Accounting Software For Medium-Sized Bakery Business

Business Processes for Bakery Organization

B bakery is a firm with the family owned business which is in existence for over 50 years. The firm is involved in the business of bakery items with a workforce of on and around 70 people. B bakery has faced the ups and downs in the market for the several times however it has managed to grow and survive since last few years through the introduction of new and healthy bakery products. As the firm is medium to large sized it requires an implementation of proper accounting system to record and maintain all the data in an organised form related to the business functions so as to get effective information to run the bakery business efficiently (Mehldahl, 2004). A proper accounting system includes various elements which is not possible to be overlooked by a single accountant therefore the firm is required to purchase the accounting software which can handle the major part of the accounting work without manual intervention. Accounting software provides the business with the excellent solution for the accounts management by performing the various accounting functions.

A Baker is the one who is engaged in the business of making bakery items such as cakes, breads, cookies etc. The person who undertakes the bakery business must have good knowledge and expertise in baking and preparing several items following different recipes.

The business processes for the bakery organisation are as follows:

• Requisition Process- The process of arranging for raw materials, tools and equipment from the suppliers i.e. the procurement of the ingredients and the moulds & machines to make bakery items to be supplied further to the willing customers.
• Production Process– The process of producing the bakery items for selling and distributing purpose in different market segments such as wholesale dealers, confectionary shops, restaurants etc.
• Cost Determination: This process involves the functions of cost calculation to identify the prices of the products manufactured by the business.
• Packaging and Labelling: This process is undertaken to provide packages and containers to the manufactured products so as to make them available for selling and distribution purpose. This process also includes labelling of some product related information on the packages.
• Stores and Logistics Management – This process involves the storage of inventories of bakery items prepared and the raw materials purchased for the production purpose and also in determining the level of economic order quantity to be maintained so to bear possible minimum storage cost (Christopher, 2016). 
• Marketing & Promotion Process- The process of marketing is assigned to the department which has the responsibility of promoting the baked items produced by company through the use advertisements and to introduce various discount schemes and offers in the target market.
• Selling and Distribution Process-Those who are in sales department have the core responsibility of reach the target market to sell & distribute the finished bakery products using adequate distribution channels.
• Accounting and Financial Management- The process involves accounts handling and also arranging for the finance for the business and performing other related operations (Warren, Reeve & Duchac, 2013).
• Personnel Management – The HR function involves the recruitment process of the chefs and other staff required for the bakery organisation and overseeing the payroll functions for the employees.
• Research and Development Process- This R&D process involves researching about the possibilities of new items and new markets and advanced technologies to grow and expand the bakery business
• Administrative Processes- This department undertakes the back end office functions such as record-keeping, billing and invoicing etc. 

The business processes that are above explained are assigned to several departments and each process is linked to one another in a way that if one process goes wrong the overall functioning of the bakery organisation gets disturbed. The growth and the survival of the entire business of bakery depend upon the proper coordination and correlation among all the departments (Rosemann & vom Brocke, 2015). Each process in the business has its individual goals to achieve, which needs to be achieved in order to meet the overall objectives of business. The baker has several responsibilities from ordering the raw materials to be used as ingredients and the other equipment such as the moulds machines etc. Moreover, a baker has to get involved in the activities of researching about new recipes and different varieties of products that can be prepared to attract more customers for the business and to get a competitive edge over its rivalry firms. He has to prepare various budgets and plans also to adhere in order to achieve the best outcomes from the bakery business. A baker is also required to go for the quality check to get the products manufactured marked as quality products. 

