Organizational Structures And Accounting Software: A Comprehensive Guide

Definition and Importance of Accounting Software

Discuss about the Accounting Software Systems And Organizational Structures.

In this assignment we will be discussing about the organizational structures and the use of different accounting software’s that helps the organization in performing the different activities of accounting with better technology to achieve better results. A very basic question that would come into the mind of the audience or the readers of this paper work is that “what is an accounting software” or what do you mean by an ERP system, how does it helps an organization in achieving better results? Well in brief, “accounting software is software that helps business organization in today’s complex environment to record and to manage the accounting part of the business efficiently and effectively (Miller, 2015). An organization undertakes a number of financial transactions in a day, week, and month or in a year, so it becomes really hectic and impossible for the accounting professionals to not make a mistake while recording the transactions. Hence the use of accounting software eliminates the scope of errors and if by mistake any error occurs while entering any transaction it will bring it to the notice of the accountant (Vogel, 2016). In this assignment we are going to focus mainly on the accounting software systems and the other thing that we are going to discuss in this assignment is the organizational structures and the errors or inefficiencies that occur due to the organizational structures.     

This assignment has two parts, the first thing we are going to discuss is the organizational structure of our organization, as organizational structure of a business firm is the structure that defines the flow of activities and the decision making of the organization. There are different types of organizational structure namely (Structure, 2016):

• Line organizational structure.
• Staff or functional authority organizational structure.
• Line and staff organizational structure.
• Committee organizational structure.
• Divisional organizational structure.
• Project organizational structure.
• Matrix organizational structure.
• Hybrid organizational structure.

The above mentioned are the types of organizational structure that every organization in this world follows at least one o two of them altogether. Well if talk about our organization then it is the Line organizational structure that our organization follows.

In Line organization structure, the organization is headed by a single power head individual who is generally the managing director or the chief executive officer of the organization. In this kind of structure the command flows from top to bottom. Below is an image that shows how a line organizational structure looks like and how it works (Jamail, 2015);

Now as you can see, the top most position is obtained by the chief executive officer, he commands the managers of production and marketing, they further take this command on foreman’s and sales officers, this process goes on until the command reaches to the most bottom part of the organization.

Understanding Organizational Structures

In this section we are going to discuss the operational problems such as inefficiency or ineffectiveness of the organizational structure on the goals, results and the working of the organization. No organizational structure comes with zero disadvantages. Every organizational structure do have some loop holes in it that leads to inefficiency and ineffectiveness which further leads to non achievement of the targets set by the organization (Ritzman, 2014).

There are few advantages of the Line organization structure and these are as follows (Snow, 2015):

• Fast decision making, as there is only one head and his decision is the final, its helps the organization to take timely decisions.
• Simple structure in which every employees knows his responsibilities and powers.

Now if we discuss the operational problems that occur in such kind of organizational structure then these are as follows:

• This kind of structure depends mostly upon the key persons to perform the tasks, which will make him/her feel overloaded with work, which will ultimately leads to inefficiency in the work.
• As it is a structure, where the firm follows commands from top, it will create difficulties of understanding when the organization will expand.
• The process of command from top to bottom will delay many key activities of the organization.
• As the head is all alone to make decisions, he/she may end up taking wrong decisions because of the extensive business pressure.

All these disadvantages lead to operational problems in an organization which ultimately affects the effectiveness and efficiency of the organization.

A system acquisition method is an internal information system on which the organization relies upon for different projects or decision making process. An acquisition system is a system that stores a large number of information on the system and provides different analytical information to the organization while deciding which product needs to be improved, which project must be set on the priority, what is their going in the financial accounts of the organization, what the competitors are planning to launch etc (Al, 2015). A system acquisition method is a method under which either the organization builds their own information systems or hires professional organizations to build the best suitable system acquisition method for the organization (Emilio, 2016). 

There are different types of information or system acquisition method in the business world, while some organizations choose to build their own information systems (Custom Made), while there are organizations that go with the commercial information systems, which are prepared for the organization by some professional organization in this field (Ahmad, 2013).

• Custom Made Systems: A custom made system can be a system of any type; usually these types of systems are prepared and maintained by the organization itself. The organization first decide what they wants it in their information system and then keeping in mind all their requirements a custom made information system is made. It is not like that custom made software or a system is always prepared by the organization, it can be built by an outsider firm keeping in mind the requirements of the organization and the outsider firm may give the option of altering or amending the system as per the needs of the organization.

• Commercial System: A commercial system is the one which is prepared or built by a professional outsider firm for an organization. These kinds of software’s are usually expensive as it contains a number of features that enables the customer organizations to perform fantastically well at every aspects of the business. However an organization may or may not alter or amend these software’s as per their needs. In the market there are a large number of software’s that are available in the market and these are as under:
• Executive Support Systems: This type of information system is prepared to help the senior executives of the organization. It provides a number of analyses to the organization that are relevant to take good decisions for the organization.
• Management Information System: A management information system is the one that provides the management different information about the managerial activities of the organization.
• Decision Support System: A strategic system that helps the management of an organization to take the decisions in the events of uncertainty. This means that it is system that stores different type of data and helps the organization when it is hard to make the decision regarding something.
• Transaction Processing System: A transaction processing system is the one in which all the financial transactions of the organization is prepared and stored, so that the organization can access this information at any time. Usually these types of systems are called accounting information systems.

