A Study on Effect of Technology on Expenditure Cycle
The study has evaluated on the various subsystems of the expenditure cycle such as the use of internet on the expenditure cycle. The study is segregated into four sections. The first section has introduced the background of the research topic. The second section has shown the literature review associated to the effect of technology on expenditure cycle. The third section has identified the relevant research questions, the fourth section has suggested the methodology which shall be used for the study followed by data analysis. The final section of the study has concluded the findings and suggested for further recommendations for improvement plans.
The main intention of the expenditure cycle is depicted with converting the cash of the company into physical materials and HR requirements needed for conducting a business. In general, most of the business entities is depicted to operate on a credit basis and does not pay for the resources before acquiring them. Therefore, the time lag between the two events is known as the physical phase, which involves the acquisition of the resources and the financial phase, which includes the cash disbursement. The expenditure cycle is also conducive for the business which involves the management of dealings preceded by the inventory management. The expenditure cycle is this responsible for maintaining the flow of information and inventory processing thereby minimising the cost. There have been several studies which implicates that the main reason of Internet is depicted with confirming manual system is improved thereby all the difficulties imposed in the system is successfully solved. The adoption of Internet has been conducive for the organisational functions and with the application of IT the expenditure cycle and daily transaction have effectively produced along with an error free inventory processing(Ghelani et al., 2015).
It must be understood that IT has an important role in the management of activities included in the expenditure cycle via improved security and functionality. The introduction of different types of IT services such as barcode scanners have substantially improved the packaging services and reprocessing wherever required for ensuring error free ordering system, along with effective warehousing for the customers (Technology, 2014).
This paper focuses on the expenditure cycle and the application of the internet. The evolution of internet has become widely accepted and applied in most business processes and the expedite cycle is one process of the purchasing department that highly uses the internet. This application has brought several advantages to the businesses which include an increased operational efficiency, transparency in the transactions, governing of relationships with the customers and an effective handling of the inventory management processes.
This paper commences by evaluating the body of evidence on the impact of the internet in the expenditure cycle which is viewed in terms of the operational effectiveness. The review of literature addresses the pathway to the implementation of the internet, the various internet applications applied by the organizations and the outcomes to the purchasing department. The application of information systems such as ERP, financial electronic data interchange system is created (FEDI), electronic funds transfer (EFT), REA and RFID (Radio Frequency Identification) have been analyzed for the input they add to the purchasing department and onto the expenditure cycle.
Research conducted by Gelinas, Dull & Wheeler (2011) indicates that the internet is used to revolutionize the operations of the expenditure cycles in a variety of ways. The introduction of new technologies in inventory management, order processing, vendor relationship management, tracking of inventory, governing transactions and labelling the materials have been governed by the internet and they are increasingly becoming more efficient. It follows that the traditional inventory management systems were full of human errors and inconsistencies which were necessary to be removed through the introduction of internet in the inventory management systems. Various researchers have identified the importance of applying information technology in inventory management and the various ways to use the internet in the expenditure cycle.
The impact of the internet on the expenditure cycle
The expenditure cycle is an important business process that involves the management of the transactions preceding the inventory management. The expenditure cycle is responsible for inventory processing and maintaining the flow of information in the purchasing department and as the key objective of this cycle is to effectively manage the inventory while using minimal costs, the internet has a wide role to play. Findings by Gelinas, Dull & Wheeler (2011) implicates that, the key reason of using the internet is to ensure that the manual system that involved huge processes of keeping all the inventory records have been improved and all the difficulties imposed by the manual systems such as the human errors and the security breaches have been solved. Through the adoption of the internet, the organizational functions have been smoothened. With the application of information technology in the expenditure cycle, the daily transactions and reports of all the inventory have been effectively produced and the errors in inventory processing have also been reduced.
The information technology significantly plays a central role in the management of the activities in the expenditure cycle through functionality and improved security. Introduction of IT services such as the Barcode scanners has improved the material packaging and reprocessing which implies that the organizations are bound to reduce the errors in the ordering, warehousing and the supply of materials to the customers. Information technology has also been applied in the payment of vendors in a most efficient way using the electronic funds’ transfer systems that are more secure and fast. Thus, through the application of internet, the expenditure cycle has been improved for the better.
