Cloud-Based Accounting System Comparison for Wesfarmers Limited
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This report compares Xero and MYOB software as cloud-based accounting systems for Wesfarmers Limited. It provides an executive summary, background information, system requirements, software selection, and a decision. The report concludes that Xero software is the best option for Wesfarmers Limited.
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Accounting Systems1 Accounting systems (Name) Student Number Institute Affiliated Date
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Accounting Systems2 Executive Summary Xero software is one of the best cloud-based accounting systems that are available for Australian companies. They are listed in the Australian stock exchange which makes it a huge and successful company. For any progress to take place in an Organisation, change has to take place by doing things that were not done before. Wesfarmers Limited is an organization that deals with different products in multiple states where a more effective accounting system could result in the growth of the business. Cloud-based systems is the future of accounting since they make the bookkeeping process fast and easy to understand. WYOB software is not a bad accounting system, but it is more focused on the Australian accounting system with very few considerations to the other countries. Wesfarmers Limited operates in different countries, and it will be advantageous to the organization if they could find an accounting system that could compile all their clients into the same system and help the organization by determining their total cost of operations and amount of revenue generates from all operations. The best accounting system for Wesfarmers needs to provide all the services required by the organization.
Accounting Systems4 Introduction One of the most considerable advantages of having a cloud-based system is that the business is always up to date with the recently implemented regulation and it is easier to file tax returns and keep company records compared to a desktop accounting system.A cloud-based accounting system helps the user to access accounting information from anywhere. It is also easy to attach files to the date entered on adatabase(Du and Cong, 2015).This report looks at the advantage Wesfarmers Limited could have in using a cloud-based accounting system. The best applications to compare are Xero and MYOB software. They are both internationally recognized accounting system that is used in multiple countries. The aim is to find the best option for Wesfarmers Limited to implement as a cloud-based accounting system. Background Information Wesfarmers Limited Wesfarmers Limited is a company that is located in Western Australia with multiple businesses that include coal mining, the sale of fertilizers and chemicals, and the production of industrial and safety products(Group, 2019).It is one of the leading companies listed in the Australian stock exchange owned by multiple shareholders. It is a profit based organization with the aim of providing its shareholders with satisfactory returns through some of their objectives and goals. The company aims to anticipate customer needs and delivering quality goods as expected. They believe in teamwork and care for the environment within which the company operated. Profit making is not the only goal of the organization; they also participate in community development projects and value integrity and honesty in all their business transactions(Group, 2019).
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Accounting Systems5 All the business and extra-curriculum activities are only possible if the financial planning organization is effective. Wesfarmers Limited is involved in numerous business activities as stated above and proper management of resources is a major factor in the success of the organization. The best cloud-based accounting system should be able to integrate all the business processes of Wesfarmers by identifying individual business operations in the system and finding a way of making the financial operations of the organization moreeffective(Christauskas and Miseviciene, 2012). The major operations of Wesfarmers are done from the headquartersof the organization in Australia. System Requirement Wesfarmers Limited requires a cloud-based accounting system that performs inventory, invoicing, and multi-currency operations. This will help the organization monitor all the good they have in store, and the number of sales they have made in all the countries the organization operates(Ciger and Kinay, 2017).All these financial operations have to be explained by attaching files to a particular set of financial data to provide clarification to the management. A good cloud-based system for Wesfarmers should also be able to create purchase orders for clients since it will be simpler to compile all transaction when they are handled on one system. It is also an advantage for Wesfarmers if the accounting system could claim expenses according to the Taxation Acts of Australia and in all the countries, the organization is operating. Software Selection Xero and MYOB softwares are both cloud-based accounting systems that are based in Australia and affordable to Wesfarmers Limited.
