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Key Topics
Requirement
Use of Accounting Software in Australia
Solution
Abstract
The development of Accounting Software has made the process of accounting much easier. The recording of complex transactions has become simpler and saves a lot of time. The essay studies the History, development as well as adoption of accounting software in Australia. The Accounting software industry has made it big in Australia as well as in the international market. Therefore, we shall also study the market size and leaders in the Accounting software industry. There are also certain problems faces while using these software’s. The same has also been discussed.
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History
Till 1974, accounting was done more or less in the same way as the Egyptians had started doing it 3000 years back. Towards, the end of the crusades, accountancy travelled to Europe, which saw an increase in trade between Europe and the Middle East.
In the Australian history, specifically for the small business, communication with the accountant is subjected to an only yearly visit to evaluate how the year had gone, setting of some budgets for the future year and about tax reporting. In some cases, it was more than a year when the purchase of an asset was planned and the accountant needed to check its impact monetarily to ascertain whether the business can afford it or not. The scenario is different now, for many years owners of the businesses have been engaging internal as well as external staff to tap data into the accounting software so that the stuff that happened manually could now be done electronically in a much faster and simpler manner. The accounting operations included the payment made in terms of invoices and the employees, reconciling of bank accounts and meeting reporting requirements. For many decades, this has been the practice, but before the 8o’s things were different, as everything was done by hand. Long hours of tedious double column entries were made in huge books/registers.
Although in the 80’s, Microsoft Excel helped in making the columns wonderfully add up without the need of a calculator, the kind of accounting technologies available today are making the requirement to excel spreadsheets less essential. Minimizing entry of information manually into the system can result in massive saving time and money and having everything in the cloud has given complete freedom of working from anywhere. (James & Maher, 2013)
It has been an ever changing world in the area of accounting software. The 90's saw an arrival of new book keeping solutions that took over from cumbersome manual systems and cashbooks. In year 2000, with the advent of GST, many businesses started using accounting software, supported by the hundred-dollar coupon from the Commonwealth Government that to a large extent covered the price of the popular accounting packages. There was an additional cost involved in shifting from paper to electronic accounting, moving towards such a system meant that the users could record the transactions at a much faster pace as compared to manual accounting.
Development and Adoption of Accounting Software
In the 21st century the everyday accounting work is less tiresome, more effective and has minimal risk of errors due to presence of accounting software’s. The new software options are easily accessible at every place that has an internet connection. The program is not only limited to just windows based machine, but anything with an internet browser. Through these options data feeds can be provided by banks on a regular basis. Each software is based on the subscription and one can get the versions that suit their business. (kristin, 2015)
The accounting software that is designed for real time management has to a large extent improved handling of finances, operational efficiency and business intelligence. Most of the businesses specially the small sized ones have adopted the use of accounting software because of the following reasons:
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Fast access and reporting: Through accounting software one doesn’t have to wait for reports that take a huge amount of time to run. The accounting software planned for heavy duty, multi user- performance helps in improving effectiveness, customer service and minimizes frustration.
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Real-time management: While the crucial information is displayed on the screen, decision making support, signals and activity tasks are always in view. It helps to examine performance trends, KPI's or have access to updated details such as stock deliveries due.
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Control and efficiency: One can take control of unofficial and needless expenditures with password controlled requests and approval processes. It also eliminates outdated, slow selling or expensive items being ordered by a fault, and match supplier bills against purchase orders to prevent over-charging or supply errors. (Brown, 2013)
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Automation: Paper based accounting offered no room for automation as all data entry, assessment and reporting was done manually. On the other hand, accounting software’s gave huge scope for automation. It enables information to come from bank feeds and instant generation of reports.
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Efficient document management: Accounting software simplifies business processes and saves time with automated delivery and storage of accounting documents. The above benefits of accounting software have led to the development and adoption of accounting software.
Market Size of the Sector
Australia’s accounting software market for small and medium sized enterprise has seen huge growth. There is competition for two big rewards: likely monthly subscriptions of thirty to hundred Australian dollars from the country’s more than 2 million small sized enterprises along with the label of market survivor looking at the hard competition coming from the global market in the accounting software industry. The final objective of the major players is to capture a segment of the international market of the accounting software industry valued at tens of billions of dollars annually. (Business Victoria, 2015)
The Leaders in the Accounting Software Sector
The insurgents
Xero: Xero was formed in New Zealand with the dream of making it big in the international market. The company captured the online accounting industry at a very initial level by aiming at accounting organizations as well as small enterprises in its promotional operations. The company’s strong network of referring accounting partners has been vital to its success. It becomes essential to state that, Xero allied 1 lakh 58 thousand enterprises in Australia were using its services by spending on the subscription fees.
