Applications of ICT in Finance & Accounting
Most firms have accounting software packages to help produce statutory accounts and reports for bankers and management, as well as to help with the day-to-day control of its finances. One very popular package amongst small to medium UK businesses is Sage www.sage.co.uk, which also has modules to manage, for example, payroll and debt factoring facilities.
The main components of an accounting system would include modules such as:
- Bought ledger (trade creditors)
- Sales ledger (trade debtors)
- Bank reconciliation
- Cash flow forecasts
- Producing draft accounts and trial balances
Widely used by finance departments to help manage cash flow, for bank reconciliations and in credit control.
Any department holding a budget for expenses and/or revenues would typically use a spreadsheet to help create the budget in the first place, and then to monitor incomes and expenditure and any variances.
Remember the work in Unit 1, looking at managing cash flow? Well, much of this work can be made much more efficient with computerised credit control. As businesses typically buy from and sell to other businesses on credit terms, it is essential to have up to date and accurate information about which creditors need to be paid, and when money is due from debtors.
Banking & payments
Businesses are able to take advantage of electronic banking which allows them to check their bank account records in real time – saving time and helping ensure that payments due have been made and received, and also to operate the bank account within any agreed overdraft limit.
Large and overseas payments can be made quickly and securely with on-line banking, as long as the business has its own security checks to protect against theft by staff or by anyone else who managed to obtain account details and passwords.
EFTPOS Electronic Funds Transfer at Point Of Sale is familiar to most of us in the form of card readers that swipe credit and debit cards for payments. This has the advantage of avoiding the expense and risk of handling cash and in generally a much more efficient payment method. Again, even quite small businesses are now using this technology, and portable EFTPOS devices have made it feasible to use in places such as taxis and restaurants.
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