Benefits Of Online Accounting Software For Electrical Businesses - An Essay. (70 Characters)

MYOB is a leading provider of business management solutions for small to medium size organisations in areas including accounting, payroll, job management and financial reporting. By reviewing the various case studies discussed on the MYOB website as a guide1
, you are required to write a report to the owners on the benefits of converting to the online accounting software tool MYOB. This report should address the following information:

1. Outline the economic transactions that would take place at a small business.

2. Outline the benefits of using an online accounting software tool.

3. Outline the problems Jane and John face by using a manual accounting system.

4. With reference to three (3) specific economic transactions that would take place at  John and Jane's Electrical Company, detail how MYOB would be used and useful.

5. Outline any limitations or risks that John and Jane's Electrical Company may face  in the implementation of MYOB. 

John and Jane's Electrical Business

John and Jane run an electrical business since last 8 years. But, recently due to high demand in electrical supplies and fitting they have planned to open 3 stores all in different locations. Earlier they use to follow traditional manual system of accounting and now considering shifting to online accounting because they faced lot of difficulties in maintains accounts manually.

They faced difficulties such as:

The accounts were prone to human errors. The electrical supplies business is such that lot many number of transaction takes place in a day and there are high chances of mistakes happening.

In accounting software reports are generated automatically. But, in manual accounting reports are required to be created manually. Therefore, its takes longer time to generate reports(Manual Accounting Systems - advantages, disadvantages and overview of Manual accounts proceedures).

Manual accounting was suitable to John and Jane electrical when they were small electrical business. But now they are planning to expand so manually accounting is not viable at all.

In case of manual accounting there is a risk that their manual data might get destroyed or get stolen and it is harder to implement disaster recovery plans(Johnsten).

Apart from above problems, manual accounting process is very time consuming process as well. This requires a full time employee to take care of the accounts 24/7.

Now John and Jane will be having 3 more showrooms and large number of transactions will be happening in a single day. So it will be impossible to maintain manual accounting system.

So due to all these problems they decided to convert to online accounting software because this has the following benefits:

Online accounting system is user friendly. Once it is install the concern people just have to enter the basic data and rest is all taken care of by the system.

In online accounting, data is stored online so one does not have to worry about the security of data. In fact, in makes many customer transactions easy such as raising invoices, receiving payments etc.

Online accounting makes many transactions easy such as employee’s incentives, calculating discounts. And enterprise can view income and expense account in comprehensive manner.

The most important benefit of online accounting is that it provides 100% accuracy which is very important for any business to run successfully in long term

Online accounting provides cost effectiveness as well. The company just has to pay the cost of software or else in manual accounting company has to bear employee cost for managing the accounts.

Online work is not tedious and tiring. Therefore, it enhances productivity of employees (Macaluso, 2011).

Online software’s provide company with the knowledge of the current trends new business opportunities which helps company to grow.   

Challenges with Manual Accounting

Economic transactions that would take place at a small business: 

Retail to customer (physically): this is the most prime and simple transaction to take place in small businesses. In this the customer will be going to the retail store, placing the order and making the payment.

Retail to customer (not in person): in this the customer himself will not be going to the store. He will place the order on phone and will make the payment along with shipping charges at the time of delivery of goods.

Wholesaler to retailer: many retailers are not manufacturing the product they are selling at the store. So in this case retailer will place the order with the manufacturer of the goods and will make the payment as per terms and conditions(Newton).

Business to business: at times the purchase and sale transaction takes place between one company and another company. In which one is the seller and other is the purchaser.

Making salaries and allowances payment to employees

Taking care of other miscellaneous expenses. 

Benefits of using online accounting software:

It provides real time reporting: the online accounting software system provides proper details about the cash flows. So the business owners are having clear picture about the current cash situation of the company and can take decisions accordingly. Business owners can have access to income and expense account of the company anytime anywhere and this really helps them to take decisions on day to day basis.

Fast reconciliations: having an online accounting system updated in the company which is having more than one store is very beneficial. The system reconciles all the transactions together without having any chances of errors and save lot of efforts.

