In a highly competitive business environment,companies are required to quickly adapt to the changes taking place in internal and external environment affecting the organization. Customers expect quick delivery of their orders and resolution of their complaints.
Similarly, vendors expect timely and quick disbursement of their outstanding payments. Further, it is important for a company to ensure that money is collected from the customers on time. Management needs financial information to make decisions in respect of arrangement of funds through external borrowings.
All these requirements are met with the help of a strong accounting structure within the organization.It is on the basis of this accounting structure, that the financial statements are prepared on time and in accordance with relevant policies and accounting principles.
In order to automate the accounting process, companies are frequently purchasing third party accounting systems. Such systems help in proper accounting of various transactions with more speed and accuracy. While transactions are required to be entered by employees,efforts involved in maintaining physical books of accounts have reduced considerably.
However, it is important for an organization to select an accounting system that meets its basic requirements and generates reports useful for management decision making and business evaluation. There are many factors which influence the management decision in regard to purchase of a particular accounting system.
Following Approach May Be Used In Selection Of Best Accounting System
Depending on the size of the organization and requirements of the accounting function, management may perform a cost benefit analysis of various accounting systems available in the market. It is important to ensure that an accounting system is purchased in accordance with structure of the organization.
Purchasing an expensive system may require more maintenance, which may increase the overall cost in the form of hiring employees in the information technology department in order to provide technical support to the accounting team.
Accounting system should be user friendly.Employees in the accounting department should not feel that the accounting system has increased their work. Hence, it becomes important to ensure that demonstration of an accounting system is taken by the management as well as relevant employees before making the actual purchase decision.
An accounting system that offers too many features may not be suitable for a small scale organization and may only delay the performance of accounting function.
Similarly, an accounting system that covers only limited parts of an accounting process may not be suitable for a medium or large scale organization. It is very important to ensure that user licenses are obtained in an adequate number at the time of purchase.
Similarly, management is required to ensure that the company from which accounting system is proposed to be purchased offers after sales support for a particular period of time.
Further, a company may require different types of access rights for different employees and supervisors. This is particularly true in case of big organizations where segregation of duties forms an important part of the entire internal control framework.
For Instance, a company may have a separate accounts payable department where some employees may be required to process vendor invoices while others are responsible for preparing the checks.