How does implementing an accounting software helps the company in terms of efficiency?

PT-UOP BAAFM-10 – ISAC (U23000)

How Does Implementing An Accounting Software Helps The Company In Terms Of Efficiency?

Wong Yu Ling Evelyn

Individual Assignment

4 June 2018

I declare that all materials included in this essay/report/project/dissertation is the end result of my own work and that due acknowledgement have been given in the bibliography and references to all sources be they printed, electronic or personal.

Date: 4 June 2018

_______________________________

Student Name: Wong Yu Ling Evelyn

Kaplan Student No.: CT0160439

UOP Student No.: 797002

Content Page 1.0 Introduction 4 2.0 Background to the Study 4 3.0 Literature review 5 4.0 Research methodology and findings 5 5.0 Finding 6 6.0 Accounting software automates redundant tasks 7.0 Accounting software helps the company’s efficiency by provision of digital invoices 8.0 Accounting software improves efficiency by helping with taxes References 8

1.0 Introduction

This research focuses on importance of the study which is; how implementing an accounting Software helps a company in terms of efficiency, how accounting software can help in improvement of efficiency of a company and the factors which should be put into consideration before choosing an accounting software in any company.

2.0 Background to the Study

Accounting software is one of the most important things any company which wishes to achieve its goals should implement in its operations. Nowadays many companies are switching to an accounting solution which can handle their financials; one of the best solution which is being adopted by most of the companies is the accounting software. Many companies have adopted the accounting software because it has very many benefits on the company (Meall, 2013). Hence, there must be a good amount of beneficial reasons why. Whenever considering of implementing accounting software to any company, it is very important to establish the ways in which the software is going to help the company in book keeping and accounting tasks.

Below is a description of the reasons as to why companies should make use of the accounting software. Accounting software cuts operational costs, helps in provision of digital invoices, provides a wide accessibility, automates tasks which are redundant and takes care of math for the company. Accounting software was first introduced in 1959 when International Business Machines Corporation come up with the 9PAC, the software was used generation of reports in companies, the software also allowed all the users to access and store any structured data from any form of database from their computers (Meall, 2013). Many companies started investing in the development of an appropriate accounting systems which were designed to certain requirements, because most of the tasks were done in batches. As the capability of technology advanced, many researchers came up with ideas which could be used in development of a generalized accounting software which had flexible functionalities.

This led to development of a software which was capable of handling a wide range of business operation within a short period of time and the software also helped in making financial decision process fast and with less intermediaries. Later, a system which was known as the Peachtree accounting system was established in order to make data storage simpler and enable end user of the system to derive more value from the software.

The Peachtree software later introduced an integrated office suite which had a word processor and spreadsheet (Leon and Leon, 2005). This software was later upgraded to come up with the accounting software which is used by many companies today. Many companies have adopted this software because it is easy and quick to utilize and it only requires inputs in order to correct reports and accounts and automatically generate them. The efficiency and effectiveness of the accounting software have played a major role in the adoption of the software by many businesses which are growing. Over the past few years an increase in the competition has been witnessed in the global accounting software market. The highest number of customers for the accounting software in world is medium sized and the small businesses.

3.0 Literature review

Accounting software is very important for companies which are growing, this software helps a company to manage finances with limited challenges. This software helps companies to process and record accounting transactions such as accounts receivable, accounts payable, general ledger and payroll. Accounting software works as an accounting information system in a given company. The accounting software is on-line based and this makes it easy to access it anytime it is need, all what you require to access this software is a device which is internet enabled (Leon and Leon, 2005). The software may also be desktop based depending on cost and complexity. Accounting software is composed of various modules which comprise of; accounts payable, accounts receivable, billing, general ledger, purchase order, sales order book keeping and inventory. In most cases, the installation and configuration of the software at the customer level is highly considered as compared implementation at any other level. Larger applications and midmarket are sold exclusively through consultants, developers and resellers.

There are various types of accounting software, the most common is the personal accounting software, and this software is mainly targeted towards the home users. It supports in management of budgets, accounts payable and account reconciliation in the cheap end of the market. The second type of accounting software is the low end market accounting software, at the low-end of the company markets, cheap applications software helps in carrying out the most basic accounting functions which are to be performed. Most of the low end products are distinguished by being single-entry products, as compared to double-entry systems which are used by many companies (Leon and Leon, 2005). Most of the low-end systems have inadequate security and inadequate audit trails. The third type of accounting software is the high end market software, this software is used for the most expensive and the most complex businesses, these software usually takes a very long implementation duration, which is usually more than six months. In most cases, these software is simply a collection of functions which require outstanding integration, configuration and customization in order to resemble an accounting software.

All these types of accounting software are very important in the current world businesses and that’s why they have been adopted by most of the companies today. These software helps companies to operate at a little cost and in an effective and efficient manner.

4.0 Research methodology and findings

The study will apply mixed methods, that is, quantitative and qualitative and approaches of methodology. In qualitative approach, the research will depend on information available from different sources which are on the internet and books. The research will describe and analyze the findings as per the objective of the research. At the same time the research will make use of the quantitative research approach. This approach will give the researcher an opportunity to make a decision on the findings from his study.

