Benefits of using an Online Accounting Software Tool

Question: Discuss about theBenefits of using an Online Accounting Software Tool. Answer: Introduction Modern corporate organisations operate in different types of sectors have relentlessly tried to improve the functioning management. Therefore, management of business accounting has been one of the major priorities for most of the firms. The reported paper has developed to analyse the role of cloud-based online accounting software tool in the business management of Brickworks Building Products, a Wollongong, New South Wales based building material supplier company (Brickworks.com.au, 2016). Precisely, MYOB, XERO and Zoho Books have been identified as the targeted online accounting software to be reviewed. Meanwhile, the traditional manual accounting system can be recognised as one of the issues for financial reporting and other accounting tasks. As a result of the scenario, small organisations have relied on cloud-based accounting system tools to minimise the cost and improve the productivity. Apparently, the report has been structured to evaluate various economic transactions to be p erformed by a small suppliers company (Byrd and Megginson, 2013). Also, the study shows the benefits of the online accounting system over the manual accounting system. Various Economic Transactions and Events Transaction in an organisation is termed as economic events that take place when monetary exchange is done within or outside the organisation. There are different types of economic transactions and events that occur in an organisation like Brickworks Building Products. Hence, it is important for the accountants to note down the economic transactions in order to analyse the financial position of the company after the end of the financial period (Joia, 2013). Some of the examples of economic transactions and events that can be recorded through the online accounting solution include buying of materials, wage payments of the employees and applying overheads to the inventories to calculate the cost of goods sold. Along with that, the online accounting software helps to automatically calculate the tax amounts that are needed to be paid to the government (Fanning, 2015). There are several other economic transactions or events that take place in the organisations. It also include sales of go ods to the customers, providing services to the customers, receiving payments from the customers and making payments to the suppliers. The economic transactions also include recognition of expenses that are incurred by the organisation during the course of its operations (James and Maher, 2016). Hence, it is important for the accountants to record the economic transactions and present the data in an appropriate format to analysis the financial position of the company. Benefits of Using Online Accounting Software In the section, a brief discussion has been done about the benefits of using online cloud-based accounting software for Brickworks Building Products; a Wollongong, New South Wales based building material supplier company (Brickworks.com.au, 2016). Apparently, online accounting software such as MYOB, XERO and Zoho Books can easily handle a number of accounting tasks and bookkeeping in an accurate order (Growthpath.com.au, 2016). The primary benefits of the online accounting software have been briefed in the underlying section as follows. User-Friendly: Online bookkeeping is user-friendly software to learn in regular business operations. After the installation of the software, it can correctly maintain regular business data such as bank statements and purchase invoice in an automated way (Tilkov, 2015). Security: Security is one of the most evident benefits of using online accounting software. As the online bookkeeping software stores the data in the online cloud storage, security of the data has been the priority for the developers (Byrd and Megginson, 2013). With the proper security system, the software can manage a healthy accounting activity for small business firms. Payroll and Invoicing: Online accounting software has made life easy for the employers in order to fill payroll forms more efficiently instead of the traditional paperwork. On the other hand, online accounting software can generate invoices in a proper order saving both the time and effort. Accuracy: Through online accounting software, the precision of the business computation has been maintained as human errors and mistakes can be avoided. In this way, accounting related calculation issues can be comprehensively done without errors (Turner and Weickgenannt, 2013). Cost saving: Small businesses have run on a tight budget. Therefore, it will be sometimes difficult to hire an accountant claiming a high salary. As a result, online accounting software tool can be the easiest way to deal such issue as it requires one-time investment (James and Maher, 2016). Thus, online accounting system tool can be identified as a cost-saving deal. Predominantly, the small business organisations need to purchase the software or run it on monthly subscriptions. Productive: Online accounting system tool avoids manual paperwork that can become tedious and unproductive to some extent. Apparently, online accounting software helps the accounting employees to fill accounting paperwork in an easier way using the electronic system through a much productive way. Transaction Cycles and Usefulness of Online Accounting Software to Perform Economic