A friend of mine is very excited about XBRL and has told me all about it twice now (once with some vodka, so I wasn’t super clear). If you start searching for XBRL online, you might need some vodka too.
XBRL allows financial statements (and other financial information) to be machine read.
What does that mean? Well let’s say you wanted to compare 10 different companies. You could look at their financial statements, extract key information and put it into a spreadsheet. Then you could sort and graph and do other things to see how those companies stack up.
But if you wanted to do it for 100 or 1000 or 10000 companies, or if you wanted to compare 10 companies over 20 quarters, the problem quickly gets out of hand.
XBRL allows the information to go straight into a spreadsheet automatically. XBRL is a set of standards so that there are clear definitions for gross revenue, net revenue, gross income, net income and everything in between. Financial statements prepared using these standards can all get sucked into analytical programs instantly. This will be used not only by funds, but by media outlets too.
What is IR?
Investor Relations is all about getting information to current and potential investors. Since your company is one of thousands an investor has to choose from, it is difficult to get their attention.
XBRL might not be used by retail investors much (yet), but you can bet the big funds use XBRL. And they target investors too. So it might be worth pushing from the IR side of the business.
While our accountants are all still recovering from the conversion to IFRS, it might not be the best time to push them to adopt XBRL as well. But it is a global standard that will be used more and more. Something to get started on.