Accounting for your purchases, sales and operational costs is one of the basic requirements for running a business. Traditionally organisations will have their own accounting process. But you can also outsource this function to a third party.
At the end of each financial year organisations will need to submit accounts to the relevant authorities, such as HM Revenue and Customs, or Companies House. Over the past decade high-profile scandals such as the collapse of Enron and WorldCom have driven governments to tighten up rules on financial reporting to ensure greater transparency.
The tightening of financial rules has also placed demands upon business owners and IT departments to comply with the law. With such compliance challenges also come the requirements to retain electronic data, introduce ediscovery processes and apply general information assurance rules to business-confidential information.
A business will raise an order, log a delivery into inventory, cost the goods received, match the invoice against the expected costs, and effect payment against each invoice on a statement. Many organisations are now using e-invoicing to simplify processes, remove the need for hard copies, and manage volume.
Supplier management of customer online accounting
Organisations that have developed a strong value chain partnership with a supplier who can be trusted to deliver on time the agreed quality and product numbers ordered, can also trust their own staff to raise orders on the supplier’s own computer system and to do the detailed accounting for each transaction.
The customer could then interrogate the supplier’s computer applications and databases to answer specific questions on volumes, prices, values and performance, rather than use his own computer systems.
It is a basic principle of electronic business that suppliers are usually best placed to provide data on their products and services. Do not duplicate what your supplier should already have done well unless clear value is added. Make sure that your own data does not conflict with that of your supplier.
Audit and control
Agreed audit and control methods can therefore extend value chain collaboration into administration and accounting, from customer self-billing, through supplier direct debiting of the customer’s account, to the supplier’s financial summaries. This avoids the need for detailed ledger reconciliation by the supplier.
Business accounting software
Cashbook - for sole trader and cash business;
Accounts - to create invoices and manage VAT;
Accounts Extra - for small businesses that need more from online business accounting software and
Payroll. A simple online payroll service for small businesses.
- Read our pages on Corporate Governance