Activity-based management/activity-based costing
Activity-based costing (ABC), first introduced 15 years ago, provides a means of accurately assigning support or ‘soft’ costs to product manufacture that includes the administrative resources that a job actually consumes, not just labor, machinery, and materials. The ABC approach calls for mapping all of a company’s workflows and processes so that each activity that contributes to costs are identified and tracked through the system. Analysis of activity leads to an Activity-Based Management (ABM) business model from which management can make decisions to improve the effectiveness of the organization.
Application Service Provision
Application service provision is where a company will manage and distribute software over networks from a central location. As a client, you effectively rent software that is installed and upgraded for you automatically. In the field of accounting and financial software, application service provision could allow for training, technology transfer, and full technical and system support together with the hosting of an accounting solution and software support, all provided as part of the packaged service fee.
Now used by an estimated 60 percent of Fortune 1000 companies, balanced scorecards are strategic measurement systems that provide an overview of financial, customer, operational and innovation issues. With more systems, companies can automate the balanced scorecard approach to track and improve customer and channel profitability, revenue/expense ratios, organizational expertise, quality, employee output, timeliness and responsiveness, product and service mix, and many more operational attributes.
Budgeting, planning & forecasting
Businesses are making big changes in their budget planning and forecasting processes. Once carried out by a financial director and a few accountants, budget planning is becoming more of a company-wide effort thanks to the latest software, with a greater number of managers and employees contributing to the process. Many companies are using technology to combine the traditional bottom-up approach to budget preparation, in which department heads submit budget requests that are rolled up into a corporate budget, with a top-down approach in which budgets are prepared in line with strategic objectives outlined by top management. And while annual budgets were once as unchanging as a statue, more companies now view budgets as living documents that are revised on an ongoing basis throughout the year.
Commitment accounting refers to the commitment you make to pay for something ordered but not yet paid for. A useful tool to improve budgetary control, commitment accounting has historically been a paper-based record system,. New accounting solutions, however, can automate this process, allowing companies to instantly get a snapshot of their financial commitments and cash position.
It is estimated that small businesses are owed £17bn from debtors at any one time – £6.8 billion of that paid late – while other research has indicated that approximately 10,000 UK businesses fail each year as a consequence of late payment. Keeping tabs on sales, invoices and money received is therefore crucial. The latest credit management systems allow for centralised control – enabling companies to forecast cash flow and chase debts without launching separate applications or switching between different screens.
E-commerce and e-business can be broadly defined to include any kind of transaction that is made using digital technology, including open networks (the internet), closed networks such as electronic data interchange (EDI), and debit and credit cards. Transactions are not limited to purchases of goods and services but move along a spectrum beginning with information gathering and exchange, progressing to negotiation and decision to purchase, finally to completion of the transaction and after-sales support. In the field of accounting software, e-commerce friendly systems can lower procurement costs, reduce processing errors, reduce inventory costs, reduce time to market, and extend business reach.
Modern electronic and online banking systems can provide a service to businesses where debits and credits of accounts are transparent, doing away with the needless secondary entry of invoices and payments. Some allow businesses to post payments directly into their online banking software and download online statements for bank reconciliation purposes. BACS software solutions enable validation of bank account details to help automate payroll systems.
E-procurement software makes it possible to automate buying and selling. Companies participating should expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computerized supply chain management.
Field service management
Traditional field service management is an ad hoc arrangement where technicians in the field have paperwork thrown at them. These people, who are in high demand, receive their daily schedules on paper. There are no maps or time frames, and no details about what is involved in a particular customer’s maintenance contract. Through software automation, however, technicians can remain in contact with their home base. They can access the information in the customer’s service agreement, inspect spare parts availability and even determine if there is a fellow technician close by that may have a needed replacement part. Better yet, customers can log into a vendor’s system and find out where the technician is.
Financial consolidation can be a slow and error-prone process that drains organizational resources and delays vital decisions. The problems are formidable – consolidating financial data from diverse locations and across multiple general ledgers, performing multi-currency conversions, untangling outmoded spreadsheet-based data collection processes, incorporating changes from reorganizations, mergers, and acquisitions. Financial consolidation solutions can meet this challenge by streamlining data collection and integration from multiple sources, making the monthly close faster and more efficient while turning disparate data into useful, business-critical information.
