Factors Influencing Accounting Systems

by Diana Wicks; Updated September 26, 2017

At the core of every successful business or organization is a well-functioning accounting system. Accounting systems provide a computerized method of recording and keeping track of daily, monthly and yearly financial operations of a business. Additionally, small and large businesses use accounting systems to generate data that enables them to make accurate management decisions. However, whether an accounting system works to meet these objectives depends on a number of factors.

Compatibility with Business

The functions of accounting systems are influenced by the nature of business and the operations of that business. Different industries require different types of systems and different features in accounting systems. Having an industry-appropriate accounting system ensures that the system meets the specific goals of a business.

In addition, the daily functions of a business also influence the type of accounting system required and how this system works. Overall, an accounting system is effective to the extent that it is compatible with daily business needs, such as storing client information, creating invoices, keeping account of and tracking inventories.

Perception

How an accounting system is received by employees and management of an organization influences its effectiveness and relevance. Employee resistance to changes in accounting systems may be due to complexity of the system, effectiveness of an existing system or apprehension over the introduction of accounting controls and auditing. Yet, sometimes, the employees may see the need for accounting systems, contrary to the views of the management. A lack of support from management can render the accounting system irrelevant to the decision-making functions of the organization. This is because data collected by the system is essentially for the use and consideration of the management.

Level of Training

When accounting systems are introduced to a business environment, training users is a key requirement. The level and nature of training attained by users influences the way in which the system serves to meet business objectives. A lack of adequate training among users, such as managers and supervisors, can cause the accounting system to be a problem rather than a solution to financial management. On the hand, users who are well trained in handling an accounting system will use this system to ease accounting and financial functions in the business.

Implementation

The nature of implementation and the implementation partners influence the effectiveness of accounting systems. Implementation is not the same as installation; it involves integrating the accounting system into the operations of a business. Implementation partners include team members, and importantly, the service provider. A poorly implemented system, which lacks the support of team members and the follow-up of the service provider, will fail. Input and support from implementation partners ensures that the accounting system performs its functions properly.

About the Author

Diana Wicks is a Canadian residing in Vancouver. She began writing in 2004 while still a student at Lincoln School of Journalism, in the city of London. She has worked as Chief Editor of Business Chronicle, an online magazine based in London. Wicks holds a Bachelor of Arts (Honors) in journalism and a Master of Business Administration from the London School of Economics.