Sourcing of Accounting Software

Sourcing of Accounting Software

The sourcing of Accounting software is an integral part of the computerised accounting system. An important factor to be considered before acquiring accounting software is the accounting expertise of people responsible in the organisation for accounting work. People, not computers, are responsible for accounting.

The need for accounting software arises in two situations :

(a) when the computerised accounting is implemented to exchange the manual system or

(b) when the present computerised system must get replaced with a replacement one insight of adjusting needs.

Accounting Packages

Every Computerised accounting is implemented to perform the accounting activity (recording and storing of accounting data) and generate reports as per the wants of the user. From this attitude. The accounting packages are classified into the next categories :

(a) Able to use
(b) Customised
(c) Tailored

Each of those categories offers distinctive features. The accounting software would depend upon the suitability to the organisation especially in terms of accounting needs.

(a) Able to Use

Able-to-Use accounting software is suited to organisations running small/conventional businesses where the frequency or volume of accounting transactions is extremely low. This is because the value of installation is usually low and the number of users is restricted.

Ready-to-use software is comparatively easier to find out and other people (accountant) adaptability is extremely high. This also implies that the level of secrecy is comparatively low and therefore the software is susceptible to data fraud. The training needs are simple and sometimes the seller (supplier of software)offers the training on the software free. However, this software offers a little scope of linking to other information systems.

(b) Customised

Accounting software could also be customised to satisfy the special requirement of the user. Standardised accounting software available within the market might not suit or fulfil the user requirements. However, when the user requires that inventory status be updated immediately upon entry of sales voucher and report be printed, the software must be customised.

Customised software is fitted to large and medium businesses and may be linked to the opposite information systems. The cost of installation and maintenance is comparatively high because the high cost is to be paid to the seller for customisation. Secrecy of knowledge and software are often better maintained in customised software. Since the necessity to coach the software users is vital, the training costs are therefore high.

(c) Tailored

The accounting software is usually tailored in large business organisations with multi-users and geographically scattered locations. This software requires specialised training for users. The tailored software is meant to satisfy the precise requirements of the users and form a crucial part of the organisational MIS.

The secrecy and authenticity checks are robust in such software and that offers high flexibility in terms of the number of users. To summarise, the subsequent table represents the comparison between the varied categories of accounting software :

Considerations before Sourcing an Accounting Software

The following factors are usually taken into considerations before sourcing accounting software.

I) Flexibility

An important consideration before sourcing an accounting software is flexibility, viz. data entry and therefore the availability and style of varied reports expected from it. Also, it should offer some flexibility between the users of the software, the switch over between the accountants (users), operating systems and therefore the hardware. The user should be ready to run the software on sort of platforms and machines, e.g. Windows 98/2000, Linux, etc.

II) Cost of Installation and Maintenance

The choice of software requires consideration of the organization’s ability to afford hardware and software accurately. A simple guideline to require such a choice is that the cost-benefit analysis of the available options and therefore the financing opportunities available to the firm. Sometimes, certain software which appears cheap to buy, involve heavy maintenance and alteration costs, the Cost of adding modules, staff training, updating of versions, data failure / restore costs. Conversely, accounting software that is initially costly to buyers may require minimal maintenance and free upgrades and negligible change costs.

III) Size of the Organisation

The size of the organization and therefore the number of business transactions affect the software options. Small organisations, e.g. in non-profit organisations, where the amount of accounting transactions isn’t so large, may choose an easy, single user-operated software. While, an outsized organisation may require sophisticated software to satisfy the multi-user requirements, geographically scattered and connected through complex networks.

IV) Ease of Adaptation and Training needs

Some accounting software is user friendly requiring easy training for the users. However, other complex software packages linked to other information systems require intensive training on an endless basis. The software must be capable of attracting users and, if it requires simple training, should be ready to motivate its potential users.

V) Utilities/MIS Reports

The MIS reports and therefore the degree to which they’re utilized in the organisation also determine the acquisition of software. For example, software that needs simply to produce the ultimate accounts or cash flow/ratio analysis could also be ready-to-use software. However, the software, which is predicted to supply cost records must be customised as per user requirements.

VI) Expected Level of Secrecy

In tailored software for giant businesses, the user rights could also be restricted to get vouchers for the acquisition department, sales vouchers to the billing accountants and fund module access with the cashier. The operating system also matters. Unix environment allows multi-users compared to Windows. In Unix, the user cannot make the pc system functional unless the user clicks with a password, which isn’t a restriction in Windows. the security features, which prevent unauthorised personnel from accessing and/or manipulating data in the accounting system.

VII) Exporting/Importing Data Facility

The transfer of the database to other systems or software is usually expected from the accounting software. Organisations may have to transfer information directly from the ledger into spreadsheet software like Lotus or Excel for more flexible reporting. Accounting software could also be required to be linked to MIS software within the organisation. In some able to use accounting software, the exporting, importing facility is out there but is restricted to MS Office modules only, e.g. MS Word, MS Excel, etc. However, tailored software is designed in a manner that they will interact and share information with the varied sub-components of the organisational MIS. The software should allow hygienic, untouched data transfer.

VIII) Vendors Reputation and Capability

Another important consideration is that the reputation and capability of the seller. This depends upon how long has he been the seller is in the business of software development, whether there are other users of the software and the extent of the supply of support mechanisms outside the premises of the seller.