Why the Philippine idea of “Accounting Systems” is obsolete

Apr 4, 2019, 12:39 am

Guest C.

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When you bring up the term accounting system to most English speakers, the idea that would probably immediately come to mind be some kind of manual or computerized system for tracking business transactions – which would be mostly correct, if we’re to go by most definitions.

When it comes to businesses outside the Philippines, that’s basically the only thing an accounting system does. Sometimes such a system may include basic payroll and inventory functions, but that’s mostly what an accounting system does, as far as most people are concerned.

In the local context, however, the term accounting system can be quite broad, and to a foreign observer perhaps seemingly-erroneous. Within the Philippines, the term is also applied to all types of enterprise resource planning or business management software, even if accounting may be just one of many areas such software is designed to tackle.

Why do we call ERP systems “accounting systems”?

The reason for this quirk is not quite clear. Perhaps it’s because modern enterprise resource planning (ERP) software such as SAP Business One and its competitors evolved partly from accounting software. However, this is not exactly accurate as there are also plenty of business management suites that have no roots within that type of software. Project management systems such as Atlassian JIRA may occasionally be incorrectly referred to as accounting systems on occasion.

While it’s not ordinarily a big problem if the term accounting system is used incorrectly to refer to any business software suite, it also critically sells short the real capabilities of modern enterprise resource management software.

Modern ERP systems do more than accounting

Systems such as SAP Business One are able to perform multiple functions in different areas of business beyond just accounting. If you go with an integrated and correctly-implemented system, this affords your business capabilities that would be unthinkable with older systems.

The speed at which you can get updated information is perhaps the biggest benefit. This means that your business’s financial status can be monitored close to real-time, rather than in a week or at the end of the day that’s typical with manual or Excel-based accounting systems.

This speed and interconnectivity also offer some other benefits. Your point-of-sale system can be used to update your books as transactions happen. This data can be used to update your inventory in real-time as well, keeping you from having to store an excessive number of items at a location. You can also use this data to automatically order new stock when preset conditions (such as low inventory quantities) are present.

Other aspects of an updated system are not immediately obvious. You can link up payrolls with your employee logs so that over time, tardiness, holiday pay, deductions, and other important items are automatically accounted for, making human error far less likely. Your manufacturing and project management flow could also be integrated so that some routine actions are automatically done when certain conditions are met. When implemented properly, the labor and time savings – and possibilities – are truly endless.

It’s clear that accounting systems in the Philippine context do so much more than help you log your transactions. If you run a small business, it’s well worth investigating what holistic ERP suites such as SAP Business One are able to do for your business.

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