Transactions Transaction cycle is a set of economic transactions that takes place on a repetitive manner in a particular accounting period. Most of the economic transactions or events can be aggregated into different categories of transaction cycles that are related to payment of suppliers, sales of goods, payment to employees and payments to other lenders of the organisation (Warkentin, 2012). Two primary transaction cycles that takes place in an organisation like Brickworks Building Products are Sales Cycle and Payroll Cycle. These two transaction cycles are explained in details herein below: Sales Cycle: An organisation receives orders from the customers, examines them for creditworthiness, delivers the goods, provides service to the customers, issues invoice and collects payments from the customers (Pillsbury and Saemann, 2011). Hence, the set of sequential and interrelated activities to sell the building materials is known as sales cycle. Payroll Cycle: On the other hand, Brickworks needs to record the working hours of the employees, verify the time and overtime hours, deduct payroll taxes, calculate gross as well as net pay according to the fixed hourly rates, and issue payments to the employees (Ketelhhn, 2012). Hence, the process of making payments to the employees on a weekly or monthly basis is known as payroll cycle. Online softwares help to manage the sales transactions and payroll transactions by automatically calculating the taxes that are to be paid to the government. The final amount to be received from the customers and the net wages to be paid to the employees can be automatically calculated using the online accounting software like MYOB3 (Ketelhhn, 2012). For example, the accountants just need to enter the fixed wage rates and any deduction that are needed to be made from the gross salary of the employees at the beginning of the accounting year. After the completion of the payroll period accountants needs to enter the individual working hours and the final calculation is automatically made by the software. On the other hand, sales transactions are automatically recorded by just entering the quantity of product, price of product, name of the vendor and any extra discount amount (Warkentin, 2012). Furthermore, the money paid or received and the goods sold out from the inventory are automati cally recorded in other ledgers of the organisation by using the online accounting software like MYOB3. Hence, it can be seen that software like MYOB3 is quite useful for Brickworks Building Products to record its transaction cycles. Risks Associated with Using Manual Set of Accounting Books Maintaining a manual set of accounting books can be a tricky task in the contemporary business scenario. Herein, the risks associated with using a manual set of accounting system have been described below. The risk of exposing the associated operation cost: Due to manual handling of an accounting system, there is always a risk of exposing the associated operation cost of the business. Hence, monitoring of the conventional accounting system is required on a regular basis to avoid such issues (Bragg, 2013). Understandably, business firms depend on its accounting personnel so that business costs can remain secret. Errors and manipulation: Manual accounting system can be filled with human errors as accounting paperwork can be a tedious task, to say the least. Hence, an organisation can lose significant cash due to a mistake made by the accountant. On the other side, there is a chance that the accounting data can be manipulated (Chen and Bahsoon, 2016). Meanwhile, such risks have always been there associated to the manual set of the accounting system. Reporting issues: One of the biggest issues of manual accounting system is fact-finding and reporting. Due to manual search and review, making forecast and spotting opportunities can be unpredictable. Hence, reporting of financial facts and assumption can be severe issues attached to the manual set of the system. Conclusion Through the above discussion, it is clear that cloud-based online accounting software can run the financial accounting of a small organisation in a safer way, to say the least. Due to easier accessibility and security, authorised personnel can use the software whenever requires. As a result of the scenario, accounting activities, payrolls, invoicing, financial reporting, and job management can become easier than the conventional bookkeeping system. Convincingly, cloud-based online accounting system tool can also restrict the risks of exposing the associated costs of operations of a business. Primarily, leading to the study, it can be identified that online accounting management software can provide human errorfree and secure accounting system at a cost-efficient comportment. References Bragg, S. (2013).Accounting best practices. Hoboken, N.J.: John Wiley Sons. Brickworks.com.au. (2016).Brickworks Limited |. [online] Available at: https://www.brickworks.com.au/IRM/content/default.aspx [Accessed Oct. 2016]. Byrd, M. and Megginson, L. (2013).Small business management. New York, NY: McGraw-Hill. Chen, T. and Bahsoon, R. (2016). Self-Adaptive and Online QoS Modeling for Cloud-Based Software Services.IEEE Transactions on Software Engineering, pp.1-1. Fanning, K. (2015). Benefits of Using a Single-Account Cash Management Structure.Journal of Corporate Accounting Finance, 27(1), pp.35-39. Growthpath.com.au. 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