Cost effective: installing online accounting system saves lot of cost. Because in manual accounting system a professional employee is require all the time to take care of all the transactions but in online accounting it is very simple and fast(Thompson, 2016)

Security: online accounting software provides proper security to the financial records. There is no risk of data getting lost or destroyed and the owner can check the accounts(te banafits on online accounting software).

Anytime anywhere.

The data process manually has chances of errors and mistakes but data processed in online system has no chance of having any error or mistake. 

John and Jane running an electrical company since last 8 years there business is doing well because of increased demands they have opened 3 showrooms in different locations and they are following manual accounting system. The problems faced by John and Jane’s company are as follows:

Why Shift to Online Accounting?

The company has to keep record of stock, tax, payroll, accounts receivable accounts payable and many other things. So due to expansion reconciling the accounts together is very difficult process.

In process of reconciling the accounts there is high chance of mistakes and errors happening.

It is a very tedious and tiring job for the person doing the manual accounting procedure. Because the concern person has to coordinate with all the showrooms and have to keep very detailed tracks of all the activities happening on daily basis.

John and Jane cannot have the clear picture or position of the company because income and expense account is not prepared on daily basis. Therefore, they face difficulty in taking decisions.

To compare individual store performance with other is a difficult task and to identify the reason for good or bad performance of particular store is even more difficult. 

Retailer to customer (not in person): the case where customer is placing order on phone or ordering online the MYOB software will be very usable to the company because it will facilitate customer to make online payment and will generate the invoice automatically.

Business to business transactions: at times apart from customers the other businesses or competitors are our customers and benefit of MYOB software is that it provides the enterprise with the information about the latest trends, current scenario, market demand, competitors’ trend and lot more.

The benefit of MYOB software is that it provides automatic calculations of employee payroll, commission and incentive. It also calculates customer discounts and provides the status of income and expense accounts on regular basis. This really helps the top management to formulate strategies and can also evaluate company’s performance(myob case studies).

There is a risk that an unauthorized person may access the company’s data and can make misuse of company’s confidential information. But to prevent this risk company should have proper passwords for computer files so that only authorized users can access the data and should also install firewall. Company should also install virus scanners(myob security recommendations).

Mandatory internet connection: one can have access to data anytime anywhere. But, if there is no internet connection available then all this won’t be possible. So internet connection is mandatory requirement for MYOB.

Johnsten, K. (n.d.). Advantages & Disadvantages of Manual Accounting Systems. Retrieved from https://smallbusiness.chron.com/advantages-disadvantages-manual-accounting-systems-23862.html

Macaluso, J. (2011, 12 16). 9 Benefits of Online Accounting Software for Small Businesses. Retrieved 10 4, 2017, from Getapp: https://www.getapp.com/blog/benefits-online-accounting-software-small-businesses/

Manual Accounting Systems - advantages, disadvantages and overview of Manual accounts proceedures. (n.d.). Retrieved 10 04, 2017, from https://www.accountsman.com/manual-accounting-systems.html

myob case studies. (n.d.). Retrieved 10 05, 2017, from myob: https://www.myob.com/au/enterprise/case-studies#?filterBy=Industry&filterByTag=All

myob security recommendations. (n.d.). Retrieved 10 05, 2017, from myob: https://www.myob.com/au/about/security/security-recommendations

Newton, C. (n.d.). Six Types of Business Transactions. Retrieved 10 2017, from smallbusiness: https://smallbusiness.chron.com/six-types-business-transactions-25729.html

te banafits on online accounting software. (n.d.). Retrieved 10 05, 2017, from efolioaccounts: https://www.efolioaccounts.com/the-benefits-of-online-accounting-software/

Thompson, J. (2016, 01 21). PJT accountants and business advisors. Retrieved 10 05, 2017, from Top 5 Benefits of Online Accounting Software: https://blog.pjtaccountants.com.au/top-5-benefits-of-online-accounting-software