Usefulness of Accounting Software for Improving Business Efficiency: A Case Study of Eureka Limited

This report examines the usefulness of accounting software for improving business efficiency by better management of complex accounting activities. It analyzes the features of cloud-based accounting software and compares MYOB and Xero for Eureka Limited. The report recommends the use of MYOB online accounting software.

HI5019
Strategic Information Systems for Business and Enterprise
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Executive Summary
This report has been prepared for examining the usefulness of accounting software such
as Xero or Myob for improving the business efficiency by better management of the complex
accounting activities. The overall analysis has been conducted in reference to the case study of
Eureka Limited which is currently facing the problem of maintaining accuracy and integrity in its
accounting activities to support its strategic goals and requirements of business innovation and
expansion. This has been carried out through analyzing the features of cloud-based accounting
software that matches the needs and requirements of the company. The comparison of the two
accounting software, that are, MYB and XERO is demonstrated for examining the best required
as per the company requirements. The overall discussion has recommended the use of MYOB
online accounting cloud-based software to meet the business goals and objectives of Eureka
Limited.
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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Business Requirements....................................................................................................................4
Business processes in Eureka Limited.........................................................................................4
Major Control Risks for the Business Processes of the Company...............................................6
System Requirements......................................................................................................................6
Software Selection...........................................................................................................................8
Brief description of the following accounting software and its products....................................8
Category of accounting software (Low, medium or high end) suitable for Eureka Limited.....10
Vendor Selection...........................................................................................................................11
Comparison and contrast of functions or features of cloud based accounting software packages
Xero and MYOB:.......................................................................................................................11
Most suitable vendor and accounting software package for the company................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
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Introduction
This report has been developed for the purpose of examining the use of accounting
software such as MYOB, XERO, SAP and others for the purpose of recording and interpreting
the accounting and financial information. This has been conducted through examining the
accounting issues presented in the given case study of Eureka Limited. As given in the case
study, Eureka Limited is a family owned company having about 73 employees and is realizing
sales revenue of $18.5 million during the last year. The company is involved in developing
beverages products for different businesses and is conducting its operations from about 55 years.
However, it is facing some performance issues over the past few years and as such is focusing of
developing new healthy ranges of beverage products for improving its performance. The
company at present is facing problems regarding developing competitive prices of its products. It
has also hired an accountant for bookkeeping but the company is still not able to adequately
collect record, manage and interpret its accounting information. In this context, this report is
developed for evaluation and recommending accounting software for the company that can
adequately meet its different business needs and requirements. The report presents an analysis of
key business processes and their major control risks and provides an analysis of the accounting
software features to be considered by the company. This is followed by conducting an analysis of
the three accounting software vendor that are, QuickBooks Xero and Myob and evaluation of the
category of accounting software suitable for the company. Lastly, the comparison regarding the
features of MYOB and XERO is conducted and the most suitable vendor out of them for Eureka
Limited is identified and recommended on the basis of discussion held.
Business Requirements
Business processes in Eureka Limited
On the basis of information given, Eureka Limited is involved in the business of
manufacturing and supply of beverages to many different types of business. The business
structure of Eureka Limited is privately owned company with no subsidiaries. All the business
process is centralized with manufacturing and distribution centre at one place. Following are the
main business processes of Eureka Limited:
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Operational Processes: This process refers to primary process of the company as this processes
deals with the core business and value chain. The main purpose of this business process is to
deliver the value to the customer through developing and producing the products and services
that customer desire. Some of important operational processes that have been carried out at
Eureka Limited are purchase of required raw material, processing of raw material to produce the
finished goods, delivering the goods to the target customers, sales collection and customer after
sales process. All the operational process is backed with required supporting processes so that
operational business process can work appropriately. Eureka Limited is inventory driven
company due to large quantity of supplies need to be produced, stored and supplied to the
customer. It is the reason why inventory management is most difficult part in whole supply chain
process of Eureka Limited. Inventory management starts when raw material is purchased from
the selected vendors, warehousing of raw material, transfer to the production process,
warehousing of finished goods and transport to the customers. The beverages produced by
Eureka Limited it less shelf life that requires special care to be taken for storage and supply of
goods. Goods that have been produced before have to be supplied first and vice versa (Cleary and
Quinn, 2016).
Supporting Process: The primary purpose of supporting processes is to help the core business
processes and functions through providing the required solutions for carrying out the core
processes. The important supporting processes that have been carried out at Eureka Limited are
as follows:
 Accounting and finance management: Accounting and finance process begin just when
the business starts such as capital funding, inventory accounting, bills and invoices
management, preparation of books and lastly preparation of financial statements.
 HR Management: All the core functions at Eureka Limited require human capital to
manage and control at the activities. The function of HR management at Eureka Limited
is to ensure right person is hired for right job (Martinez, 2013).
