Have you ever heard of XBRL (short for eXtensible Business Reporting Language)? No? If not, join the crowd. Most finance professionals are unaware of XBRL, yet it will play an increasingly important role in financial reporting over the next five years for both public and private companies. And, if the software industry does its job right, it will be the most indispensable technology you never heard of.

XBRL was conceived a decade ago as a way to make it easier for investors to analyze a public company's financial information. The objective for which it was developed was (and still is) to reduce the effort required to get the information from a financial filing (such as a form 10-K or 10-Q in the United States), a press release, or some other document into a format (usually a spreadsheet) for analysis.

Typically, people manually rekey the information from these sources into a spreadsheet. Of course, it takes time to type in the numbers, check for errors, and correct the almost inevitable mistakes. XBRL makes it possible to automate the entry of this information into a spreadsheet no matter how it is set up and formatted. Better yet, XBRL allows anyone to easily compare the results from multiple companies side-by-side without having to pull this information out from each filing. And you don't have to know anything about the technology behind XBRL to use it.

XBRL is already being used around the world by agencies such as the Federal Deposit Insurance Corporation (FDIC), a dozen European countries, and the Bank of Japan, among others, to collect regulatory filings from banks. The Tokyo Stock Exchange collects its Earnings Digest in XBRL format from 80 percent of listed companies. While the United States Securities and Exchange Commission (SEC) has had a voluntary XBRL filing program in place for two years, it is mandatory in other countries and likely to become so in the U.S. in the not-too-distant future. The Australian government sees it as a way to simplify a company's reporting requirements and has embarked on a project to develop a system for corporations to use to submit information electronically to a single central repository. XBRL makes this feasible.

Yet XBRL is useful for far more than just regulatory compliance for large corporations. For example, lenders typically require commercial borrowers to provide periodic financial statements. Today, borrowers deliver this information in the form of an electronic spreadsheet or printed reports. XBRL would significantly reduce the amount of time lenders must spend in both collecting and using the information. It also would enable them to do more kinds of risk analyses that just are not feasible today (e.g., are there negative trends in the creditworthiness of certain types of businesses operating in a certain area?). The applications of XBRL are not limited to commercial transactions; for example, it is being used by the Micro-Finance Information Exchange (MIX) to collect information worldwide about the institutions making very small loans in developing countries.