Accounting Systems6 Xero Software One of the basic services Xero provides is invoicing services. They have business invoice templates that can be customized according to their client’s preferences. The only thing Wesfarmers will have to upload is the business logo and all the business information they would like to appear on theinvoices(Xero, 2019).Thismakes it easy to invoicing all business transaction. All information will be available in the system. The customers who operate on credit can be remaindered continuously by the system automatically through mail according to the number of times set by Wesfarmers. Invoices that are fulfilled they can b closed in the system and the same data updated in all the relevantsections(Xero Accounting Software, 2019). Business inventory is an essential factor for all organization. They affect the amount of taxes an organization has to pay, and it has to be managedeffectively(Xero, 2019).Companies practice monthly stock taking to identify goods that have been sold, those that are still in production, and those that are complete but not yet sold. Xero software will enable Wesfarmers to keep track of the stock levels and its value. It is an effective way of identifying the amount of stock available and sales made daily. The software has the capability of calculating the value of the inventory available using the average costing method. Wesfarmers is a retailer and even a wholesale supplier of its products, which makes the software very effective in its operations. Accounting information such as the data found in the balance sheet and income statement is very hard to understand if it is not accompanied by files such as invoices and bills justifying how the revenue wasspent(Xero, 2019). Xerosoftware provides a platform where such information can be shared with the management in an organized manner for easier understanding. The customers can also be supplied with additional information that explains the
Accounting Systems7 information found on an invoice. The information is subsequently attached to individual customer files for better organization of information. The system can be used as an online filing system for accounting information. A company that operates in multiple countries is prone to make mistakes in their accounting due to the fluctuating exchange rates. Xero software enables the company to have client accounts in various states, and their exchange rate is updatedhourly(Xero, 2019). Wesfarmers can set the currency preference for individual client accounts while doing their financial computation, and the software will automatically update the date in case of any fluctuation. The hourly updates enable the business to know the exact financial cost of each transaction and the amount of money generated One other important factor about Xero software is it is easy to use. The organization can control their cash flow, and it also makes it possible to pay suppliers in batches at one go. Expenses are also easier to handle on this cloud-based accounting system. The Chief financial officer has to review the receipts on the software and make the appropriate payment. With fast approval of receipts and efficient way of managing cash flow, Wesfarmers Limited will be able to maximise on all its business activity and identify areas where improvements can be made. All the mentioned points are important for a cloud-based accounting system, but organization prefers to keep their financial information a secret for their business security(Ficco, Palmieri and Castiglione, 2014). All accounting records need to be kept in Wesfarmers private servers, butXero comes with its own servers. Security could be an issue if a third party can access the data from Wesfarmers Limited. This is a major disadvantage of using a cloud-based accounting system.
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Accounting Systems8 WYOB Software Just like the Xero software, WYOB is a cloud-based accounting system that allows the business to conduct efficient accounting and financial record keeping. Through this software, it is possible to compile expenses and carry out monthly employees salaries. Financial information is constantly uploaded into the software that can be used both offline and online depending on the preference of the business. Having a system that can manage invoices, pay bills, and manage expenses is very good for Wesfarmers Limited as they reduce the time spent in preparing financial reports and focus more on businessoperations(Myob.com, 2019). The softwareis s advanced that it can be linked to the business accounts for easier management of the cash flow. The software is also able to generate invoices that are directly mailed to the clients, and payments made can be done directly using the invoices generated from the software. All these financial information play major roles while filing for taxes in Australia (Myob.com, 2019). All tables in the software are automatically updated when any information is added to the software. The software automatically does any tax computation related to the business, and the content can be accessed from anywhere. The main disadvantage of this software compared to Xero software is that it is more focused on the Australian market putting multinational corporations such as Wesfarmers Limited at a disadvantage. Computation of all exchange rates will have to be done separately before the data is entered into the software.