In business corporations, expenditure cycle has a pivotal role with saves business capital and reduces expenses thereby ensuring smooth governing of the business transactions. A considerable amount of literature is able to show the importance and the effect of Internet on expenditure cycle. This is important for the use of computerised information system, thereby holding daily reports and transactions for the inventory. To maintain the inventory level for the organisations, the shift in IT is evident in nature. The various types of traditional manual transaction system have been depicted with increased vulnerability towards security breaches and more number of organisations tend to lose their data on everyday basis. This have shown the increased need for data management option for organisations to secure their transactions and govern the information which they hold among the client and the suppliers. The main questions be answered from the literature review is depicted with what at the positive impact for the inclusion of Internet on the expenditure cycle. Secondly, the important evaluation from the literature review has been conducive in addressing the factors which inhibit the utilisation of Internet on expenditure cycle. Thirdly, based on the assertions made in the previous studies, literature review has found the various functions of expenditure cycle that is enhanced with the use of Internet. Lastly, the important findings of the data have been conducive in stating about the contribution of expenditure cycle to the vendors (Van Kollenburg, Mulder, & Vermunt, 2015).
In the organizations, expenditure cycle has been a key concept which is awarded great significance as it saves the business money in the form of reducing the expenses incurred in the day-to-day management and governing of the business transactions. A lot of literature has been conducted to instigate the importance and the effect that the internet has on the expenditure cycle. This is necessary as it is evident that, with the use of the computerized information systems, it has become possible to govern and uphold all the daily reports and transactions for the inventory.
According to the study conducted by Gelinas, Dull & Wheeler (2011), in order for the organization to maintain their inventory and also manage to keep all the inventory records, the manual systems have become difficult and cumbersome to handle. The organizations are thus shifting their attention to the information technology. The traditional manual transactions management systems were prone to increased security breaches which made more organizations keep losing their data. This necessitated the introduction of a data management option for the organizations to secure their transactions data and be able to govern all the information they hold with the clients and suppliers. Deshmukh (2006) supports this by noting that, the introduction of the information system in the expenditure cycle was thus instigated and it has revolutionized the way the purchasing departments operate. As the internet became adopted for governing and managing the business transactions in expenditure cycle, errors were also prone to be eradicated and the organizations started aiming for efficiency in their operations.
Research conducted by Hall (2012) insinuates that the information technology has a significant role in enhancing the performance of the activities in the expenditure cycle. This implies that as there exist many upcoming technological developments, the organizations can achieve more in terms of functionality and security for engaging the internet in their expenditure cycle. The organizations continue to expand on the important technological revolutions that can help in the running of the expenditure cycle and manage the organizational information. Hall (2012) research implies that IT is increasingly being adopted in the purchase decision by most organizations. This is consequently accrued to the material needs of organizations as well as supplies to enable the organizations to meet the demands of the customers. According to Hall (2012), this makes it necessary for the companies to ensure that they have out across internet systems to help them in requesting and delivering the materials required by their customers. Using the computer systems, they are able to research products from different suppliers, compare the offers from these suppliers and then make a determination of the right supplier for the business. In relation to this finding, Gelinas, Dull & Wheeler (2011) note that, through the internet application in the expenditure cycle, during the ordering of the gods, the organization is able to check on the trends of the purchases they make and this helps in the pricing of the goods and services. In the process of pricing of the goods and the services, the use of information technology has been found to be necessary as it helps in analyzing the terms and conditions of the purchases to be made, the delivery times for the customer and making consideration for other factors such as return policies.
Gelinas, Dull & Wheeler (2011) stipulates that there have been three general activities that involve the application of the internet in the expenditure cycle. In the phase of ordering materials and goods, the associated and the supplier services usually require the internet. In this phase, research indicates that the primary activities that are supposed to be undertaken are to make a decision on the amount of the purchased items and under which situation and from which suppliers to purchase the goods and materials. Sinnett & Overell (2009) research shows that this is a critical process in the expenditure cycle as any errors did in this phase will be traumatizing for the entire expenditure cycle. To ensure that there are no errors in this phase, it is required that a properly maintained information system needs to be implemented. Inghirami (2013) supports this view by arguing that managers in the purchasing department should use the internet to make an analysis of the organizational needs so as to provide accurate results of the required goods that need to be efficiently purchased. In this phase, research by Inghirami (2013) highlight that the application of the internet is very important. This is because, with the information technology being put into place, the inventory control method needs to be properly implemented to provide prompt feedback when the department falls short of inventory. It is through the information system that this process can be effectively handled in the most profitable manner.