•Saasu is the oldest player in the accounting software industry, with an experience of more than a decade. It has successfully managed to gather a client base of almost 25000 companies even though with very less expenditure on marketing. It has become popular for high-transaction, e-commerce dealers and larger enterprises that look for an inexpensive alternative to expensive accounting software. (In the Black, 2015)
The Incumbents
The two huge leaders in the accounting software industry of Australia have been MYOB and Reckon. But unlike Xero and Saasu, both MYOB and Reckon was a bit late in creating online versions of their software. This was because of a false start that leads to so much time. Reckon has launched an online accounting program called
Reckon One.
MYOB has been a giant leader specifically in the case of small and medium sized companies. It came with a new product known as the MYOB Accounting Essentials. It can be dangerous for the competitors, especially Xero as Xero has been a major player throughout the years. (HEBER, 2015)
The global Giants
There are two international players in the sector. Intuit has been a gigantic player in the Unites States. It has been tracking the activities of Xero as Xero has successfully marked its journey from New Zealand to Australia, moving to the United Kingdom and reaching the United states where Intuit is the big player. Intuit came up with a strong marketing activity where it promoted its online accounting software program targeting at the accountants of Australia at a monthly subscription fee of only five Australian dollars. (AGIMO, 2011)
Sage, a company that portrays itself to be the biggest creator of accounting software globally, has come up with an online accounting software program known as Sage One. Sage is popularly known among the people of the accounting fraternity in Australia. But it doesn’t have huge name recognition as its prime attempt at online accounting software was not successful. The new product is speculated to be good as the company has been claiming that Sage One overtook Xero in the United Kingdom. This shows Sage too might give tough competition to Xero in the Australian markets. (James & Maher, 2013)
Issues faced by users of the accounting software
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Cost and Simplicity: Cloud services as well as various software plans based on subscription keep enterprises entangled in a stream of financial outflows. Making the shift between programs, services or new accounting software’s takes time, effort and money.
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Backup: Working life of hard disks and chances of losing information or data due to malware requires a strong backup system
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Dealing with your accountant: The accountant may increase his/her fees looking at the complexities of the software. It is also possible that the accountant may suggest software which is doesn’t suit the business, but may be beneficial to his own personal interests.
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Security Risk: Few small sized enterprises are not very happy with the structure of cloud-based accounting products as the accounting records of the businesses are available on the web server instead of the desktop. A large number of people in the accounting software industry are concerned about security issues. It is also strange that the same people who don't like the system of using cloud accounting products are possibly using separate cloud-based services such as Google mail and online banking.
Recommendations
The accounting software should be used by matching the needs of the accountant instead of matching the requirements of the customers. For successfully implementing accounting operations the companies should subscribe to the software’s that would best suit its business. For instance, a freelancer photographer has his own business. Most of customers ask for credit, while others insist that the bills must have the order numbers and other say that payment would be made by cash, credit card or internet banking. In this case, one must use middle range accounting software meant for small businesses so that it is not required to update the software annually. There is no need for payroll and new tax tables. In this case the product that can be used is Money works express. Similarly, a manufacturing company that has complex inventory needs and gives or takes credit must consider using specialized accounting software or an ERP system. (Houser, 2014)
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Brown, R., 2013. The Evolution of Accounting Software.... The Evolution of Accounting Software, 20 December.
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Business Victoria, 2015. How to choose the best accounting software. [Online]
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Available at: http://www.business.vic.gov.au/money-profit-and-accounting/financial-management-set-up/How-to-choose-small-business-accounting-software
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HEBER, A., 2015. The cloud accounting supremacy war in Australia. [Online]
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Available at: http://www.businessinsider.com.au/charts-the-battle-for-supremacy-in-australias-cloud-accounting-market-2015-4
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Houser, C., 2014. Survey: Australian SMBs Lead Global Cloud Accounting Adoption. [Online]
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Available at: http://call-accounting.tmcnet.com/articles/394945-survey-australian-smbs-lead-global-cloud-accounting-adoption.htm
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In the Black, 2015. Choosing the right online accounting software. [Online]
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Available at: http://intheblack.com/articles/2015/04/01/competing-for-australias-small-accounting-businesses
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James, D. & Maher, W., 2013. 7 accounting packages for Australian small businesses compared: including MYOB, QuickBooks Online, Reckon, Xero. 7 accounting packages for Australian small businesses compared, 27 may.
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kristin, 2015. The evolution of accounting & bookkeeping. Accounting & bookkeeping, 14 July.
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