Fixed assets/asset management
A coherent strategy for asset management will improve a company’s competitiveness and shareholder value. Asset management solutions can enable businesses to maximise the profitability of assets in their four distinct lifecycle phases: buying, tracking, managing, and selling. As a result, assets perform for longer periods of time, reducing requirements to procure new capital assets and increasing the total profitability of existing assets.
In stock control the idea is to have just enough around to feed. Modern inventory and stock control systems mean inventory records are automatically updated when goods are received and sold. Reports show the actual stock holdings and warnings for under and overstocked lines. In addition, some packages allow turnover and profit analysis by product so that ‘hot items’ are signaled for reordering and unprofitable lines can be evaluated for further action.
Multi-company systems should allow easy access to multiple companies within one program. This means that you can easily switch from one company database to another in just a few keystrokes – each containing its own set of customers, inventory, documents, locations, and so on.
Multi-currency and euro-compliance functionality enables invoices to be sent and received in the currency of your choice. Invoices of one currency can be paid in a different currency and exchange rates can be entered for each currency. Packages can allow debtors and creditors to be revalued when rates change and a journal generated. Packages can also allow the general ledger to shows revenue and expenses converted from foreign currency to domestic.
The objective of the multi-dimensional analysis is for end-users to gain insight into the meaning contained in databases. The multi-dimensional approach eases navigating the database, screening for a particular subset of data, asking for the data in a particular orientation and defining analytical calculations. Furthermore, because the data is physically stored in a multi-dimensional structure, the speed of these operations is many times faster and more consistent than is possible in other database structures. In accounting and financial software, multi-dimensional analysis can allow automatic handling of inter-company postings and currency revaluations, with an unlimited number of reporting structures including financial, non-financial, and statistical data.
Good payroll software does more than just calculate wages and print payslips. It enables you to gather information on your employment costs and to keep track of individual employees. Packages can offer a range of extra modules that can be bought as add-ons. These will give you the option of expanding the capability of your payroll software to cover specific tasks, such as automatic bonus calculations and BACS transfers. Additional features and functionality from certain packages on the market include full calculation of SSP, SMP, National Insurance, and pensions.
Project Costing is both a time billing and a job costing application that addresses the needs of companies tracking the progress of projects or jobs. Project costing allows the user to define the structure of the project and to make decisions about what type of project it is, how the project levels will accrue income and costs, and how billing will be handled.
Reporting tools generate a collection of modifiable reports that allow you easy access to all your underlying transactions. The software will incorporate graphical tools that report on cash flow, for instance, or on monies yet due and owed. Certain packages will automatically distribute appropriate reports by email as a spreadsheet or can publish HTML reports to a designated area on a corporate intranet.
RFID (Radio Frequency Identification)
Also known as radiofrequency barcodes, or EPC, RFID is a method of identifying items using radio waves, which is being heavily touted as the successor to barcode technology. A reading device remotely contacts a tag from a short distance, and in response, the tag transmits its unique coding information. There are two main types of RFID tag, active tags which include a battery that boosts the signal, and which transmit continuously, or passive tags that return a signal only when interrogated by the reader.
Taxation systems cover a variety of areas from personal and partnership tax issues through to corporate tax. Most systems will allow on screen completion of the tax return to ensure accuracy, along with auto-population of key data fields to reduce the need to re-key data. ‘What you see is what you get’ functionality ensures that the printed tax return is correct before sending it to print.
Time recording systems allow the user to record chargeable time, disbursements, and other expenses to allow efficient billing. At the same time, you can identify ways of improving recoverability and margins. Certain packages allow for powerful reporting facilities that enable you to extract the reports you want from the client, staff databases, the work-in-progress, the fees, the purchase, and the nominal ledgers.
Treasury management/cash management
Managing cash is a crucial activity for any business, and the latest treasury and cash management software offers advanced functionality that lets companies monitor and forecast their cash position at any time and in multiple currencies. With immediate access to all their cash transactions, companies can make proactive business decisions to manage their cash flow more effectively.
A unified ledger system is designed to allow finance and accounts departments to track, manage, and report on a broad spectrum of financial parameters – from expense and employee ledgers through to building and branch accounting ledgers. The software is designed to minimize manual re-keying of data through its unified ledger architecture, with some packages offering real-time reporting where users can view business data in a wide range of formats.
Workflow and document management systems can greatly reduce the paperwork and administrative costs of running a business. They can also improve business performance by reducing the time and cost of processing information. Modern workflow and document management systems ensure that established policies, procedures, and timeliness are observed through tracking the status of a workflow, spotting bottlenecks, and reporting on average completion times.