Research by Inghirami (2013) stipulates that the use of technology by a firm in its expenditure cycle leads to an improvement of the core activities in the cycle that includes issues to do with the inbound logistics. Managing the supplier relationships through the inbound logistics and application of information technology is important to help the firm to expedite the handling of their customers. For instance, according to Inghirami (2013), using a system such as RFID (Radio Frequency Identification), a firm is able to tag all its vendors to streamline its operations and make them implement similar systems to assist in the process of acquiring the materials. As far as Simkin, Norman & Rose (2014) are concerned, the supplier and the business relationships are also noted to have been improved through the application of the internet. As all of them seek to ensure that the end deliverable product has reached the final consumers, the business applies the EDI to govern the shipments. Hall (2012) implies that, through the EDI, the vendors of a firm are able to send notifications to the customers that the shipment is on the way. The traditional method of sending notifications was usually ineffective and ended up mostly with the information not reaching in quality time. Using the EDI, Inghirami (2013) finds that, the businesses have also been enabled with an opportunity to track all their shipments in relation to the status and the location. The truck drivers can also be redirected to the nearest docks they can unload the materials to shorten the truck turnaround time and hence improve the business shipment effectiveness. Deshmukh (2006) also found that most suppliers’ use the bar-code or RFID (radio frequency identification) to label their products and expedite the totaling of the goods. Receiving-dock workers scrutinize the goods and use an online terminal to fill data about the magnitude and state of items received. The system authorizes that data alongside the open purchase order, and any inconsistencies are instantaneously exhibited on the screen so that they can be fixed.
The businesses have also been able to adopt a data entry model (REA). Through this data model, they are able to account for resources in terms of cash and business inventory. Findings by Deshmukh (2006) highlight that with the improved data entry method, the businesses are now able to manage several events which among them include requesting goods, ordering of materials, receiving of the requested materials, approving the vendor invoices for payments and then paying for the goods. This is consequently managed in an efficient manner that is free of errors and puts the firm at a minimal risk of losing data on any transaction. Research by Deshmukh (2006) indicates that the application of IT in the expenditure cycle helps in increasing the business opportunities. This is manifested through online data entry that has integrated edit controls. The on-line data saved is usually necessary to help the businesses in retaining the data and retrieving it in the future. Conferring to data by Sinnett & Overell (2009), the traditional manual data entry systems had an increased chance of data loss. With the new information technology, there has been an on-line processing of the company data that is equipped with an integrated database for the just-in-time order processing. This helps the businesses in the management of their purchase information over the internet.
As far as Deshmukh (2006) is concerned, barcoding has been introduced by the internet in the expenditure cycle. Through the coding, the organizations have been in a process to reduce the human errors that often arise from the data management. In inventory control, data has been found to be filled by errors resulting from a mixture of different inventories from different products. The end result is that the control process will be difficult to be championed. Through the barcodes, the organizations have become able to code every item purchased and they feed these into their computer systems. Simkin, Norman & Rose (2014) implies that having the business information in code form helps to reduce any human errors in filing the product data and order processing. The vendors are also reflected to be using the barcode systems. These vendors are taking initiatives to reduce the receiving time for the orders. This is increasing the efficiency in the expenditure cycle by helping the firms and their vendors to complete their transactions in record time.
In the expenditure cycle, Deshmukh (2006) states that, the last phase usually involves paying the vendors. With an increased intervention and application of information technology, it is becoming aware that the business can use the electronic fund’s transfers (EFT) to pay all the vendors. This is regarded as an effective, quick and safe way that the business gets to pay the vendors for the materials provided. More to that, research has also indicated that the businesses have revolutionized the integration of technology in the payment of the procured materials. In this sense, they are noted to be integrating EFT and EDI (Deshmukh, 2006). With the integration of these two systems, financial electronic data interchange system is created (FEDI). This system is becoming advanced to help the business in managing all their financial transactions with ease and avoid losing any vendor and customer data. Compared to the traditional inventory control methods, the businesses were often at an increased risk of losing the financial data and they were unable to make accurate financial projections based on the data available. Conferring to Simkin, Norman & Rose (2014), companies are also making payments to some of its larger suppliers using financial electronic data interchange (FEDI). The evolution of the internet has changed all these and it is evident from research that businesses are accurately managing their financial records and transactions. Simkin, Norman & Rose (2014) also show that passive radio frequency identification tags are being applied in the business in the management of the receiving purchases. It is widely known that while making purchases, confusions are bound to rise as a result of increased transactions. With the internet being revolutionized, the businesses are making efforts to govern their relationships with the vendors and the customers. This is also aided by the provision of procurement cards for both small and large purchases.
