Greg Carter Explains the Broader Possibilities of XBRL

Lorraine Lawson, of IT Business Edge, interviewed EDGAROnline CEO Greg Carter this week, pulling a wealth of information from him on the possible future of XBRL. Carter believes that the language holds the key to more successful business to business (B2B) companies.

You could really say that it would be used from one organization’s ERP or consolidated financial system and uploaded directly to a regulatory agency. It wouldn’t necessarily (be used), at this point, though it’s perfectly applicable to B2B transactions between businesses, but that’s exactly where it’s headed.

It’s a standardized way of communicating a transaction, whether that transaction is the close of a quarter, the close of the year or the shipment of a cargo container. That’s actually an example of an industry that is actively looking at XBRL: the shipping and logistics industry.

Much like recent efforts to promote XBRL on the National level, the language can also bring efficiency to a smaller scale. XBRL data is similar to today’s popular QR codes. It contains a large amount of data, in a small, easily-read package. Businesses using XBRL reporting could keep a better eye on their transactions, according to Carter.

But that isn’t the only industry looking at this technology.

Lawson: What’s it competing with in terms of standards in the B2B space?

Carter: There are a variety of older standards, such as HL 7 in the health care industry, that are kind of pre-XML standards.

 The beauty of XBRL is that it comes with a bigger framework. So, previously, organizations agreed, and HL 7 is an example. They came up with a static standard that described a relatively thick set of data points and there were tools that were kind of hardcoded to understand HL 7.

The way XBRL is used is a given set of trading partners or interested parties that come together. They agree upon a core taxonomy that represents maybe the minimum information required, or the maximum information required or different levels of information. Not only can they define the information structure, the taxonomy, they can also capture a lot of business rules that allow that information to be very dynamically validated and to be accurately represented…

The interview is a long, but fascinating look at the future of XBRL. If you have the time, I strongly suggest reading it, but the basic message Carter presents is that we have barely tapped the limits of XBRL. There are few businesses, and even fewer industries, that cannot take some benefit from the XBRL reporting language. Where do you see the future of XBRL?

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