Management Processes: The purpose of management processes is to control and monitor all the
core and supporting activities within the business organization. The basic management processes
that have been effectively placed at Eureka Limited are internal communication, governance,
strategic planning and other management control required to support the business process.
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Currently all the management processes is carried out manually without the aid of computerized
accounting software. Eureka Limited is facing many issues with current management process and
wants to use accounting software to take the business to the next level (Bansal, 2012).
Major Control Risks for the Business Processes of the Company
 Operational Risks: The operational processes of the company are associated with the
possibility of realizing losses from faulty business procedures, systems and policies. The
risks are associated due to possibility of occurrence of employee errors, systems failure,
inappropriate maintaining of billing or invoices and conducting the activities or the events
that could result in disrupting the business processes. The control processes that can be
implemented by the company for controlling these types of risks are improving the
accuracy of recording accounting transactions associated with operational functions,
maintaining security of information systems, using risk management programs and
adequate compliance with standard business policies and regulations (Cleary and Quinn,
2016).
 Supporting Risk: The key risk that is associated with the supporting processes such as HR
management is inaccurate recording and maintaining of employee payroll that could
result in impacting the operational costs or business profitability.
 Management Risk: The risks associated include developing unrealistic budgets due to
lack of sufficient accounting information. This could result in developing unrealistic
strategic goals and objectives to be attained thus impacting the long-term performance of
the company (Identifying Risks and Controls in Business Processes, 2014).
System Requirements
As analyzed from the case study, Eureka Limited is presently considering undertaking the
business process of innovation and aiming to develop new beverage products for improving its
efficiency and sales by achieving customer satisfaction. The company at present is struggling to
deliver higher performance and thus is intending to introduce new products in the range of
healthy drinks to meet the changing requirements of its customers. However, the company is
recently facing problems to develop competitive price of its products (Brewer, Sorensen and
Stout, 2014). It is recently facing issues in maintaining the accounting records due to lack of
sufficient accounting information which is causing the problem before the management to
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accurately develop the budgets. It is also not able to maintain accounting records due to inability
of processing the large volume of accounting data due to expansion of its product portfolio. Thus,
it can be said that the company is in high need of implementing an accounting software that is
able to meet its accounting and financing requirements related with business expansion (Simkin,
Norman and Rose, 2014).
As such, the company is recommended to adopt the use of cloud accounting software for
meeting its diverse accounting and financing requirements. The cloud accounting software would
enable the company in improving the efficiency of its key business processes by reducing their
associated accounting and financial risks. The cloud based accounting software can be regarded
as a fundamental application that will enable the company in recording the flow of money and
thus allocating proper financial resources as per the nature of business activities (Mithas and
Sambamurthy, 2011). It will help in maintaining accurate financial records through assisting the
finance managers in developing and recording the core financing activities such as general
ledger, accounts payable, purchase order and accurate maintenance of stocks and invoices. The
key features that would be provided by the cloud-based accounting software that will enable
Eureka Limited to support its plan of business expansion can be stated as follows:
Cloud Storage
The accounting software would enable the businesses to maintain security of accounting
data and thus facilitating in taking accurate decisions (Deshmukh, 2016).
Reducing Paper Work
The use of accounting software would enable in eliminating the need of manual recording
of complex accounting data and thus reducing the paper work. It would help in improving the
efficiency in developing the accounting and financial transactions and reducing the possibility of
error occurrence. It also helps in gathering the overall accounting data and storing it in a
convenient manner that can be accessed at the time of decision-making.
Quick Reporting
It would enable the company in developing the different financial reports such as ledger,
payroll processing, developing outstanding invoices, recording and interpreting of inventory data
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and recording the financial transactions involved in creating the financial statements. The
reduced time involved in processing of financial data would help the company in taking help of
accounting and financing managers in other core activities related to business expansion. Also,
coordinating of accounting and financial data related with different business operations in an
integrated manner would enable the finance managers in taking critical decision such as
developing competitive price of the products (Bragg, 2011).
Reducing Control Risks
The different control risks associated with the key business processes such as error in
developing and maintaining bills, inaccurate maintaining of inventory, payroll and tax
implications can result in negative impacting the financial outcomes of the company. The use of
cloud based accounting software could result in reducing the risks associated with the business
functions and thus helping to improve its efficiency (Sutherland, 2013).
Software Selection
Brief description of the following accounting software and its products
The Three accounting software which are going to be discussed in this report are- Xero,
Myob and QuickBooks.
Xero: New-Zealand based Xero is a public software company listed on Australian stock
exchange. Xero Limited was found in 2006 by Rod Drury. Xero is one of the fastest growing
accounting software company that provides online accounting services to approx. 5, 40,000
business with 20 offices around the world. Xero is specifically designed to meet the accounting
challenges of small businesses.
