objective questions to discuss with leadership:
- Are IT, legal and purchasing all in favor of adopting cryptocurrency?
- Do we try it out with a “hands-off,” payments-only approach first? There are third-party vendors that take care of the complicated stuff and make it possible to convert crypto into and out of standard fiat currency for receiving and making payments without having to include it on the company’s balance sheet.
- What third-party vendors/custodians should we consider partnering with? Tip: Ask for their SOC 1 and/or SOC 2 reports. Because your company can still be held responsible for any risk, compliance or internal controls issues that pop up, due diligence must be taken. Don’t forget to vet potential partners with the Office of Foreign Assets Control sanctions database.
- How do we monitor the execution of transactions?
- Because of capital gains tax, how much extra accounting is involved?
- Will our vendors be on the same page on the value of the currency?