Why businesses should embrace ICT

As a business grows and competition intensifies, there is need for timely, accurate and relevant information regarding its operations. That is the reason why an increasing number of organisations are now more than ever embracing information and communication technologies (ICTs), like accounting software solutions, to keep track of their operations. Remember, information is essential to allow informed decision-making entrepreneurs and managers. To ease information management, as well as monitoring of business operations, enterprise owners need to embrace ICTs. Note that each business requires accounting software that satisfies its specific needs. So, care should be taken when selecting the type and size of software to install at your firm to ensure it is compatible with the activity that the organisation is engaged in. Such an accounting system is based on a chart of accounts. The chart of accounts is a numbered list of the ledger accounts that are impacted by each financial transaction of the business. Therefore, a computerised chart of accounts makes it easy for the business owner to enter each source document as a financial transaction when it happens. Each element of the accounting system and the accounting equation is represented in the chart of accounts. An accounting software system is necessary as it helps in creating an audit trail. If anyone, other than the owner of the business, will be paying bills and receiving payments, an audit trail comes in handy to smoothen the process. The accounting software system will allow the owner to monitor how the firm’s cash from different points is being used. It is also crucial that the accounting software you buy is able to develop financial statements, such as the income statement, balance sheet, and statement of cash flows. Using the information from the general ledger system, along with the inventory, accounts receivable, and accounts payable systems, makes this possible. Business accounting and management solutions help organisation in controlling their inventories (stock of items). However, for firms that deal in services, their accounting software package should not include an inventory module. Remember that when you buy software with features you do not need, you end up paying money for stuff you will not use. Besides, such a solution makes it harder for you and your employees to learn compared to that that is tailored for your business needs. So, ensure you buy software with modules that suit your business operations. Only businesses that sell products require accounting software package with an inventory option because it helps you when to order for more items and how much you need to order at any given time. The nature and size of your business will also determine the type of software to buy; if it is a small enterprise with no employees apart from the owner, you could buy software that does not have the payroll function. Otherwise, businesses that are not run by owners should buy software that has a payroll option. Even if you have one or two employees, you will want to consider getting accounting software with the payroll function as there are so many payroll-related items you need to monitor. In fact, the payroll is so complex that you may even want to hire experts to handle it. If you have employees and you plan to do your payroll yourself or have a payroll clerk do it for your business, you definitely need a payroll module included with your accounting software. If you have accounts receivable on your books or extend them credit in the form of a store credit card, meaning that you extend credit to customers, you would want to include an accounts receivable module with your accounting software package. The accounting package will make it easy for you to keep track of credit customers and their balances. Of course losing track of creditors costs you money, and could easily lead to collapse of any venture, especially when they own huge sums of cash. The other good thing with this package is that it will help you know which customers are creditworthy, so you become selective on who gets credit in the future. You also need to manage your accounts receivable. This helps a business to develop an accounts receivable aging schedule, which is essential in tracking creditors’ payments, and also in influencing policy as far as credit is concerned. The accounting software package also needs to have the capability to track your accounts payable, which is what you owe to your vendors and suppliers. It helps monitor the different suppliers’ due time so that you are able to make payments out on time. So, for any organisation that wants to be competitive and up to date, it is essential to incorporate information management systems into their operations. Accounting software like QuickBooks, Aage, Tally or Fresh books can help you organise and manage your business in a modern way. The writer is an accountant based in Kigali. vbahizi@yahoo.com

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Why businesses should embrace ICT