Now here, we will be discussing the sales flowchart of the organization that we have chosen. A sales flowchart or the sales process is the process under which the organization follows a particular process while selling its products and services. It is a process that is usually followed by the organization and every employee of the organization when the products or services are to be sold to the outside of the firm.

Above is the sales flowchart of our organization. As we said earlier, in the Line organizational structure there are many disadvantages which can lead to control problems and even these control problems may lead to frauds in the sales system of an organization. As you can see in the above sales flowchart there is no area or a stage where inspection is being done, what qualities of goods are being produced, and if only the required number of goods are being produced and delivered to the customer. An inspection system is a must in organizations.

Operational Problems Due to Organizational Structures

Another thing in this system is that the organization will have to produce the goods, if the required number of goods is not available with the organization. Now the question is who will decide the quantity of the goods to be produced and what will be there quality. These are the two major problems and frauds that may occur in this system.

In today’s world, where all the business organizations are working in a very dynamic environment that there is no certainty of a single event, there all the organizations are working towards being the best amongst each others (Chaudhry, 2014). Accounting software are the software’s that are used by the organizations to facilitate their own accountants so that they do not need to work hard each time to record new entry or at the time of presenting financial analysis to the organization.

The development of the accounting software’s are not new, it goes back in the year 1800’s. However the true modern accounting software’s stared developing in the year 1980’s. In addition to this the internet era brought many new changes to the way of performing accounting activities (SoftwareSuggest, 2016).

Accounting is an art of performing, recording and analyzing the financial data of an organization in a way that all the necessary information can be accessed through it and the factors of profit or loss can be find out. Earlier a team of accounting professionals use to perform all the accounting activities, even now it is them who perform it but the accounting software’s has cut down their works to almost 70%.

Today in the market, there is a large number of accounting software’s present in the market for the business or individual purposes of the people’s. Few of the accounting software’s are; Quickbooks, SAP ERP, SAP Business One and Odoo. 

There is a large number of accounting software’s available in the market that suits small to large scale organizations. However it is not the number of the accounting software’s that makes an organization to buy and install it but it is the capability and the results given by accounting software that attracts the organization to buy and to install particular accounting software. There are a few leading accounting software’s that are best in terms of quality, results, price, technical knowhow etc. The accounting software’s are as under:

• FreshBooks: Now talking about the Freshbooks, it is designed to help small scale organizations, agencies or individual players. However the features that come with this software are so many that it can even put onto shame the big organization’s accounting software’s. The current market size of Freshbooks is estimated by its customer base; it is having as large as 5 million customers. The organization is yet to release its own IPO(Books, 2014).
• Xero: Xero is again accounting software, which was launched by the XERO organization in the year 2006. The organization is soon to become a 1 billion organization as stated by its blog. In the march ending XERO recorded its customer base at 5.5 million. The organization or the software has its clients in more than 180 countries. The software is suitable for small and medium size organizations. Even though, Freshbooks was launched 3 years earlier, the XERO software successfully overtook the Freshbooks even after getting introduced 3 years later (Software, 2017).
• MYOB: The full form of the MYOB software is (Mind Your Own Business). It is accounting software that provides its services in the field of taxation, and other accounting areas. In the past, MYOB has been a dominant player in the Australian market of accounting software but it was left behind by the XERO accounting software. In the year the yearly revenue of MYOB was 350 Million NZD. The organization has a bigger valuation if we consider the revenues (Myob, 2016).

The leaders in the accounting software market are no doubt the XERO and the MYOB accounting software as they are the most dominant players of the market. Both the accounting software’s are best suitable for the small and medium scale organizations. However if we go into dept and start comparing both these organizations then it will be the XERO accounting software that will have an upper hand in this comparison as it is working hard to be the leader in this market. The market share or the subscribers of the XERO accounting software in the year 2016 was more than 90000 and in case of MYOB it was only around 25000. Now talking about what is giving the MYOB and the XERO accounting software’s the competitive advantage in becoming or being the main players in the market. Well the answer is quite simple, it is their numerous features software’s and the software’s of these firms are easy to install, understand and use. They are quite reasonable as compared to other software’s in the market. In the business world, a large number of organizations operates on small to medium scale, hence it is another competitive advantage for both these organizations as they develops software’s only for small to medium scales organizations (Ross, 2016).

There are a number of gaps or challenges or in simpler words there are a number of problems that are faced by the customers using accounting software’s and these gaps and challenges are as under:

• Lack of Security: The data stored in such software’s can be breached easily and the organization or an individual may have to face huge losses.
• Poor Customer Relationship Management: Another problem is that after selling or installing the software, the organizations just forget about their customers after sale services.

A very simple recommendation to overcome such gaps and challenges is to start developing such software’s that cannot be breached or hacked at any cost by any method. Another thing is that the software selling organizations must have a dedicated CRM department that not only deals with the customer’s problems properly but also make sure that the problem gets resolved in least required time.

Conclusion

A final conclusion says that, today when everything is so advanced that even the minutest of our life’s activities are influenced by technology then we must adopt accounting software’s for our organization as they really helps business organization in becoming efficient, effective and accurate in terms of financial matters. 

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