Importance of Efficient Accounting System for B Bakery
This study deals with discussing the concept of accounting information systems that actually help in tracking all the financial activities of a given firm in a proper way. In the modern competitive environment, application of accounting information systems in organization has become a necessity as the system has lot of advantages of its own (Worrell, Wasko and Johnston 2013). Nowadays, all types of modern organization are showing interest in adopting various kind of modern technology so that they can sustain in the business as well as able to compete with the competitors. The present study identifies the importance of efficient accounting system for the firm B Bakery. The business is currently following a manual form of accounting systems and has not yet adopted and automated accounting software (Diatmika, Irianto and Baridwan 2016). This study suggests B Bakery in using automated accounting software for the keeping track of all the financial activities. Different types of accounting system as well as accounting software had been mentioned to B Bakery that even explains about the benefit of each process. Therefore, B Bakery should adopt automated accounting software as it will solve the current issues faced by the firm due to manual accounting system (Williams 2014).
A Baker is an individual who really produces different forms of breads and cakes with the help of heated source. In addition, Bakery is a place or workplace where the baker prepares and sells their respective breads or cakes (Weil, Schipper and Francis 2013).
B Bakery mainly carries out various range of business that is explained below with proper justification:
- B Bakery is a medium-size enterprise that deals with different forms of bakery products such as manufacturing of bread as well as other items. The Unique Selling Proposition for the given product items offered by B Bakery is that it give importance to health related factors at the time of manufacturing its products (Sutton and Arnold 2013).
- Carrying out the business manually- B Bakery still carries out their business activities through manual accounting system and this is one of the disadvantageous factor that need to be corrected on urgent basis (Deegan 2013). B Bakery records all their business transactions as well as accounting activities through adoption of manual process rather than technical accounting process such as use of any of the accounting software. Using manual accounting system is one of the limitations of B Bakery as the firm failed to adopt any proper ERP process in their business activities (Sousa and Oz 2014).
- B Bakery involves in allocation procedure of its diverse types of bakery products. Here, it is noted that B Bakery sells their breads through use of various channels of distribution such as supermarket chains (Dillard, Yuthas and Baudot 2016).
- Less effective in human resource management- B Bakery employs 70 employees who work for the firm. B Bakery still uses manual process for keeping track of monthly salaries. In addition, lack of proper accounting department had negatively affected the employees of the firm by large amount (Simkin, Norman and Rose 2014).
It is noted that B Bakery is highly successful in making a good amount of turnover in their business activities (Collier 2015). For this reason, the business process of B Bakery will suffer largely because the firm had adopted manual accounting system for tracking the financial transactions. It is suggested to B Bakery to adopt accounting software for smooth functioning of business enterprise (Simkin, Norman and Rose 2013).
- Payroll structure with automated accounting structure- B Bakery currently follows manual payroll structure to give away salaries to their employees. B Bakery is a growing firm and it is essential that the firm should have a proper automated payroll structure in order to credit the salaries of their respective employees (Belfo and Trigo 2013).
- Proper analysis of costs for various inflows as well as outflow activities- B Bakery is a growing organization and it is essential for the firm to categorize its various types of costs in their respective production as well as manufacturing process. B Bakery should minimize their operating costs as it will help the firm to sustain in the upcoming financial year. The problem can be sorted when B Bakery adopts automated accounting software (Patel 2015).
- B Bakery need to adopt an effective process so that they can properly determine the cost of production or cost of goods sold. In addition, the process mainly involves determination of costs starting from raw materials to finished goods. This type of activities is not possible if B Bakery continues to use manual accounting process (Apostolou et al. 2014).
- Financial statements and preparation of annual reports- In modern business environment, it is taken into account that most of the firms are publishing their financial statements as well as annual reports. In addition, it had now become an indispensable part on behalf of the business enterprise as it help in evaluating their business process at the same time (Worrell, Wasko and Johnston 2013). Therefore, B Bakery should adopt such type of business process so that they can sustain in the present competitive business environment.
