Introduction
Small and large firms automate their accounting systems to improve their operation efficiency. The efficacy of using automated systems cannot be undermined by the costs associated with their acquisition and maintenance as the cost savings are high (Gelinas & Sutton, 2002). The tax and advisory services offered by the firm in the metropolitan area are manageable by the use of mere spreadsheets. The use of an automated system in such activities, however, could increase the speed at which the staff can handle these tasks. The planned expansion of the firm’s accounting practice to offer services to homeowners will increase the work to be done and the number of transactions to be handled on a monthly basis. Unlike taxation and advisory services, home associated bills need more monitoring to ensure that all homeowners are furnished with the right information concerning their bills at the right time.
The monthly bills and payment collections to be remitted to the firm are too many to be handled manually by the few employees. The automation of the accounting system will save the cost associated with employing more workers as the system will manage the clients and the staff. The ability of the system to generate periodic financial reports makes it a better tool as it requires no human effort and provide information necessary for planning.
Proposed System Requirements
Billing Processing
The billing process requires three key things namely the input data, the output data and controls to ensure that the input-output processes are working as desired.
Input Requirements
The billing system will be responsible for generating itemized bills belonging to a single homeowner. A large number of homeowners necessitates the adoption of a system that caters for all data captured and entered into the system. The various services offered will aid in the creation of itemized lists, which will contain services such as office supplies, rental space, utility expenses, snow and refuse removal, and lawn care. The input process will entail the identification of the client’s details concerning their location, addresses, amounts payable and prepayments. Standard codes of financial inputs or standard itemized codes can be established to cater for the client’s needs (Gelinas & Sutton, 2002). Computerized accounting systems apply a shared language among computer networks to transmit information (Oganessian & Utyonkov, 2015). The input system should be designed in such a manner that the users can optimize it for efficiency. Single codes are provided to the input, for instance, the power bill or the rental bill before the transaction is automated or programmed for entry into a single or a multi-tiered accounting ledger (Oganessian & Utyonkov, 2015).
Output Requirements
Billing output from an automated accounting system should be easily understood by the intended customers. Various categories of homeowners exist, thus their bills are different. The system chosen should generate output that suit each client’s expenditure details. The clients should receive a summary of the services received and the rates that apply, or any fines incurred. The late 20 percent per month on the unpaid balance, for example, should be indicated in the report generated to enable the customers to plan for their dues in advance.
Control Requirements
Billing process requires good control to ensure that the administration and issuance of bills are done accurately. The account users and agents should have passcodes to allow them access what they need to perform their tasks effectively (Gelinas & Sutton, 2002). The entire billing process will be divided into three parts namely data entry, system authentication and bill distribution. The three parts will ensure that those involved in data entry and the distribution of the bills to the homeowners do not collude with the system workers to alter any information. The division of the duties will ensure that the billing process remains clear and authentic.
Collection Processing
Homeowners remit money within 15 days of receiving their bills. The remission of dues can be easy for them depending on the mode chosen by the firm. The firm aims at optimizing the service experience of the customers by having a convenient collection system. The firm has four payment options, which are personal payments at the main office, postage, electronic and direct deposit to the bank account. Therefore, a client can comfortably choose one that suits them.
Input Requirements
Various input requirements are needed when payments have been made. The four payment modes should be captured and treated in the same way though some must be keyed in the system like the cash and postal payments. The electronic and direct deposit payments should be interlinked with the automated system such that it automatically updates itself.
Output Requirements
The settlement of clients’ accounts should be done simultaneously with the acknowledgment of payment. Receipts that are associated with the payments should be generated and be availed to the clients promptly via email to reduce the cost of postage. The information to be sent to the clients should be generated automatically at the click of a button or immediately after the payment to ensure promptness in information delivery.
Control Requirements
The collection process is mainly customer centered as they avail the cash to major cash collection points. To ensure that every payment is made, the system should have an error notification in case of any interference. The system administrators should also be able to query the expected total payments and note any discrepancy before it becomes a problem.
Payment Processing
The different modes of payment should be processed differently by the automated system but yield the same output. The capturing method of this information is crucial as it forms the basis for the generation of the clients’ individual payment schedules.
Input Requirements
The input data should detail what a customer is paying for and the amount to be paid. The payment should highlight the bill as settled or not duly settled. The various services provided determine the payment made as every service has a different rate. The amount paid and for what service will be required including the time for which is paid as well as any fines.
Output Requirements
The input used closely relates to the output. Payment information is necessary to the clients and the firm because it enables the firm to make major decisions and meet its operating costs. The output generated should offer informative and summative information that is customer specific. The output from the system should be real-time such that after every payment, the system can indicate and print out or forward an email to the customer who makes the payment. The output information should indicate the costs of all the services offered and applicable taxes.