Basic Functions Necessary for Bakery Business

The processes that are considered indispensable for the bakery business varies depending upon the type and size of organisation (John Wiley & Sons, 2012). However, there are certain processes which are necessary for any bakery business as they are merely the basic functions without which the business will not be able to survive. They are as follows:

• Purchase management process: The procurement of raw materials as well as the equipment used for preparing different bakery processes is the key process in the business of bakery as ingredients are the basic things to start the baking process. The purchase department will have to identify the dealers who are ready to supply the raw materials to B bakery and negotiate with the final dealers.
• Production process: Once the raw material and the machines necessary for the production process is arranged, the bakers of the firm will have to start the process of making variety of bakery products considering the taste and preferences of the willing buyers of the confectionary items.
• Inventory management: As the bakery business is not the seasonal business, the demand for the products it manufactures remains on going therefore a proper stock level is to be maintained by the bakery organisation in order to avoid the long lag time and the carrying cost of inventory.
• Order management: The bakery business to survive and grow excellently must manage the orders from the customers properly to provide effective order execution. If proper order management is not followed by the organisation it can lose its customer base leading to the business failure.
• Sales and distribution process: Whatever an organisation produces, is to be distributed in various markets and places such as restaurants, confectionary shops, wholesalers or the ultimate consumers of bakery items through the use of different distribution channels so as to generate revenue from business.
• Accounting and finance management:  Maintenance of accounts is necessary to manage the business as it involves management of receivables & payables, cash & bank, income & expenditure, assets & liabilities. Also, to comply with requirements of various regulatory bodies and for preparation of financial reports to be delivered to the investors of company.

Outcomes that are expected from the above business processes: 

• Purchasing process: This process is expected to provide for the timely procurement of the raw material and the identification of the potential sellers with whom the company can enter into the deal of purchasing the required material.
• Production process: This process is supposed to convert the inputs into the outputs using several operations in the most effective and efficient manner. The production unit is expected to produce the best output with the maximum possible utilisation of input and with minimum wastage.
• Inventory management process: The management of inventory is important to determine the level of inventory to be maintained and proper storage of inventory. It is expected to reduce the warehousing cost and at the same time to prevent the problem of long lag time between the two orders.
• Order management: This process must help in the timely execution of all the orders placed by customers in a systematic way thereby enhancing the quality of service of B bakery which gives the best satisfaction to the customers.
• Sales & Distribution process: This process is expected to generate the revenue from its customer for B Bakery using the suitable distribution channels so that the firm can maximise its profits.
• Cost determination process: This process is used to determine the cost of products manufactured by B. bakery so as to assist the management in price-fixation of bakery items and in other decision making processes.
• Marketing process: This process is expected to promote the bakery products produced so as to create more awareness of products in the market thereby increasing the turnover of the firm and it will also give competitive advantage over other firms operating in the industry.
• Accounting and finance function: The accounting function will help the firm to manage its financial reporting system and in arranging funds for the company on timely basis whenever it requires the funds to invest in the business (Trigo, Belfo & Estébanez,  2014).
• Human resource function: This function is expected to manage the workforce of the company through proper staffing process so that all the employees of the company can work efficiently.

Any business software to be considered as a good solution must be capable of providing the required solution to the business to operate smoothly with minimum possible investment (Mageto, 2017). It must help the business to get a competitive edge over the rival firms operating in the industry through innovative and advanced features that can save enough time and efforts of the management (Salehi, Rostami & Mogada, 2010). Accounting software for B bakery is required to provide the firm with a complete assistance for managing its finances, fixed assets, revenues and expenditures, payables and receivables’ records adequately (Baxter & Thibodeau, 2011). Moreover, the software must be user friendly so as to provide easy solutions to organise the data related to accounts and finance in a systematic manner and it must also provide the best technical support to the users (Granlund, 2011).

