Computerised Accounting Systems
Advantages — From the Business's Perspective
- Speed — data entry is faster; automatic processing eliminates manual calculation time
- Accuracy — calculations are done automatically; only one data entry needed per transaction
- More information — instant generation of financial statements, aged debtor reports, cash budgets
- Cost savings — fewer bookkeeping staff required; savings can be redeployed
- Better management decisions — 'what-if' scenario analysis possible; up-to-date information available at any time
Disadvantages — From the Business's Perspective
- Cost — hardware, software, training, maintenance and software updates; redundancy costs if staff are made redundant; parallel running of old and new systems adds cost
- Knowledge — staff errors in inputting data can corrupt financial statements
- Security risks — software failure, viruses, hacking, power cuts can cause data loss
- Health and safety — eyestrain, back strain from computer use
From the Staff's Perspective
| Advantages | Disadvantages |
|---|
| Training updates skills | Fear of change / unfamiliarity |
| Improved career prospects | Risk of redundancy |
| Possible pay increase | Retraining seen as burden |
| Demotivation from perceived impersonal nature of the system |
Computerised Inventory Records
Advantages: real-time stock levels; accurate reordering; reduces buffer stock needed; faster than manual records.
Disadvantages: system failure; staff training time; data loss risk; inaccurate input errors; hardware/software maintenance costs.
Why Computerised Inventory May Differ from Physical Stocktake
- Inventory has been stolen — not recorded on the system
- Inventory taken by the owner for personal use — may not be entered
- Inventory has been damaged — system still shows original cost; physical check reveals condition
- Input errors — transposition errors, unrecorded transactions
- Goods returned by customers — not booked back into the system
- Inventory is obsolete — still shown in system at cost; physical check reveals unmarketable items
- Software failure or data corruption — system records incorrect
Trade Receivables Analysis
Computerised systems produce an aged debtors report showing each customer's outstanding balance analysed by how long it has been owing. This enables effective credit control, reduces bad debt risk, and improves cash flow.
Spreadsheet Benefits for Budgets
- Speed and accuracy
- Automatic recalculation when figures change
- What-if analysis — change an assumption and see the effect instantly on the whole budget