Control Requirements
The generation of information relating to the payments made is crucial. The manner in which payment is made determines the process of input generation. Cash paid directly to the bank is automatically updated but that paid to the office has to be keyed into the system. The manner in which the cash is treated is crucial to ensure that none is misplaced and that the cash tallies with the payment keyed in the system. To control the cash, the system should generate reports for cash received and cash deposited directly. The individuals responsible for handling the cash should have passcodes so that they can be held responsible for any irregularity.
Payroll Processing
The payroll handles all the dues to be paid to employees of an organization. It contains the total days worked, the number of overtime hours, commissions to be paid, bonuses, allowances and any other payments attributed to an employee due to duties they discharge for an organization. The payroll is central to an organization’s remuneration plan as without it employees cannot get their due dues.
Input Requirements
The computation of employees’ dues requires various input data types. The data include the terms of employment (full-time or part-time), payment mode and the payment duration (monthly, bi-weekly or weekly). The firm pays its staff using a bi-weekly plan from the clients’ payroll checking account. The details required for the payment are the duration or hours worked and the services offered by the part-time employees. Deductions such as taxes and medical cover among others should be done and submitted to the relevant authorities.
Output Requirements
The output of the payroll should indicate the amount payable to every employee and their employment type. The details of the amount as per the hours worked or commissions earned should be indicated. Taxes and deductions should also be indicated on the employees’ payslips. The output given by the system should be un-editable to ensure that no alteration is made to the final payments.
Control Requirements
The payroll forms the basis for remuneration. Therefore, any alteration or inflation can be detrimental to a firm. A specific individual should be responsible for the safe custody of the payroll for accountability purposes. Access to the payroll should be limited to those involved in remuneration computation. The authority of editing and altering it should also be restricted to prevent unauthorized editing. The amounts payable to the employees should have a different output from the payroll processing system.
Proposed Outsourcing Functions
Outsourcing of services has become a major way of lowering business costs. With the rising competition, every business wants to focus on its core business to cut a niche. The company can outsource services such as staff development, accounting system maintenance, lawn care, as well as refuse and snow removal. The development of staff involves training them on the use of the new Sage50 system that will be used after the firms merge. The need for training on usage and system maintenance will require that the firm outsources these skills. The expertise required should be inculcated to the staff from experienced personnel to optimize the use of the system. Lawn care, garbage and snow removal services are better outsourced from companies with the required machinery that the firm may not have. The disadvantage of outsourcing these services is the danger of unsatisfactory services.
System Selection
The selection of Sage50 is due to its agility and ability to be manipulated to aid decision-making. Since one firm has used the system, the firm’s experience can be used to make the purchase decision.
There are numerous pros of using the Sage50. The system’s efficiency saves time used in the computation of accounts, which can be transferred to other activities that help in the growth of the business. The users of the system do not need to worry about downloading the latest version of the software (Kelly, 2012). Its ability to aid in the managerial decision-making process is vital as it will enable the business management to make important decisions (Oganessian & Utyonkov, 2015). The software has a wide variety to choose from with varying features to suit different business at different costs.
The availability of a free trial version is beneficial as it helps to assess the most suitable version for a particular business (Bride, 2010). The ability of the software to link the customers and the management increases their contact, which is desired for business success. Versions that compute financial statements, employee compensation (payroll) and deductions are available to reduce the work done by employees hence translating to labor savings (the cost of hiring more staff). The software capability to invoice customers and update payments reduces the risk of debts (Kelly, 2012).
The setback of using the system is that the installation of the software is challenging and takes a long time (Kelly, 2012).
Recommendation
The system is robust and has many advantages. I recommend the Sage50 as it will increase the productivity of the firm. The time saved can be devoted to more productive activities. The reports generated will help in decision-making by the management. Also, the monitoring of cash flow is simplified thereby making it easier to track the financial state of the business. The payroll system management including deductions and customer support facilitates the management of individual contacts with the business. The system should be adopted in phases to allow seamless adoption by the firm’s staff.
Challenges to Automation
The automation of businesses may meet certain challenges such as employees’ resistance to changing towards a particular system, which may make the implementation of the program difficult. The reliability of the system to the internet for updating and the yearly payments tie the business to the software provider. The reliability of the system to power and the rising threat of cyber security may also pose a threat to the security of the data stored in the system.
Conclusion
The use of an automated system is beneficial as it reduces the cost and time of doing business. The benefits of system automation outweigh its challenges. Therefore, every company should strive to automate its systems.
References
Bride, M. (2010). Get started in Sage50. London: Hodder Education.
Gelinas, U. & Sutton, S. (2002). Accounting information systems (5th ed.). Boston, MA: South Western.
Kelly, J. (2012). Sage 50 accounts for dummies (2nd ed.). Chichester, West Sussex: John Wiley & Sons.
Oganessian, Y. & Utyonkov, V. (2015). Super-heavy element research. Reports on Progress in Physics, 1(2), 36301-36302.