This question is from my Accounting Tools Assignment.

Answer the question below after reading the paragraph at the end:

QUESTION:

If you are the consultant and you have to advise to Leeta to install accounting software then tell Leeta why ERP will better than manual accounting system for her retail, distribution business and also for upcoming business of assembly business. Discuss the points from the scenario and explain it properly?

PARAGRAPH:

You are the manager in the firm providing the services regarding ERP. The objective of the firm is to provided and assist the companies and financial institution to maintain their accounts and other operations through ERP. FIRM is providing the services and install the accounting software in small and large enterprises.

Leeta is a sole proprietor and running a retail business. Her business is retail electronics Business and daily average sale is around 01 million daily. LEETA who came to firm getting information about computerized accounting system She is currently working through manual accounting system But she is not satisfied about the financial operation of the business. She wants to developed his business and growing the range of markets and now she wants to manage Accounts through computerized accounting system.

LEETA is facing some of the serious problems into the accounts managements of the business or financials of the business will be compiled and prepared by his accountants after closing date of the year. Because she is having retail business of electronics now she wants to expand her business and convert single retail shop to Distribution network of the multinational brands.It may need heavy investment, large inventory and will hire number of employees into the business. But currently there is no any system to manage the stock, assets and payments to supplier and also may cause theft problems in cash and inventory.

For large investment she wants early financials for the loan and negotiations with the bank and other investors . She has no idea how to prepare financials because during the year Due to heavy rain large number of inventory has been damaged and cannot be sale on fare price. The cost of finished goods 100Millionbutthescrap value of inventory is 100,000/-. Now she is going to become a solo distributor of the electronic appliances of a big brand but for the negotiations with the lenders she has no financials. Leeta now is going to expand the business and invest more than 100 million in the new distributions into another city.

She wants a centralized system of the financial record and activities in the large chains of the business. Because large number of stocks will be involved, employees, and assets managements will be required. Gst will now be applied on all the sales and purchases and it will be difficult in manaual accounting system to collect the gst and pay to FBR.

Leeta starts the sales through receiving the orders from the customers and delivered the products to customers and charge carriage outward. But she has no idea how the process will start because how to collect the cash and maintain the receivables and stock will be delivered to the supplier , how rejected items will be record in the system. Large number of working capital will be required and Working capital ratios and the liquidity ratios might be adverse due to overtrading.

Over trading and Over capitalization may adversely affect the business of the Leeta. But leeta sure she will expand the business and she has large number of investors they will invest in her business.

Now leeta is hiring Large number skill and experience employees into business. And more than 80 employees has been hired. Managers, support staff and sales and purchase workers has been hired and she wants to pay the salary through proper heads. She will pay and deduct the income tax, and

pay other allowances to the employee. But the point is how she will record and maintain the complete payroll and payroll statements , payroll register maintained. She wants to also record the labor record and may use daily basis staff in her outlets. Some of the employees got loan from the business and they will pay through deduction in salary monthly. After all she will maintain the provident fund and deductions from employees. All for this she wants categories all the staff in different departments. Here business having the more than 5 departments sale, purchase, admin, marketing and accounts.She will pay different salaries and entertainment packages to the marketing employees.

Now she wants to get information and benefits about COMPUTERISED ACCOUNTING SYSTEM and install the accounting software. Now she is consulting about what type of software she should install. If she installed accounting software how it will work and how his accountant will manage accounts.

Leeta stored inventory at multiple locations. But there is lack of coordination among the accounting of inventory with store manager and accounts department. She could not account for the complete order and in result lost a lot of orders. Lot of customer has been lost and increase in doubtful debts because no record has been managed. Due to lack of purchase record it creates conflicts with supplier and some of the orders had been late.

Annual turnover of her business is more than 120 million and working on 15 days credit period in the market. Last year bad debts was of 10 % and lot of his customers going to another competitors due to her order and inventory management.

Now, LEETA wants to create budgets and estimates for budget control because she want to control all the expense and she will paybonus to manager if they control the expenses according to the estimatesprovided atthestart of the year. Ratio analysis and age analysis for performance measurement will also used. Leeta in near future may start production of items.

Last Year she heard fraud in business , Because cashier pay amount to the workers for sanitary work in the shop but he did not record the amount. Some of the receivables pay post dated cheques and cashier did not present into the bank. Some of the features she heard about profit estimation

(record expected income and expenses and get provisonal profit). Bank accounts did not matched with the cash books.

LEETA wants a system through he could manage all the branches on a single setup and making coordination with his staff and suppliers.

So leeta has distribution network as well as retail business chain. She will offer vouchers and discounts in her retail business to attract new customers.

One of his investor offered her to get the spare parts from abroad and assemble the products and sale.

It will boost up the business and profit of the business. But custom duty will involved and assembly machines will be required. Technical Staff and labor also required in this type of business.