5.0 Finding

After carrying out a thorough research we realized that the implementation of accounting software is very crucial to many companies. The findings in this research are based on the results acquired from most of the companies which we managed to engage in the research. Below is a description of why it is very vital for companies to make use of the accounting software in order to improve its efficiency.

6.0 Accounting software automates redundant tasks

One of the tasks which consumes a lot of time in most of the companies is data entry, the new and updated accounting software allows entry of data only once and hence improving the efficiency in the company. A good example of data which is only entered once is the automated payment plan which allows a company to enter the details of its customers only once (Bagranoff et al., 2005). This software helps in tracking the customer’s payment habit as well as the purchasing history for reference purposes. When it the time for collection of payments is due, the company will then receive payments without putting any extra effort from its end because the software will automate the process and hence ensuring that the company is efficient in its operations. Accounting software is also provides the company with the vendor history and aging with reports for each customer, this improves the efficiency of the company by making retrieval of the payments and invoices fast. It saves time which could be spent trying to retrieve invoices manually.

The software also gives room for saving of each and every aggregate transaction history in the system without the company having to manually input the data one at a time. The software not only improves efficiency by saving time but it also helps in eliminating the most probable errors which might arise from entering the data manually into the system.

7.0 Accounting software helps the company’s efficiency by provision of digital invoices

In this century the world is driven by technology, paperwork is no longer efficient any more. Most of the companies rely on technology in improvement of their efficiency and this is achievement through provision of digital invoices’ (Bagranoff et al., 2005). Accounting software plays a major role in provision of these digital invoices for most of the companies. This software helps companies by ensuring that they are ahead against their competitors by ensuring that services are fast and efficient and hence attracting more customers. Sending of digital invoices to customers of the company by using emails is very convenient both for the customer and the company, therefore this software improves efficiency of the company.

The accounting software improves the efficiency of the company by making transactions fast and easy, this is because customers of the company can make payments through a few clicks and the transactions are successful, this software helps in reducing the risk of walking around with money. Many companies nowadays are integrating with various payment channels which allows debit and credit cards, e-wallets and bank transfers, all this services are provided by the accounting software and hence improves the efficiency of the company by ensuring that transactions are fast, efficient and reliable.

8.0 Accounting software improves efficiency by helping with taxes

Companies use the accounting system to record the amount of money it has received and spend in an organized manner. This allows the company to stay on top of its accounts when exporting documents and compiling them together with the receipts to the accountant with ease, therefore the accounting software makes the work of the accountants of the company easy by compiling all the transactions. Properly compiled records ensures that the accountant’s work is easy in taking care of the company’s taxes and hence improving the efficiency of the company (Blocher et al., 2013).

Some accounting software also helps in compiling the taxes as per the office rules by automatically formatting the invoices and this makes work easy more so during the taxation season. Accounting software also enables audit-proof of the accounting books and this makes the auditing process shorter as the internal revenue service auditors of the company may only do cursory review and check to see of the bank statements are in line with the records which are in the accounting software and hence from this we can say that the accounting software helps the company in the auditing process and hence improving its efficiency.

9.0 Accounting software improves the efficiency of the company by overseeing cash flows

Management of a company pertains the net cash equivalents and the amount of cash which flows in and out of the company’s financials. Overseeing all the transactions of the company, for instance making payments and requesting for payments from clients might mean that the company will have to designate its productive time in go through excel sheets, contact lists and files Excel sheets if the company operates without an accounting program which might streamline this task which is time consuming. The accounting software helps in improving the efficiency of the company by ensuring that the company is able to keep track of the invoices, cash and overdue payments (Pullum, 2001). Therefore the software helps in improving the efficiency of the company by ensuring that the company does not miss a vital financial transaction. An accounts payable system tracks bills as they arrive so you can plan and forecast future cash flows instead of just cutting checks when bills are due.

The accounting software has a system which tracks the accounts payable bills as they arrive and this make it easy for the company to plan and forecast on the future cash flows rather that just cutting checks when bills are due. Accounting software also has formalized financial statements, for instance the profit and loss statements and the balance sheet and this improves the efficiency of the company by evaluating the progress of the company and identifying any area which needs urgent improvement in order for the company to achieve its goals.

10.0 Accounting software helps companies to cut operational cost

Accounting software helps in automation of the accounting tasks and this saves the company a lot of money in the long run. Accounting software helps in elimination of the need to hire some employees such as bookkeeper or allocation of some employees some extra time in their shift in order to be able to handle invoices, transactions and books. This helps the efficiency of the company by reducing the cost of hiring extra workers and also saving time which is spent compiling invoices and transactions. In business, time is very important because it is equivalent to money and hence optimization of the greatly minimizing bookkeeping hours, this time can be used to carry out other tasks. Accounting software has subscription-based pricing models which have cheap to subscribe on either monthly or annual basis, this models improves the efficiency of the company by reducing the time which is spent on tasks such as pricing of the company’s products.