- It is important for B Bakery in determining the market value at the time of adopting suitable accounting methods. In addition to that, B Bakery is required to pay off its liabilities on time such as tax (Diatmika, Irianto and Baridwan 2016).
If B Bakery adopts the above-mentioned business process in their operations, then it is quite feasible that the firm can easily attain different positive and these are mentioned below with proper justification:
- Control over variable and various types of operating costs- B Bakery can easily get access to control over its operating costs if they successfully adopt automated accounting system process. After adopting the automated accounting system, B Bakery will come to know about the highest as well as lowest production unit where the variable costs can be controlled in the most appropriate way (Worrell, Wasko and Johnston 2013). In addition, adopting the accounting system will help B Baker to get access to effective manufacturing systems.
- By adopting automated accounting system process, B Bakery can publish effective as well as error-free financial systems. It will even help B Bakery for analyzing their business performance over past years as well as planning for the business activities for upcoming financial years (Worrell, Wasko and Johnston 2013).
- The accounting process will help B Bakery for determining an effective pricing strategy for both short-term and long-term perspective (Diatmika, Irianto and Baridwan 2016). Therefore, with the use of this accounting system, B Bakery can easily increase their sales revenue as well as have positive impact on the profit figures as it will guide with establishing suitable pricing strategy.
- In addition, this will help B Bakery in their production process as well as minimizing their total amount of unused stock (Diatmika, Irianto and Baridwan 2016).
On analysis, it is noted that bakery firm need different types of accounting system in their operations. These requirements can be present in form of financial statement analysis in proper ways as well as documentation of various forms of records that relates to vendors, debtors and creditors at the same time (Worrell, Wasko and Johnston 2013).
- Easy Online accounting- Most of the business enterprise recently are opting for online accounting transactions (Diatmika, Irianto and Baridwan 2016). It is an important factor that needs proper attention where management of the business firm needs to track all the financials of the firm so that they can undertake prompt decisions that benefits the organization as a whole. It becomes essential that the inventory process need to be smooth for any business enterprise and this will have positive impact over the growth of the business firm (Vanhoof et al. 2016).
- Financial Statement Analysis- There are different types of accounting software that are needed for bakery firm for recording their financial transactions. It is important to consider the fact that where the firm can make use of software such as MYOB and DacEasy. B Bakery does not have proper accounting software. It is for this reason that basic software will help B Bakery for attainment of future success (Zhang and Ni 2016).
- Documentation of various kinds of records and comparing at the same time- On analysis, it is found out that any firm, be it small or large scale, need to track all types of financial transactions (Diatmika, Irianto and Baridwan 2016). These transactions are mainly in the form of accounting transactions and carries equal importance in real terms. It is for this reason become necessary that B Bakery should adopt effective accounting software that includes daily financial transactions. In addition to that, transaction over the year is needed for making the comparison for measuring the level of performance for a period of years. B Bakery needs to even get involved in comparing the level of performance with that of its competitors. Therefore, there is a need for B Bakery to adopt automated accounting system for keeping proper track of their vendors (Worrell, Wasko and Johnston 2013).
- Analysis of various types of costs- It is noted that the bakery need to adopt an effective accounting software as it will help in analyzing different types of costs on daily basis. In addition, this software will help in producing effective cost-sheet reports. The costs that need to be taken into consideration are salaries of the employees through use of electronic transactions (Dillard, Yuthas and Baudot 2016).
B Bakery can adopt various types as well as form of accounting software that will suit their business process. To explain in detail, there are various software packages that are currently available and these are as follows:
- MYOB- MYOB accounting software help in managing the finances in better way for any business who adopts or implementing this accounting software. This accounting software will help any business enterprise to boost in the level of profitability and help managers at the time of decision-making process with a real view of the finances. Using MYOB accounting software by any business enterprise will save lot of time and increase in the level of productivity for the business so that they can attain future goals and objectives. This accounting software had been awarded by BRW for creating of small bills and it is one of the significant features that allow SME customers to save up money.