As Bodnar & Hopwood (2012) indicates, the activities in the expenditure cycle are the mirror images of the base activities that are usually performed in the revenue cycle. The close linkages that exist between the expenditure cycle of the buyers’ activities and the revenue cycle activities of the sellers. These have important implications for the design of the buyers and the sellers’ accounting information systems. Specifically, by applying new developments in information technology to re-engineer expenditure cycle accomplishments, companies generate prospects for suppliers to re-engineer their revenue cycle activities (Romney, Steinbart, & Cushing, 2000). Conversely, using IT to redesign a corporation’s revenue cycle can construct prospects for customers to make a modification of their own expenditure cycles. This aligns with the findings of Bodnar & Hopwood (2012) who stipulated that, in fact, the alterations in one company’s processes may oblige resultant changes in the processes of other companies with which it does business. For instance, the major auto producers and many large retailers, necessitate their suppliers to transfer invoices via electronic data interchange (EDI), or they will not do trade with them. Subsequently, those merchants must transform their accounting information structures to integrate the use of EDI.
Romney, Steinbart, & Cushing (2000) shows that most organizations also use the ERP systems and this is important as it improves the expenditure cycle and the business activities. The purchasing department has the responsibility of ensuring an adequate and quality supply of materials. Any department in the organization is also enabled to submit a request for orders for purchases. Once the purchasing departments have approved all the purchase requests, the integrated information system has been applied by the business, this system searches the inventory master file to make an identification of the preferred supplier for that item. The information system is then used to create a purchase order that is usually sent to the supplier using the EDI. Bodnar & Hopwood (2012) argues that the department that is receiving the purchases usually has access to the open purchase order file so that it make plans for and verify and validity of deliveries. The accounts payable is then notified of the orders to making plans for all the pending financial commitments. The major suppliers in the business, with the help of the information technology, they are able to send electronic notifications of the coming deliveries.
Research by Bodnar & Hopwood (2012) indicates that EDI is also necessary for businesses as it helps in making comparisons with the supplier invoice with the data enclosed in the purchase order and receiving a report to ensure accuracy and validity. For purchases of supplies, the system has also been allowing for the checking of informational accuracy and mathematical accuracy. The system spontaneously program invoices for payment by due date. Deshmukh (2006) notes that most of the companies are also using the batch processing which is integrated using the information technology to make payments to the suppliers. Each day, the companies are making attempts to also use the inquiry processing systems to make a review of the invoices scheduled for payments to the suppliers.
Conferring to Romney, Steinbart, & Cushing (2000), business expenditure cycles are also very important as through the implementation of the information technology, they are able to get easy access to up-to-date, accurate information. This deal of information is noted to enable managers to closely monitor performance. Sinnett & Overell (2009) research shows that the quality of decisions depends upon the accuracy of the information in the database and this implies that with the technological applications, it has been easier to effectively manage data and ensure that the management operations have been effective and the transactions are fulfilled accurately. The best practice according to research by Bodnar & Hopwood (2012) is to make an implementation of the ERP system. This is done in several instances. The first instance relates to production which is used as a process daily activity. Secondly, it is used for the process of development and testing and the third instance related to the ERP system requiring to be maintained as an online backup to the production system to always provide the businesses with real-time data recovery. Romney, Steinbart, & Cushing (2000) revealed that, as the internet continues to take over the business expenditure cycles, extensive reporting capabilities through the ERP systems have become integrated into the business functions. These are important as they are increasingly helping the businesses to monitor threats in expenditure cycles that relate to the poor performance. Through other systems in the ERP such as the inventory turnover, the businesses are provided with real-time data on how to better manage their inventories and be able to monitor the percentage of requisitions.
The findings by Romney, & Steinbart (2014) show that the ERP systems in the expenditure cycles also have a significant effect on the management effectiveness of the purchasing department. This implies that through inventory reports generated by the ERP system, these can help the management in changing the ways of managing the inventory. For instance, in the purchasing department, it is necessary to make sure that the percentage of requisitions have been monitored effectively. Some other reports can be used to help the management in identifying the relative importance of various items in the inventory. This implies that with effective online data management, Romney, Steinbart, & Cushing (2000) shows that it has been used for an organization to be able to understand different ways that they can possibly classify the items being purchased or sold in the dimensions of the frequency of purchase, the frequency of resale/sale as well as the contribution to organizational profitability. As far as Sinnett & Overell (2009) is concerned, using the data analyzed, the management can be able to consider making an elimination of the items that are occasionally purchased and those that have a little contribution to profitability. The internet is thus making it possible to organize the business inventories for increased business efficiency.
