I have been asked to write a report on a piece of software and demonstrate how it solves many problems that occur whilst running a business. There were four choices for me to choose from and I have decided to choose the accounting package for the small business. I have chose this particular one because I am going to use Sage accounts package, and I feel that I am familiar with this and I think there will be a lot of useful information on the internet using search engines and various web sites.
1.2 Showings I am going to try and show in this report how a business would benefit from using an accounts package on a computer rather then doing things manually, the traditional paper way, I am going to look at different case studies of businesses who have installed and adapted to using sage and gather their views and opinions about it. The report is going to contain detailed facts about Sage the company and how they have come about to be the market leader in supplying accountancy packages to small and medium sized business.
2. Findings 2.1 Introduction to Technology
Jotway (1983) identifies that it wasn’t until the mid 1970’s that office technology really began to change and offices became known as the electronic office. This was the period known as the ‘microchip revolution’ where computers were changed from being huge machines to what we see today, the development of the microchip meant that information could be stored on them and highly skilled people began to write programs that would enable the computer to perform a wide range of tasks much faster than a person trying to do the same thing.
It is obvious these days that using a computer is a much faster process than doing things manually, but this does not necessarily mean that every small business will be computerized for example, a sole trader such as a window cleaner may have been keeping his own books manually and may not know how to use an accounts package. Not being ‘up to date’ with computer technology could be seen as a downside to a computerized accounts package for the simple reason that people may be scared of it or simply don’t know how to use it. There is no point a small business being computerized if nobody can use it, but for most businesses an accounts package like sage if used properly can be highly beneficial to an organization.
2.2 Introduction to an accounting package Sage Group Plc is the uk’s market leader in accounting and business software for the small to medium sized businesses. Sage is headquartered in Newcastle and has over 1400 employees 500 of which are dedicated call centre staff. Sage began around 1980 when Graham Wylie wrote his first program whilst at university and with the help of a government grant was able to start selling it to other businesses. He came to the uk and began to sell it here. Sales were reasonably slow due to the fact that not a lot of people could afford computers at that time but that changed in 1984 when Amstrad introduced a computer that could be afforded by small businesses resulting in sales increasing from 30 to 300 a month.
Sage line 50 is recommended by 90% of accountants when choosing what package to use at work because it can help the business be as efficient as possible, it carries out traditional accounting functions accurately and very fast compared to the manual paper system. Sage line 50 covers every aspect of accounting such as the production of sales ledgers, nominal ledgers, purchase ledgers, credit control and VAT management.
When first using Sage it is important for the Business to gather all the details of customers that they will be dealing with, Sage lets you hold a large database of all the customers’ information and even lets you set a credit limit on there account and will warn you when it is near. Also there is a database for all the businesses suppliers and will again tell you very quickly how much is owed and any payment dates whether it be 30 days or 90 days, when using a manual method small details like this could be missed an it could be possible for a customer owing a large sum without you knowing it.
Also there is the nominal ledger, this shows the business all transactions that are not directly linked to customers or suppliers, this could include things like loans or plant and machinery depreciation this is very important to the business because it is very important when there is a VAT inspection to show where all monies have gone, again using the manual method could result in errors which could cost the business fortunes in unpaid taxes. Accounting is one of the most important key business activities because it is vital that a business can tell how they are doing at a given time. Having a good accounting package like Sage lets you do this very accurately and very fast and I would recommend it for every small business.
2.3 Evaluating Performance I am going to look at a case study from the Sage website that basically evaluates sage’ performance when a small business converted to an electronic accounts package. Caroline Parkes Bridal Design: Caroline started her business as a sole trader working from home; she steadily built up a good reputation for quality took on more employees as the business began to grow.
She stopped selling direct and began to wholesale her designs. As the owner of a small business Caroline was worried about the prospect of computerising her accounts but she was aware that it was a step that the business needed to take. Caroline comments “We spent three months researching software from all quarters before becoming computerised and everyone we talked to from accountants to software dealers all recommended Sage”.
When outlining the benefits that the software has had on the business Caroline says “Virtually all of the functions offered by line 50 are employed by us. We are currently having most fun with the Sales ordering process and we are now customising reports to suit our production requirements which includes ‘gowns due by despatch date’, ‘gowns ordered per month by style’, and ‘orders per retailer”.
Sage also offer ‘Sagecover’ which is their comprehensive support contract meaning you can ring them with any problem you incur and they will guide you on how to solve it. Selsbury Ltd T/A T&G Storage “The introduction of Sage accounting in my business has worked miracles, with only a small number of employees it was hard to find the time to keep on top of the accounts manually but since installing Sage I can perform all the daily functions in half the time and I know where my business stands at any given time.
2.4 Perceived Problems When looking at any possible problems using all this data from websites such as the Sage website, something that has to be considered is that it could be deemed to be slightly biased as it is reporting on its own product and would not highlight any problems that Caroline had or any negative comments or opinions that she had about the Sage package. But after speaking to another owner of a small business it is obvious that Sage is essential for the small business. 3.Conclusions 3.1 Summary of findings In this report I have been looking at how Sage can influence a small business. I have found that Sage is a very important program and it is essential for, not just the small business but generally all sized businesses. Although I have only looked at Sage line 50 there are other packages provided by Sage that accommodate their needs.
I have found that Sage can keep every aspect of the businesses accounts in order and can be accessed easily and rapdly. It has become apparent that Sage can also boost the businesses image as it gives a more professional look when sending things like invoices and remittance advice to customers. 3.2 Most important aspects Possibly the most important aspect of using Sage is that it keeps records (as long the user keeps it up to date) of all the businesses transactions and can show any external people e.g. VAT inspectors where the businesses money is going, how much money is coming in and going out which will show the companies turnover and profit and will show that the right amount of monies is being paid to the government proving that the business can not be held liable for any charges at a later date.
Problems like this occur regularly when not using electronic accounts as paper can be mislaid or simply things can be forgotten. A business may pay a large debt but lose any paperwork relating to the transaction and an inspector may want to nowhere that money has gone, whereas using Sage everything is on the screen. 4.Recommendations 4.1 Self opinions On the whole Sage is an excellent Program and I would recommend that every small and new business adapt to the ideas of electronic accounting. The initial cost may be slightly high but in the long run it will save the business time and time is money.
Books David Royall (1996) Accounting with Sage. (Pitman Publishers. London) Davis & Pain (2002) Business accounting and finance. (McGraw Hill. London) Glautier & Underdown (2001) Accounting Theory (Pitman Publishers. London)