Xero provides three packages to its user based on their monthly needs.
 Starter: This package has the ability to create 5 invoices, post 5 bills and reconcile 20
transactions. With the above standard features of this package are support services, file
storage, integration with different apps and can be used by unlimited users.
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 Standard: standard package is the most popular package as it has all the features of starter
along with creation and send feature of unlimited invoices, bills and reconciliation of bank
statement.
 Premium: Premium package has all the features of standard package. The advance feature is
that one can work with multiple currencies to make it operational globally (Smith, 2019).
MYOB: The Australian multinational corporation MYOB make cloud based accounting software
available that provides taxation and accounting services to SME (small and medium enterprises).
MYOB is listed on ASE on 09-July-1999.
Myob has categorized its product on customer basis and further on the basis of their needs.
Mostly used products for small business of MYOB are-
 MYOB essentials: This product is meant for small business to meet their requirement of
managing accounting work efficiently and timely tax updates. This product works online
only.
 MYOB accounting right: This package works online as well as offline. The standard
features of this package are multi- currency options, job tracking and inventory
management.
 MYOB Accountedge: Product meant for complex accounting based on MacOs and
works online is known as MYOB accountedge. Its importance is for its payroll feature
which has information of real time numbers and weekly position (Yigitbasioglu,
Mackenzie and Low, 2013).
Products of MYOB used by bigger business are-
 MYOB Exo: This package is flexible to manage the entire business according to its
needs. It gives its users easy accounting functioning, multiple location support, fully
integrated CRM etc.
 MYOB Advanced: MYOB Advanced is a customizable product to take care of business
current and future needs. It provides a scalable platform where one can manage its
inventory, streamline sales and purchase and many more (About MYOB, 2019).
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QuickBooks: QuickBooks provide users online access to information about customers, vendors
and employees. It has features to manage inventory, tracking sales, reports generation, and
payroll running. QuickBooks have the feature of controlling access of information that mean
which information can be accessed by a person can be decided (Marmel, 2019).
QuickBooks has classified its products in five categories for small business.
 Simple Start: This package has various features such as track on income and expenses,
manage receipts, tax deduction, invoicing and payment acceptance, basic report
generation etc.
 Essentials: It has same features as self-employed package have along with bills
management, time tracking and multiple users up to 3 users.
 Plus: This package has advanced features like running advance reports; used by multiple
users up to 5 users, track project profitability, manage contractors.
 Advanced: This product as described by its name has very advanced features such as
managing and paying bills, smart reporting powered by Fathom, customization of user
permission and safeguard of data.
 Self-employed: This package has the entire feature as contained in simple start with an
extra feature of tracking miles of business trips (Hossack, 2015).
Category of accounting software (Low, medium or high end) suitable for Eureka Limited
In Australia there are wide ranges of accounting software available that helps to the
business to solve their accounting issues. It is required that businesses must select the accounting
software on the defined set of criteria such as type of industry it belong, business size, and
business processes. Accounting software comes with various functions and features as discussed
above but selection of required features and functions completely dependent upon the business
type and needs of the business (Brewer, Sorensen and Stout, 2014). Depending upon the
requirement accounting software can be low, medium or high end. In general context, accounting
software refers to the management tool that is used as supporting businesses process and helps in
gathering of information required to evaluate the financial feasibility of the business and to
examine the financial health of the business. For example, ERP (Enterprise Resource Planning)
software allows the business organization to utilize the business structure of all the integrated
applications in order to automate the business processes and to provide ability to fasten the
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business processes. ERP is used where the business process is very complex and there is required
to manage the business process at multiple locations. Similarly, high end accounting software can
be too complex and costly for small and medium size enterprise (Curtis, 2014).
A family owned business with 73 employees and revenue of $18.5 million in previous
year requires accounting software that satisfy all the business accounting requirements and
suitable for the business structure and business processes. On the basis of evaluation of the
business processes of Eureka Limited it can be said that the best suitable accounting software
would be medium range accounting software having cloud based function and all other required
functions. Medium category accounting software is generally used for the business whose gross
revenue is below $50 million (approx) as after that it is required to apply the accounting software
that can be comprised with the available ERP of the company. Medium category accounting
software is highly advance than the low end accounting software and provides better functions
and features. One of the important features offered by the medium category accounting software
is selection of extensive financial setting from the given modules that suits up the specific
industry. Medium category accounting software helps various users and allows numerous
functions on all the available operating systems and it works on the fixed database. In Eureka
Limited, products are offered to the number of diverse businesses including super chain and pub.