- SAP- SAP accounting software is one of the financial accounting as well as reporting software that mainly records transactions, operating data and reports at the end of every month, quarterly for analyzing financial data. This accounting software has transform the computerization of the accounting system that help companies of whatever size in whatever industry to improve their data handling as well as financial processing capabilities. In addition, SAP accounting software takes into account aspects such as reporting, accounting as well as accounts receivable management. It increases the level of efficiency that allows easy access of data as well as help managers to undertake better business decisions (Dillard, Yuthas and Baudot 2016).
- DacEasy- The Payroll system or program of DacEasy works best in case of flexible payroll products and used by larger organization. This accounting system adds multiple warehouse capabilities to Version 10 but implementing this is overly cumbersome. The window products of DacEasy are entry to mid-level accounting software products. This accounting software is well-featured as well as performs suitably for most of the small t medium-sized contractors, retailers, manufacturers and service business enterprise (Dillard, Yuthas and Baudot 2016).
Types and Benefits of Accounting Software
Each of the above-mentioned software has access to unique features. In addition, B Bakery need to decide which software to select based on the requirements that best suit their business process (Dillard, Yuthas and Baudot 2016).
- Accounting software (Low-end)- It is important to consider the fact that low-end accounting system can be used for business that deals with very less business transactions and do not have to perform complex business process. Most of the professionals such as lawyers and doctors use low-end accounting software. In addition, very few small scale firms use low-end accounting software because of the reason it is not structured properly. Complex transactions were not possible to record by use of this low-end accounting software.
- Accounting software (Medium-end)- It is essential to take into account that medium-end accounting software is adopted by business organization formeeting the basic requirements of financial as well as accounting transactions. In that way, all the primary requirements need to be covered by use of this accounting software. Medium-end accounting software is used by small and medium enterprise profit-making entities as they need software to record daily business activities. It is noted that medium end software is best suited for recording double entry of accounting system and this is the reason behind selection of medium end accounting software by the small and medium enterprises.
- Accounting software (High-end)- It is essential to consider the fact the high-end accounting software are used for various kind of accounting process as well as recording of complex transactions. In addition, high-end accounting software is used by large multinationals as they need to deal with complex transactions. High-end accounting software is built with greater amount of advanced technology that has the capacity to record complex accounting transactions. The output produced from high-end accounting software is extremely useful for business organization. Huge cost is need at the time of implementing high-end accounting software. This is the reason why low and medium scale enterprise could not adopt high-end accounting software as it is costly affair and need high amount of human resource requirements.
From the above-mentioned discussion of different forms of accounting software, it is recommended that B Bakery should adopt medium-end accounting software so that the firm can brings improvement in their business operations (Dillard, Yuthas and Baudot 2016).
B Bakery can adopt quite a few accounting packages in their operations. The options available are DacEasy, MYOB and XERO. It is important to compare different software packages so that the best is selected for that suits the requirements. Basis of comparison among the accounting software will be judged upon different elements such as capability of recording adequate number of documentation, sundry debtors and creditors, payment related structure of the employees, operating expenses risk and sustainability, scheduling of time. These elements are properly explained below so that the comparison between the accounting software becomes easy (Dillard, Yuthas and Baudot 2016).
- Capability to record adequate number of documentation- On comparison, it is found that MYOB is accounting software that has the capacity to record adequate number of data within the system. This accounting software helps in generating the output quickly when a user gives input. This is due to the fact that the accounting software has a button that is present on every page when a particular input is raised. On the other hand, DacEasy is accounting software that uses an index for finding the useful information on screen (DacEasy US. 2017). Therefore, both the accounting software can record adequate number of information as well as documentation, the difference is the process of application.
- Operating expenses- On analysis, it is noted that operating as well as implementation costs for the accounting software can be categorized from medium to high. In addition, the single version of software is comparatively less costly than the multiple version ones. Hence, the cost mainly depends upon the specific firm on what software they need to carry out their operating activities (Rainer et al. 2013).