In seeking to reduce errors and threats in the internal process of the expenditure cycle, Bodnar & Hopwood (2012) shows that affixing the RFID together with the Barcode can be used to identify the errors in the listing and the naming of the products in the inventory. Using the RFID tags to specific products eradicates the problems of inaccurate product labelling and listing because the reader automatically records each item. RFID technology is also more proficient than barcodes since there is no need for a human to align the barcode on the merchandise with the reader. Conversely, Romney, & Steinbart (2014) imply that the RFID technology is more costly than bar-coding and cannot be applied to all types of products. In the purchasing departments, they have identified that the key cost driver is usually the number of the purchase orders processed. Finding ways to reduce the number of the orders that the department makes and to streamline the steps in the process. With the application of EDI, the purchasing processes are improved. Romney, & Steinbart (2014) also supports this by noting that the EDI helps in reducing costs by making sure to eliminate the clerical work associated with the mailing and the printing of paper documents. EDI is also recognized to have a significant impact in reducing the time that the business takes to make a reorder of an item and subsequently reduce the time to receive the order.
Consequently, supplementing the research by Bodnar & Hopwood (2012), using the internet in the expenditure cycle has been considered to be of significant impact as it has reduced business incidences of the risks of running out of stock. The managers are provided with an opportunity to make timely and the most appropriate inventory preparation and management to help them increase the business profitability. In the past, it was acknowledged that the EDI was expensive to be implemented by businesses. Romney, & Steinbart (2014) show that, with the increased technological evolutions, this has changed. The EDI is becoming integrated into EDINT. These include protocols such as AS2 for the secure exchange of electronic documents. These have cost the EDI costs and makes the business functions to be easier and faster. This means that it is through the internet that the business has experienced rapid changes in their expenditure cycles and they have managed to keep in check their inventory, transactions and the relationships with both the customers and the suppliers. The Internet has managed to improve the expenditure cycles for the best and costs are easily accountable.
Conclusion to the Literature Review
This paper provides some insights into the application of internet into the expenditure cycle including the increased operational effectiveness, speed and the number of transactions processed in a secure manner. Through the review of existing literature, it was found that, compared to the traditional systems, the new wave of technological applications in the expenditure cycle has led to integrated functions of the expenditure cycle. The study of literature review found that the human errors had increased in the past, making the expenditure cycle hard to govern and manage. This has however changed and the even the relationships with other business partners have also been improved as a result of integrating technology. More research continues to be conducted on the way information technology can continue being expedited for the functions of the business. This will offer organizations with an increased opportunity of having better and profound relationships with the vendors, customers and with the internal departments.
Research Strategy
The main nature of the research for the study is depicted with performing a deductive research. The implementation of the strategy will be conducive in answering the relevant research questions formulated for the study. The study has further emphasised on scope of observations with the general problems and possible traces of solutions to the same. Some of the important aspects of the study have been for the to focus on the research gathered from the secondary resources. The important process for conduction of the research is relied on scrutinising the information available from the different types of secondary resources (Neuman, 2014). Therefore, the research is not only based on secondary data but also thematic method has been used for the analysis of the same. In several cases, the responses of the data are accumulated with the interviews associated to positive impact for the inclusion of Internet on the expenditure cycle, addressing the factors which inhibit the utilisation of Internet on expenditure cycle, functions of expenditure cycle that is enhanced with the use of Internet and the overall contribution of expenditure cycle to the vendors (Research Methodology, 2017).
Data collection
The data collected for the research is mainly based on secondary sources. Several types of financial institutions, private organisations and government entities have been analysed in order to know about the role of Internet and expenditure cycle. In addition to this, there are several excerpts over information which have been extracted from the authorised journals and electronic books for proposing solutions to the identified objectives of the research study. The data collection is also based on reviewing of various types of research articles and opinions given by renowned scholars which is able to state on the use of Internet for expenditure cycle and also how has been able to respond to the various needs of the vendors in performing day-to-day activities. The important research data is collected with the expenditure cycle which have stated about the purchases and cash disbursement procedures (Hagenaars, 2015).
