XBRL Barcode: The Future of Finance
XBRL, or Extensible Business Reporting Language, is a standardized, interactive language that companies can use to submit their financial data. Rather than treating financial information as a block of text, it provides an identification tag for individual pieces of data, making it computer readable. XBRL allows companies and other producers of financial data and business reports to:
• Automate processing of data collection via computer software
• Increase the speed of handling financial data
• Reduce the chance of error
• Permit automatic checking of information
• Streamline collecting and reporting processes
• Adapt to meet different requirements and uses
• Download and compare financial metrics for many different companies
Since XBRL is more efficient than the current system of reporting financial data, there is a proposed federal regulation in place that would require all public companies to file financial statements in XBRL by 2011. The Securities and Exchange Commission (SEC) even proposed that Fortune 500 companies should begin filing in XBRL beginning in 2009, and that all public companies should consider XBRL within the next three years.
Under a pilot program, about 80 companies are already submitting their financial statements in XBRL to the SEC. These companies speculated that by switching to XBRL early, they will save money on software, and save the stress of rushing to meet future deadlines.