Some of the key features that the accounting software for B bakery must constitute to be of top quality are as follows:

• Account receivable and payables management: This feature will enable the proper management of receivables and payables by calculating and maintaining the records of amount due to be paid to the creditors and the amount due to be collected from the debtors of the business. This function will also manage the collection and the payment process of the company in timely manner so that the proper arrangement of funds can be done (Ramazani,  Zanjani & Vali, 2012).
• Billing& Invoicing:  This feature will generate the invoices in predetermined format set in the software with the required calculations for all the sales made by the B bakery. This feature will help in avoiding the arithmetic and other logical errors in invoicing and at the same time this feature can also perform the reminder functions for the payments (????? & ???????, 2016).
• Reconciliation of Bank Statements: This module of accounting software will help the business in cross checking banking transactions recorded in the books of accounts with the bank statements thereby finding and correcting the deviations, if any. This feature will enable the management to identify the mistakes made in recording the bank transactions on timely basis.
• Tax Calculator: This is the key feature every accounting software that is good enough will provide as it involves calculations relating to various taxes and duties levied on the business of the users. The different tax calculators can perform calculations for sales tax, VAT, income tax, GST etc. and this feature must be fully automated to update itself for the changes in the regulatory frameworks. If this features is enabled in the software the business administrators would not require to possess requisite tax knowledge.
• Fixed Assets Register:  The fixed asset register feature will keep the detailed records of all the fixed assets held by company and will also calculate the depreciation thereon so that the assets are carried at their written down values (Carpenter, Le Blanc & Robson, 2011).
• Budgeting and Forecasting: Budget preparation is something which requires requisite amount of knowledge not necessarily possessed by every business manager so it requires a proper accounting software to prepare those budgets and forecasts. This feature assist the management with those budgets that are necessary for its business. The forecasting feature will analyse the trends going on in the business, industry and from the results from past records it will prepare the budgets according.
• Payroll: This feature is required to calculate the wages and the salaries to be paid to the employees of the company on the basis of the working hours and days. This feature can also help in determining the correct amount of bonus and incentives to be given to the deserving personnel.
• Reporting and data analysing:  The financial reporting function is the important thing required to be performed by the accountant so as to deliver the true financial reports of the company to the stakeholders so that they can have the knowledge of company’s financial position in the market. As preparation of financial reports requires proper data entry and the analytical work to organise the data in proper format which can depict the true information in form of financial statements.
• Inventory management: As the bakery business is not the seasonal business, the demand for the products it manufactures remains consistent, so the proper stock level is t9o be maintained by the bakery organisation in order to avoid the long lag time between the periods of stock out and to reduce the carrying cost of the inventory. The accounting software will help the business in determining the economic level of quantity to be maintained by the business.

There are basically three levels of Accounting Software or accounting information system, depending upon there the usage capacity and the functioning of the software (Belfo & Trigo, 2013). The categories are below explained: 

a. Entry –level Accounting Software( Low-End)

• Suitability – Feasible for Sole Proprietor’s Business & Micro-enterprises.
• Number of users – It can take up five or fewer users to work on software simultaneously.
• Functionality – Basic Financial Accounting & Reporting Functions such as accounting for receivables and payables (Zhou, 2010).
• Cost – Economical than the other two categories of accounting software.

b. Small & Medium Accounting Software ( Medium-End)

• Suitability: Appropriate for Small and Middle sized firms
• Number of users: It can allow on an around 25 employees at a time to use the software application.
• Functionality: Apart from the financial functions provide in entry level software, it also performs functions involving other business features such as management of stores & stock items, personnel management, purchase and sale functions etc.
• Cost: Costlier than entry level software but cheaper than Enterprise level software.

c. Enterprise Accounting Software ( High- End)

• Suitability: Mainly developed for the huge business organisations.
• Number of users: Unlimited number of users can work on this software at the time (Schorr, et al., 2013).
• Functionality: It provides the more advanced features than the other two level of accounting software. It can also assist the business in maintaining the customer relationships like it keeps on monitoring the customer demands and responding to the queries on a constant basis.
• Cost: Very expensive (Gelinas, Dull & Wheel, 2011).

As B Bakery is a family owned business organisation with approximately 70 employees and had earned revenue of $ 13.5 million during the previous year with the given data it can be analysed that the organisation can be categorised as medium company. Therefore it should select the medium sized accounting software for its business. The software will assist the company with both of its financial and non financial features. Since the number of employees is more in the case of B bakery it can also invest in the high end accounting software but it will involve huge cost for it has advanced and innovative features supporting business intelligence (Gögüs & Özer, 2014). 