11.0 Accounting software enables a wide range of accessibility of the company

If the company has an accounting system which is in the cloud, it is easy to access it anytime and anywhere someone need to access the system. Financial matters are difficult to put off but the accounting software makes it easy by solving the most of the financials which are critical. An accounting software which is cloud-based does not limit the company’s access to its desktop and it makes it easy to access information in case a system failure is experienced. A company can make use of the mobile devices in order to ensure that the users are more satisfied. Accounting software helps in improving customer relationship management and hence improving customer satisfaction, this improves the efficiency of the company by making it easy for the company to achieve its goals (Pullum, 2001).

12.0 Accounting software takes care of math for the company

One of the very vital aspects of accounting is accuracy, regardless of having access to almost all financial records in the company, it is easy to make errors, lapses and edits in calculations. Correction of these errors might cost the company some money, therefore accounting software improves the efficiency of the company by providing accurate calculations and hence ensuring that no time is spent correcting errors and also no money is spent to correct the errors (Sorensen and Peckham, 2003). Accounting software is very crucial for growing companies because it helps in handling of the taxes, payments, bills, and crucial deadlines and hence improving efficiency of the company. Accounting software takes care of math for the company by helping in simplifying bank reconciliation and hence ensuring that the company does not miss deductions and hence the software improves the efficiency of the company by improving accuracy in the company’s calculations.

Making use of accounting software helps companies to save money and time, the software also provides companies with a valuable insight into their business. If a company has to choose an application of technology carefully, then investing in a computerized accounting system is one of the best decisions which the company can come up with.

13.0 Accounting software improves efficiency of a company by integrating with other systems

Accounting software is easy to integrate with other systems such as the e- filling and online banking (Pullum, 2001). This improves the efficiency of the company by ensuring that transactions are fast and efficient since customers can make use of their credit cards to purchase products from the company.

14.0 Accounting software improves efficiency by increasing the speed

Even though reduction of inefficiencies and errors can result to a decrease in the amount of time which is required to complete a certain activity, many companies still perform a various tasks manually and this requires a lot of time, accounting software can help decrease the time taken to perform some of the tasks in a company and hence improving the company’s efficiency.

A company can begin by analyzing the task which consumes a lot of time and come up with the ways in which it can perform them within the shortest time possible and with less errors. For instance, automation gives companies to perform tasks quickly and repeatedly with perfection, therefore implementation of accounting software makes it easy for a company to perform various task repeatedly without errors and hence companies should adopt the accounting software in order to improve its perfections.

15.0 Conclusion

Accounting software are very good for companies and they help in improving efficiency of the company through the above listed ways but it’s very crucial to consider the following factors before choosing an accounting software.

The first thing which the company should put into consideration before implementing accounting software is features of the software, From the company’s evaluation, probably with the support from an accountant, the company should check whether the features of the software matches with the company’s needs because most of the software solutions are created with different features.

The second factor which a company should consider before implementing an accounting software is the overall value of that particular software, in this case it is recommendable to go for the software which is expensive and has the desired functionalities and features. This kind of a software will help in improving the efficiency of the company in very many ways and hence the company will be able to perform its task without any challenges. The third factor which should be put into consideration before implementing an accounting software is integrations, Maximizing what the company can do in the software is achieved with a strong marketplace of integrations which will enhance the core capabilities and the system’s functionality (Meall, 2013).

It is recommendable for a company to choose a software which has several integrations in order to improve its efficiency.

Lastly, a company should consider the scalability of the software, most companies’ wishes to grow within the shortest time possible, therefore the factor in scaling helps the company to ensure that software will grow with growth in the company, that is, when business grows the software will be able to meet the needs of the business.

15.0 References

Greetham, B., 2014. How To Write Your Undergraduate Dissertation. 2nd edition, Palgrave MacMillan.

Saunders, M. Lewis, P. and Thornhill, A. 2009. Research Methods for Business Students, FT Prentice Hall London.

Zikmund, W. G., Babin, B. J., Carr, J. C., Griffin, M. 2013. Business Research Methods, International Edition (with Qaultrics Printed Access Card), 9th edition, Cengage Learning.

Hart. C. 2000. Doing a Literature Review, London: Sage Publications.

Bagranoff, N., Simkin, M., Norman, C. and Moscove, S., 2005. Core Concepts of Accounting information systems. Hoboken, NJ: Wiley.

Blocher, E., Stout, D., Juras, P. and Cokins, G., 2013. Cost Management. New York, NY: McGraw-Hill/Irwin.

Leon, A. and Leon, A., 2005. Software Configuration Management Handbook. Boston: Artech House.

Meall, L. 2013, Online Accounting Software. London: Institute of Chartered Accountants in England & Wales.

Pullum, L. 2001, Software Fault Tolerance Techniques and Implementation. Boston: Artech House.

Sorensen, D. and Peckham, K, 2003. Business Performance Intelligence Software. [Morristown, NJ]: Financial Executives Research Foundation.

Page 9 of 16