Who are accounting systems for?

 

Michael Gerber (The E-Myth) said that as well as a technician, businesses need an entrepreneur and a manager, which are very different personality types. They are subsets of the larger motivational groupings - internal and external. Even though these are generalisations, how they relate to accounting systems is a useful starting point.

 

Accounting systems are designed for accountants by computer people. Both of these groups are predominantly externally motivated people who like rules, principles and guidelines so they know what is expected. When accounting software existed in this world, all was relatively simple - some might even say boring. Problems arose when people who didn't have an accounting background tried to use them, but by and large the environment was reasonably well controlled.

 

With the advent of PC based accounting software available to every business, no longer are accountants the main users. When business owners record transactions, they know the details more intimately than anyone else. It's a brave new world.

 

There is a downside there. They don't live and breathe the rules, principles and guidelines of accounting. I used to think these were simple - but it turns out that's because, sad as it might be, I do live and breathe them. As an accountant in public practice I have seen far too many examples of errors - some minor, others less so. We all make errors - but many errors move us into GIGO (garbage in garbage out) territory - and make the system less than useful at best - and harmful at worst.

 

A classic example of this is Xero - one of the newer systems. It is an accounting system, developed to accounting specifications (the person behind it is a CA). But the marketing is aimed at end-users. Over time the system has been "loosened" in many ways as problems have become obvious.

 

One of the more recent features available to advisors allows us to bulk change coding of transactions coded incorrectly. Previously making such changes really showed how slow cloud systems are. The rate of errors is much higher for "fixing" errors. This change has potential for quickly spreading errors - which I assume is why it is an advisor-only feature. Not that advisors are infallible - but they should be less prone to make significant errors.

 

The  moral of this story is: no package will do it for you. It still demands a moderate amount of training. You can do this yourself - but business people call on someone to identify and resolve issues at various levels. If you don't have someone you use (and who knows the ins and outs of your software, plus tax and accounting rules), you will make mistakes that will probably come back to haunt you.

 

 

 

 

Contact us

Email results@businessacademy.nz

 

Skype PhilANZ

 

Phone 04 920 0911

 

P.O. Box 30-545, Lower Hutt 5040

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