It means there would be growth in sales quantity and product range. Medium category
accounting software would be most be appropriate as it supports higher transaction and also
allows N numbers of products to be add in the accounting software. Medium category accounting
software will provide all the supporting functions required by Eureka Limited such as cloud
based platform, Software as a Service (SaaS), inventory management, sales management, payroll,
taxation and many other (Frost and Sutherland, 2017).
Vendor Selection
Comparison and contrast of functions or features of cloud based accounting software
packages Xero and MYOB:
Xero and MYOB are cloud based accounting software that provides various products to
their customers as per their requirements. The selected two accounting software has some similar
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features along with some features that make the two different from each other. The selected two
accounting software can be compared based on the features discussed below:
 Inventory: All plans of Xero give basic inventory tracking and management. Xero’s
homogenization with outside parties enable more complex inventory. MYOB Essentials also
contains basic inventory tracking but MYOB account right have advance inventory tracking
and management features (Ali and Haseebuddin, 2015).
 Reporting: Xero enables to run multiple reports at once whereas MYOB runs one report at a
time.
 Invoicing: Xero can track invoices whenever customer opens it. It has the ability to generate
customize invoices. Myob has the same rights but Myob Account right plan has the feature of
advanced customization of invoice.
 Payroll: Xero starter and standard plans provide payroll for one person only whereas MYOB
premier plan and MYOB account right plus and premier plan offer unlimited payroll.
 Accessibility: Xero can be accessed on PC and Mac. On the other hand MYOB account right
can be accessed only through PC (About MYOB, 2019).
 Employee Login: Xero allows employees to put in their timesheets, enter leave request and
view pay slips. Myob essential also allows the same but MYOB Account right does not allow
employee login. It is only available as paid add-on.
 Foreign Currency: Xero Premium plan has the feature to support multi-currency. In this
plan Forex rates are calculated online whereas no such features are available on MYOB.
 Online Support: For online support of Xero there are so many tutorial videos, community
forums, and social media following. Same online support is available for MYOB as well.
 Cost: Xero offer only one package and has more straight forward price structure for better
understanding. MYOB provides different products with complex price structure.
 Number of Company Accounts: Xero works on (Saas) software as a service basis and only
the one company can use it on subscription (XERO, 2019). On MYOB Account right and
premier accounts of two companies can be maintained by one subscriber.
 Sign up and Installation process: Xero’s sign up and installation process is slick, easy and
intuitive whereas Advanced features in MYOB Essentials and account right require dedicated
software.
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 EOFY Data Rollover: There is no need to close the financial year in Xero because data is
continuous. Same feature is available in Myob Essential but in MYOB Account Right two
separate data rollover is required. Report creation for current year will be disabled if EOFY
rollover is not completed for previous year.
 Banking and cash management: Xero has the features of reconciliation of bank statements
and cash management. Same features are available in MYOB too. But when it comes to its
offline working the timing difference between occurrence of transaction and its posting in
books will vary and create issue (XERO, 2019).
Most suitable vendor and accounting software package for the company
The most suitable vendor as per the accounting needs and requirements of Eureka
Limited is MYOB accounting software. This is because MYOB accounting software provides the
advanced features for managing the inventory. Eureka Limited is presently undergoing business
innovation and expanding its product portfolios and thus its main focus is to reduce the cost of
inventory through its adequate control and management. As such, MYOB can serve adequately
the business requirements of Eureka Limited as compared to Xero. This is because MYOB
provides better features for managing and controlling inventory. In addition to this, it is easy to
use as compared to Xero and also is cost-effective and thus is suitable to be adopted by the
company as it is in phase of business expansion and thus requires saving money (Macpherson,
2015).
Therefore, adequate management of inventory with the use of MYOB software would
enable the company in reducing the operations cost and thus the financial resources can be used
in core business processes. In addition to this, the use of MYOB accounting software would
enable the business owners in complying with different business rules and requirements such as
GST or tax implications (Kosalge and Ritz, 2015). It would also take care of business invoices,
reporting, expenses and payroll and thus enables the company in improving the productivity.
MYOB Essentials work anywhere and provides fast and effective ways for managing the cash
flow requirements. The company can easily track its operational expenses and thus developing
accurate pierces of its new product ranges. Also, the software is updated automatically as per the
changes in the business requirements to meet the business goals and objectives (Zinghini, 2017).
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Conclusion
The overall discussion has inferred that use of cloud accounting software such as Xero or
Myob can adequately solve the complex accounting problems. The accounting software provides
easy and convenient way for the business managers to manage adequately their complex
accounting activities. The different features provided by the accounting software such as
managing invoices, tax compliance, tracking expenses, inventory management, financial
reporting and others helps in reducing the time involved in accounting functions and thus
improving the decision-making capabilities of business for promoting innovation.
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