Analysis procedure
The data analysis is done by using qualitative data analysis method with the use of thematic analysis. These data analysis technique has been conducive in focusing on identified pattern across a data set. The thematic analysis is ideal for the present research as it is able to identify the patterns of information in order to answer the research questions. Moreover, the backgrounds are mainly identified with rigorous process of thematic development, data coding and standardisation of the data. Some the main advantages of using this method is depicted with theoretical flexibility (Sloan & Bowe, 2015). This suggests that the identified data can be used across several types of research questions are suited with the people’s experience, perceptions and views. As the thematic research was that is applied to already an existing research, it will aim to develop the theme based on the existing ideas and concepts used in the research (Ghelani et al., 2015). The process of analysis will go through different phases including familiarisation with the data, coding, searching for themes, reviewing of themes, defining and naming themes. During the process of familiarisation with the data, there involves several steps which includes reading and rereading the data for being intimately getting accustomed with the content. In addition to this, in the coding phase includes generating succinct labels for identification of different types of features of the data which may be relevant for answering of the question. In several instance, the coding phase consists of interpreting the entire dataset after collecting the codes and gathering relevant data extracts for later stages of the analysis. During the process of searching for themes, usually there is examination of codes and the collated data for identification of individual candidate theme which can review the validity of each candidate’s theme (Neuman, 2014). The next process is followed with reviewing of these themes. In this stage the candidates to the dataset to determine convincing story of the data and search for the different types of answers to the research questions. This phase of the latest methodological also include the data which is being combined, split or discarded. During defining and naming of themes, a detailed analysis for each theme is prepared for determination of story of the individual teams. In case of writing up of thematic procedure, there are several types of data extracts and analytic narrative which is conducive in contextualising the association of analysis with the existing literature (Kothari, Kumar, & Uusitalo, 2014).
Validity and reliability
To ensure the validity and reliability of the data collection of the secondary sources for the data is ensured to be taken from only trusted source. Moreover, the main impact of the technology on expenditure cycle is mainly considered with Internet. This has ensured that the research is performed within the limited scope of studying the various aspects of implications of Internet on technology thereby confirming the reliability and accuracy in the projected information. In addition to this, the relevant examples throughout the research is included with the articles which had been published in and after 2014. Therefore, the research has been able to guarantee that the information is up to date (Van Kollenburg et al., 2015).
It can be depicted that the main strategy of the research study is depicted with performing a deductive approach. Moreover, the implementation of the strategy will be conducive in answering the relevant research questions formulated for the study. The study has further emphasised on scope of observations with the general problems and possible traces of solutions to the same. Some of the important aspects of the study have been for the to focus on the research gathered from the secondary resources. In several cases, the responses of the data are accumulated with the interviews associated to positive impact for the inclusion of Internet on the expenditure cycle, addressing the factors which inhibit the utilisation of Internet on expenditure cycle, functions of expenditure cycle that is enhanced with the use of Internet and the overall contribution of expenditure cycle to the vendors. The various types of discourse considered for data collection is discerned with the data analysis has been done by using qualitative data analysis method with the use of thematic analysis. These data analysis technique is conducive in focusing on identified pattern across a data set. The thematic analysis is ideal for the present research as it is able to identify the patterns of information in order to answer the research questions. Moreover, the backgrounds are mainly identified with rigorous process of thematic development, data coding and standardisation of the data. Some the main advantages of using this method is depicted with theoretical flexibility.
Based on the summary of the research it can be further stated that The data analysis has been done by using qualitative data analysis method with the use of thematic analysis. These data analysis technique is conducive in focusing on identified pattern across a data set. The thematic analysis is ideal for the present research as it is able to identify the patterns of information in order to answer the research questions. Moreover, the backgrounds are mainly identified with rigorous process of thematic development, data coding and standardisation of the data. Some the main advantages of using this method is depicted with theoretical flexibility. validity and reliability of the data collection of the secondary sources for the data is ensured to be taken from only trusted source. Moreover, the main impact of the technology on expenditure cycle is mainly considered with Internet.
Positive impact of including internet on the expenditure cycle
It is to be understood that the main objective of expenditure cycle is to operate with effective and efficient management of the inventory and processing of the same with minimum cost. Hence, Internet plays a pivotal role in providing seamless access for the records of inventory among any large organisation. The use of computerised information system with Internet is able to analyse the business activities more smoothly. Moreover, the daily transaction and inventory reports can be produced for analysing the business activities with more efficiency and reduced errors. One of the prominent uses of IT is further depicted with activities for expenditure cycle and technological developments which have added to the functionality and security for these. In addition to this, the expenditure cycle is seen to include several types of buying decisions which needs to go through several processes before the final payment. Shoppers are able to make the best use of Internet for making the decision to make their payment gateway and mode of payment. The Internet has a valuable role to play in both ordering of materials and making purchasing decisions. The businesses need materials for supplies to produce and the individual agent research for comparing and data mining the right product or service. In smaller organisations, the business owner might take the decision and a larger corporation have purchasing department that request, material purchases via Internet as needed. In addition to this, the individual request or the agent of the company may fill out internal purchase of the order for approval. The ordering material for pricing goods and services is also a crucial part of the Internet. The terms and conditions of the delivery and return policies have a vital role which affects an order (Wseas.us, 2018).