Accounting Systems9 It still possesses a security threat just like Xero software where data is stored in the softwares private servers and if they were to be accessed by another party it would cause a lot of business harm to the organization. They do not offer many services like Xero software, and those that they do provide are also available in the other application (Myob.com, 2019). It is a good accounting system when it comes to storage of accounting information and computation of taxes in Australia, but Wesfarmers Limited would still be required to use other means for all their international business records due to the limitation of the software. The software is effective in Australia with the implementation of all tax regulations as required by the taxation office. Wesfarmers would benefit significantly from using the software but it would not be enough for all their business transaction. A good cloud-based system should perform all the financial requirements of the organization. Decision Wesfarmers limited deals with products as retail and wholesaler-distributors in more than one country. The most appropriate cloud-based accounting system would be Xero software. To start with, the company is also listed on the Australian stock exchange implying that it is a large company that is able to handle all the business requirements of Wesfarmers Limited. Xero software is the best option to provide all the accounting requirements for the organization. They can easily identify the amount of revenue generated from all their transaction regardless of the currency used in the transaction. They also need a system that provides accounting information with additional primary information such as invoices and paid bills to help the management in understanding the accounting information they receive and make decisions accordingly. Xero invoicing system allows businesses to customize the templates which are advantageous for Wesfarmers limited since the clients will not see any changes in the
Accounting Systems10 invoices they receive. Inventory taking is also emphasized on the software where an additional application can be applied to monitor the stock of an organization effectively, especially where the company deals with different products at once. It is faster and more reliable compared to the traditional QuickBooks that are still popular among businesses. Conclusion A cloud-based accounting system comes has its own advantages and disadvantages like any other system applied in businesses. Wesfarmers Limited aims at maximizing its shareholders return and Xero software would be very useful in achieving this goal. All financial requirements for the organization can be found in the application making it easier to prepare the financial statements as required by the management of the organization. It also means that the accounting department will do less work, but it is more effective than the traditional desktop accounting systems.
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Accounting Systems11 References Ciger, A. and Kinay, B. (2017). A field work to determine effectiveness of cloud based accounting on accounting professionals.Pressacademia, 3(1), pp.104-117. Christauskas, C. and Miseviciene, R. (2012). Cloud–Computing Based Accounting for Small to Medium Sized Business.Engineering Economics, 23(1). Du, H. and Cong, Y. (2015). Going Cloud for Agility: Beyond Financial, System, and Control Motives.Journal of Emerging Technologies in Accounting, 12(1), pp.153-167. Ficco, M., Palmieri, F. and Castiglione, A. (2014). Modeling security requirements for cloud- based system development.Concurrency and Computation: Practice and Experience, 27(8), pp.2107-2124. Group, D. (2019).Who we are. [online] Wesfarmers.com.au. Available at: https://www.wesfarmers.com.au/who-we-are/who-we-are[Accessed 22 May 2019]. Myob.com. (2019).Online Invoicing Software for Small Business | MYOB Australia. [online] Available at:https://www.myob.com/au/accounting-software/invoicing[Accessed 22 May 2019]. Myob.com. (2019).Online Invoicing Software for Small Business | MYOB Australia. [online] Available at:https://www.myob.com/au/accounting-software/invoicing[Accessed 22 May 2019]. Myob.com. (2019).Cloud Accounting Software | MYOB Australia. [online] Available at: https://www.myob.com/au/accounting-software/online-accounting[Accessed 22 May 2019].
Accounting Systems12 Xero Accounting Software. (2019).Online Accounting Software – Free Trial, Free Support | Xero. [online] Available at:https://www.xero.com/[Accessed 22 May 2019]. Xero. (2019).Xero online invoicing and invoice reminders | Xero. [online] Available at: https://www.xero.com/features-and-tools/accounting-software/invoicing/[Accessed 22 May 2019]. Xero. (2019).Manage inventory, stock and items in Xero | Xero. [online] Available at: https://www.xero.com/features-and-tools/accounting-software/inventory/[Accessed 22 May 2019]. Xero. (2019).Multi-currency accounting in Xero | Xero. [online] Available at: https://www.xero.com/features-and-tools/accounting-software/multi-currency/[Accessed 22 May 2019]. Xero. (2019).Xero file library | Xero. [online] Available at:https://www.xero.com/features-and- tools/accounting-software/files/[Accessed 22 May 2019].