- Payment related structure of the employees- On comparison, it is noted that there is difference present in the payment structure among different accounting system packages such as MYOB, XERO and DacEasy. To explain in detail, DacEasy is useful when it comes to depositing the salary of the employment through direct means. The other accounting software is XERO that is also useful when it come to automatic bank reconciliation (Xero2017). Finally, MYOB is useful when it comes to creating different alternatives for managing the salaries as well as tax status of all the employees.
- Risk and sustainability- On analysis, it is noted that all the above-mentioned accounting software packages are error-free as well as sustainable depending upon the capability of the users. B Bakery management needs to be specialized beforehand only when they start handling a given accounting system (Peppard and Ward 2016).
- Scheduling of time and complexities- On making comparison, it is noted that XERO was successful in rendering easy online transactions where the initial process is little bit complex by nature. Same like that, DacEasy is accounting software that helps users in case of simple operations. This accounting software produces reports when billing is done within the allocated time. On the other hand, MYOB is one of the accounting software that is very simple to use and operate as it is understood by people who have basic accounting as well as bookkeeping knowledge. This accounting software helps users or companies at the time of creation of billing on credit terms (Pearlson, Saunders and Galletta 2016). Due to this feature, MYOB act as an advantage for that business firm who deal in credit transactions.
- Flexibility- On making the comparison among different accounting software, it is noted that XERO is an accounting software package that are flexible as well as operates on advanced third part payrolls. The accounting software even provides free trail training especially for small business enterprises. On the contrary, MYOB is accounting software that is extremely flexible as well as has the capacity in generating more than 175 reports. These reports actually help in generating tracking details of data for different types of suppliers, vendors, customers, vendors as well as transactions of other parties. On the other hand, DacEasy is accounting software that generates 50 reports but is not as flexible as compared to other accounting software (Dillard, Yuthas and Baudot 2016).
It is now essential to select the most suitable vendor for B Bakery firm so that they can track their financial information through use of accounting software in their operations. It is important for B Bakery to select an appropriate accounting package that will meet the purpose for smooth functioning of business enterprise (Hoskin, Fizzell and Cherry 2014). B Bakery is a family owned business organization and for this reason, they cannot afford to spend higher costs for implementing an accounting package in their operating activities. In addition, the select accounting package needs to be simple as well as easy to operate so that it can be implemented in the most successful way. From the above discussion on each of the accounting software packages, it is now understood how each one differs from other software packages and its advantages and disadvantages at the same time (Dillard, Yuthas and Baudot 2016).
In addition, the management of B Bakery should opt for MYOB as it has the capability for generating wide range of reports that is suitable for tracking the financial transactions in an effective way. Both XERO and DacEasy are not suitable for B Bakery as the features that are mentioned above are not available in these software packages. There are other types of function analysis that is not present in XERO. This accounting software package specialized in managing accounts receivable transactions whereas MYOB deals with both accounts payable as well as accounts receivable transactions (Galliers and Leidner 2014).
Comparison of Accounting Software for B Bakery
MYOB can generate huge amount of reports that is not possible in any other accounting software package. In addition, the security of B Bakery will be improved if they implement MYOB accounting software (Guragai et al. 2015). Therefore, systematic information needs to be gathered through implementation of MYOB software as well as transmission of data that can be properly done.
Hence, MYOB is an accounting software package that is more flexible than any of the other accounting software package. In addition, the reports can be easily printed because MYOB accounting software offers printing facilities as well. B Bakery should opt for MYOB accounting software as their automated accounting software for taking their business to the next level (Guffey and Harp 2013).
Conclusion
At the end of the study, it is concluded that every business enterprise should take their business operations in next level and aims at profit generation in the near future. B Bakery will be successful if they implement MYOB accounting software for tracking the financial transactions in the most appropriate way. B Bakery will be highly successful at the time of evaluating different reports of all their vendors as well as assist the firm for implementing an effective pricing as well as distribution strategy based on outcomes. Therefore, the profit margin as well as sales of B Bakery will grow at next level if they implement MYOB accounting software as it best suited to the needs of the company.
References and Bibliography
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