Comparison Between XERO And INTACCT Features

Outcomes from Business Processes

Specifications	Xero	Inacct
Customer Base	Xero has freelancer, small businesses mainly the new start ups and also the non profit organisations as its customers	Small medium and large sized firms are the intacct’s typical customers.
Platforms Supported	Xero can be supported on cloud, cell-phones and the desktop.	It supports only the cloud and the desktop.
Basic Features provided	Accounts payables and receivables, management reporting and analysis, invoicing and billing feature, fixed asset records, automatic bank transactions feeding.	It performs wide range of functionalities: Besides the accounting features it also provides Financial Management techniques and tools such as: Processing of credit cards, project and its funds  accounting, reporting of sales, management of cash flows etc.
Competitors or Alternative solutions	Two main alternatives of Xero are Quickbooks and zoho books.	Softwares named as Coda Financials as well as Financial Management Suite
Areas of support	Financial management	Areas of Core business

For the business of bakery the most appropriate and suitable accounting software will be the one which makes the business functions easy for the bakery organisation such as accounts handling, order management, inventory management etc and is easy to understand and operate by the users and also provides an excellent technical-support (Gelinas & Dull, 2008). To select the accounting software for business it requires consideration of several factors relating to the business of the firm as it involves investment of a good amount in implementation of the same (Ismail and King, 2014). As there are plenty of accounting software available in the today’s market, to select one of the most suitable option to the business is the important decision on part of business management since a wrong selection will lead to incurring of unnecessary costs without any relevance of the features (Magal & Word, 2011).

From the above study it is recommended for the B bakery to invest in Xero accounting software as xero is specifically designed for the medium sized firms where the users do not possess any accounting related knowledge (Wiegers & Beatty, 2013). Following are some reasons to recommend xero software to the bakery business organisation:

• No training costs: The accounting software xero is developed to provide all the accounting related assistance from data entry functions to the complex financial accounting through its advanced features therefore it does not require the firm to provide required training to the managers to handle accounting functions. Moreover, it provides the best technical support to the user of programme.
• Simplification of complex transactions: The innovative features of the accounting software help the business in simplifying the complex data. With the use of this software the entire file can be edited in one go as this software provides the ready format to be just filled with the important details (Geerts and McCarthy, 2011).
• Inventory tracking: This software records all the necessary data in organised form about the quantity of stock lying in the warehouses so as to avoid the stock out position of the raw materials or the produced bakery products at the time of their demand.
• Easy invoicing: The invoicing process gets it easy for the bakery organisation to collect the amount of sales through fast billings with accurate calculations.
• Dashboard: The dashboard feature will allow B. bakery’s performance and functioning to be presented as a glimpse on the software’s dashboard through the use of charts.
• Banking connect: The banking connect feature will enable the business to connect all its bank accounts to the software so as to get automatically updated with all the banking transactions so that the timely reconciliation of invoices and bills can be done with the bank transaction details.
• Reporting:  The financial reporting requirement of the bakery business will be handled by this feature as it prepares necessary reports by organising the data of the organisation.
• Payment portal: The business can get paid on an electronic basis for the bakery products sold through online mode using the payment acceptance feature of xero software.
• Therefore it is recommended to B. bakery to install xero software of accounting as it is not very costly and provides the assistance in the core business processes. Xero software also provides the adequate technical support so it is manageable for the users to work on. 

Conclusion

From the entire research it can be concluded that the implementation of a proper accounting software can help the business to reach at the next level as it reduces the manual intervention on the business processes thereby enhancing the accuracy and effectiveness of business functions. Since purchasing the accounting software for the business involves a good amount of funds, the decision must be taken prudently to avoid extra cost for the irrelevant software features. Before investing the money in any accounting software the company should be clear about its business requirements according to the size and nature of business it is engaged in.

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