It needs to be further determined that the primary function of spending to cycle is depicted to ensure overall reduction in total costs for maintaining inventory, services and acquiring others necessary operational effectiveness. Therefore, the Internet is identified as the key component for operation and responsible for reducing the operational costs. Moreover, the application of Internet has been conducive for the organisations to shift from traditional and rigid methods such as EOQ. There are several number of alternate inventory control systems which has reduced the required level of inventory by scheduling the production as well as estimating needs. Moreover, the online processing for the integrated database for both MRP and JIT system is also done via Internet. The application of Internet among the several types of control methods such as JIT is conducive for minimising the stock out costs and cutting costs. Such inventory methods scheduled the production and adhering to the needs of customers they are by virtually eliminating the finished goods inventory (Ariesa & Berasategu, 2009).
In addition to this, the expenditure cycle is greatly benefited from the application of Internet by using the AIS for having the operational information and data mining the amount of inventory monitor cash flows and verification of accuracy of the vendors thereby selecting appropriate vendors. The barcoding is another area which greatly minimises the human errors. This is seen with the use of barcode in reducing the time of receiving. Some of the other benefits of the Internet is depicted with passive radio frequency identification for a more efficient operational performance. Furthermore, the linking of Internet with the satellite technology and inbound Logistics has helped the operational context in many organisations. The payment made to the vendors via EFT is also done by Internet which is an unique feature and not available in manual processing. Several literatures as also supported that EDI is responsible for eliminating the requirement for inputting invoice data and matching the document of payment which is needed in a manual process (Arens et al., 2003).
The main factors encompassing the utilisation of Internet is associated to the services provided by the suppliers and ordering of materials and goods. There have been three main phases associated to the utilisation of Internet on the expenditure cycle. The first phase decides that the amount of the purchased items and the party from whom these purchases are made. Therefore, maintenance of the information system can be conducive in analysing the requirements for business which will be able to provide reliable results for the required goods to be purchased in an efficient manner (Lin, Mao, & Song, 2015). It needs to be further discerned that the inventory control methods need to be maintained properly for analysing the business needs and generating accurate results for the required goods to be purchased. The inventory control method also needs to be implemented wherever there is shortage for inventory and information needs to be handled in a timely manner. It needs to be also understood that the activities for maintenance of the items in an orderly manner, there may be shortage of goods and services. Therefore, before the approval of the final dispatch of the good it needs to be ensured that the payment procedure is initiated for the goods which are ordered (Chan, 2006).
Based on the analysis of various types of secondary journals it has been identified that Internet opens new opportunities for various types of pre-purchase search of information. Therefore, lower cost of searching has affected the use of Internet for this purpose. In addition to this, the benefits in terms of large amounts of information has also affected the use of Internet for information search. A model used to test the structural equation of the sample of Danish Internet users showed that the total amount of the use of Internet affected the pre-purchase information search is more than the perceived low cost of searching of information. Furthermore, the testing of the model did not support the preference for personal contact of sales staff and use of Internet for information search (CPA Australia, 2007).
The depictions from the results of the secondary journals have shown that there are several functions of the expenditure cycle which have been improved by the Internet. The most imminent benefits to the functions of the expenditure cycle includes VMI. In addition to this, a supplier can deliver more inventory due to the fact of automation of procedure in payment terms. The payment function is seen to be benefited in a major way as receiving and accepting of the inventory is easier with the use of Internet (Ebert & Griffin, 2005).
The various benefits of the expenditure cycle functions brought by Internet is depicted with online data entry with options for credit controls. The online processing along with integrated database for JIT and MRP system is also identified as one of the most crucial opportunities of IT. In many ways, Internet is seen to benefit the application of online processing of information with an integrated database for EDI and transmission of purchase orders to the vendors. The procurement card is also seen to be conducive for smaller purchases. In addition to this, the use of Internet for purchasing functions is also conducive for procurement cards transaction in smaller amounts. Internet also makes it easier for the passive radio frequency identification in receiving information in a more efficient manner. Some of the other benefits of the Internet can be traced with improvement in satellite technology and the functions associated to inbound Logistics. The other benefits of the functions have been already identified with the payment made with the EFT. Some of the other benefits of the Internet can be also depicted with integrating the EFT and EDI. The main objective of the expenditure cycle control is identified with authorising of the transactions, checking for the validation of the recorded transaction and authorisation of the recorded transaction via Internet (Gay & Simnett, 2005).
The use of expenditure cycle in accounting can be depicted with the process of receiving, ordering and payment for the goods. With the use of Internet, the ERP functions are integrated in a better way. In various cases, the e-procurement uses the Internet for purchasing direct or indirect materials. For instance, the expenses associated with the e-procurement is related with sourcing and managing of suppliers (Herman, 2002).
The primary application of the E procurement function with the Internet can be seen with including several practices brought by collaborative software. SRM usually deals with sourcing of suppliers and procurement. Therefore, the use of Internet in several software is as conducive in increasing the overall efficiency (Hoggett, Edwards & Medlin, 2006)
On consideration of the several excerpts of information taken from the different types of secondary sources the main benefits of the expenditure cycle for the vendors is depicted with the use of barcode systems. The vendors are able to take the initiative of reducing the time of receiving orders. This is seen with increasing efficiency in the expenditure cycle and helping the firms along with the vendors in completing the transaction in recorded time. The expenditure cycle is also beneficial in making payment to the vendors. The increased intervention and application of IT is seen to be conducive for being the vendors. Some of the main reason for this is depicted with effective and quick way of paying to the vendors in a timely manner. In addition to this, the integration of EDI and EFT has led to the creation of FEDI which is conducive in several organisations. This system is responsible for assisting the businesses for managing the financial transaction and preventing the vendors and the customers in losing the data. In compared to the different types of traditional inventory control systems, FEDI is depicted with an increased efficiency in the overall expenditure cycle. The revolutionization brought by the Internet is also helpful for governing several relationships with the vendors and the customers and a this is also aided by both small and large purchases (Laudon & Laud, 2004).
Recommendation and Conclusion
It can be identified that EDI is also important for businesses in making comparison with the supplier invoice and PO for ensuring validity and accuracy of information. Moreover, the purchasers of the suppliers and systems have allowed chicken of informational accuracy along with mathematical accuracy. There needs to be several systems maintained for the spontaneous programming of invoices due to late payment. In this way, the delay in the transaction can be avoided due to technical errors (McLeod & Schell, 2001).
The main nature of the research for the study is depicted with performing a deductive research. The implementation of the strategy will be conducive in answering the relevant research questions formulated for the study. The study has further emphasised on scope of observations with the general problems and possible traces of solutions to the same. Some of the important aspects of the study have been for the to focus on the research gathered from the secondary resources. The important process for conduction of the research is relied on scrutinising the information available from the different types of secondary resources. The various types of secondary sources of the data is taken from financial institutions, private organisations and government entities (Romney & Steinbart, 2006). The thematic analysis on positive impact of including internet on the expenditure cycle is identified with expenditure cycle to operate with effective and efficient management of the inventory and processing of the same with minimum cost. Hence, Internet plays a pivotal role in providing seamless access for the records of inventory among any large organisation. The use of computerised information system with Internet is able to analyse the business activities more smoothly. Moreover, the daily transaction and inventory reports can be produced for analysing the business activities with more efficiency and reduced errors. One of the prominent uses of IT is further depicted with activities for expenditure cycle and technological developments which have added to the functionality and security for these. In addition to this, the expenditure cycle is seen to include several types of buying decisions which needs to go through several processes before the final payment (Genete, L. D., & Tugui, 2008).
Several types of secondary analysis have suggested that the Internet is also beneficial for the shoppers in making best use of the Internet and making the decision for payment gateway and mode of payment. It needs to be further determined that the primary function of spending to cycle is depicted to ensure overall reduction in total costs for maintaining inventory, services and acquiring others necessary operational effectiveness. Therefore, the Internet is identified as the key component for operation and responsible for reducing the operational costs. Moreover, the application of Internet is conducive for the organisations to shift from traditional and rigid methods such as EOQ. There are several number of alternate inventory control systems which has reduced the required level of inventory by scheduling the production as well as estimating needs (Norris et al., 2002).
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