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According to Pulakanam (2010), accounting software or the packages are used in an effective manner by the businesses as it helps in conducting all accounting calculation in an easy way. With the use of these types of software, all the accounts are computerized that saves time as well as resources which can be optimized in other works. There are various packages used for the accounting purpose like Xero, Saasu, Reckon, MYOB, and Quick books. All these software are extensively used for the accounting purpose in Australia. This type of software turns the work easy which helps features installed in it (Pulakanam, 2010). In this assignment, a literature review has showcased that constitute that covers the history along with development and adoption of the software in the current market trend. Apart from that, challenges that are faced in relation to the software are also mentioned in this assignment.
History of accounting software
According to Ryan (2012), until the year of 1974, all the accounting work were done manual which leads to hectic working. But with the expansion of business in various areas of the world, there occur a situation in which accounting became a difficult task to be appropriately conducted. The development of information technology leads to changes in the perspective of business. The business started to believe in information technology which constitutes the invention of accounting software. This accounting software evolved as a business management tool that helps in switching from DOS to windows that made the operation easier and faster. This switch becomes an important parameter for the working of accounting software in the business. In the year of 1987, Turbo cash was launched which help in an automated system for trial balance, balance sheet as well as the income statement. At various time interval, many changes occurred in the system that enables the better functioning of the accounting packages (Ryan, 2012).
Development and adoption of software
In the words of Scott (2015), over the many years, there were many developments that lead to the use of effective accounting software in the business. The first ever launch accounting software was in the year of 1955 which handles the payroll of the General electrical appliances. But still, the software used faced many difficulties like they were time as well as space consuming. This problem leads to the need for the improvement in the information technology for such software. With the changing scenario, many changes occur in the business that affects the use of accounting software in the business. Many accounting software were invented in which flexibility was focused. One such software was SAP RF that handle a lot of business changes while making decisions related to financial aspects. Another software that helps for accounting purpose was Peachtree software that was specially designed for personal computers. This software was cost effective due to its use of the personal computer. Peachtree has grown in an effective manner due to the integration of word processor as well as a spreadsheet which were platform independent. Another software that was developed was in 1983 which aims to provide accuracy in the accounting system. This software was Intuit that was launched under Quicken product. Other than that, another accounting software was launched which was treated as best accounting software called Teleware Inc. which was later called as MYOB (Scott, 2015).
Market size for accounting software
In the words of Lynn (2011), each and every business decide to conquer a large portion of the market to increase its profits in an effective manner. This is conducted by segmenting and targeting the market with appropriate strategies (Lynn, 2011). According to Clements (2015), Quick book covers a large amount of market for the business. Around 80% of the market is covered with this software which helps in the better financial lives and management of the business. The quick book has come so far due to innovation in the customer’s segmentation as well as market strategies to increase its share. There are two main segments identified by QuickBooks. They are accountants which are over 400,000 and the 5,000,000 small business that are dependent on the financial software. The company has implemented Pro adviser market strategy that train and provide knowledge to the users with its free online availability. On the other hand, there is Redrup (2016), who has explained about the market share of Xero. Xero cover approximately 15 percent of the Australian market. Xero is a globalized company whereas MYOB is more focused on the local market. From the financial analysis in the year 2016 around 53% subscriber increased from the previous year. This showcase that Xero has covered a large amount of market while implementing the effective strategy (Redrup, 2016).
Market leaders and its advantages
According to Angeles (2016), Xero has cover a large amount of Australian market with its effective and efficient market strategy. This software consists of a variety of features that enables it to become a market leader in Australia. This software is platform independent due to which it can installed and used in Mac as well as on personal computers. This software has gained a competitive advantage due to its easy use. This software can be used with little bit training as and knowledge. This software is also a cost effective which attract a large number of businesses to implement it. One of the main advantages of Xero is its easy use on the Mac which distinguishes it from other accounting software. Most of the accounting software provides stripped version of the counterparts of Windows which unable to bring the best results from it. On the other hand, Xero software provides all required features that are essential for accounting. Xero also provides various attractive packages that make it better from other accounting software packages. In this software, there is no contractual obligation which leads to easy entry and exit. This software provides the best plan that is divided into 3 parts. They are a starter, standard, and premium which attract users as per their preferences as well as the availability of budget. According to Fairbanks (2017), Xero software possesses many merits that help it in an effective manner. One of the features that are added to this software is the payroll that is available in standard as well as premium plans. Xero accounting software also has a cloud-based system that helps the user to get access to the data at any location. This software can be accessed with any browser at any time. Apart from that, its interface is easy for navigation along with well designed. It also helps in providing a connection through business bank account which helps in gaining imperative updates (Fairbanks, 2017).
Challenges Encountered by the Users
In the words of Howells (2015), invoice customization is the problem that is faced by this software as there is difficulty in for aesthetic changes. Apart from that, a feature of billable hours tracking is not present in the software. This causes the use of an application that would be installed in the system. Other problems faced by this software is payment of monthly fee that if not paid leads to the disconnection of the service of this software. This causes a significant problem as many companies are required to keep a record for at least five years which may get lost due to disconnection of services. Another drawback of this software is that all the accountant which leads to the use of limited resources. Local backup options are not available that causes problems of workaround through Excel. Default rates for the Vat required amendments in different types of accounts. Other than that still many business owners do not trust the authenticity of its services due to which it is still not preferred by many businessmen (Howells, 2015).
Recommendation and suggestion
According to Smith (2015), there are many problems associated with Xero accounting based software which can be diminished by taking into account various strategies that would enable the growth as well as the success of this software. The problem of missing data or files due to disconnection of services can be overcome by exporting the files before the expiration of subscription services. In relation to the security issue related to a bank account can be overcome by providing strong passwords which are required to be revised at regular time interval. There is also the problem of unavailability of stock and payroll which can be overcome with the help of liking accounting services to the third party. In relation to the amendments of accounts on regular basis for Vat rates, an accountant can prepare sheets in relation to it. Xero also provides the services for the user to export data for the QuickBooks users. Xero provides a link to business accounts as well as access to partners’ accountant and firms. Other than that, various programs can be formulated and implemented in an effective manner so that awareness for its authentication may be increased. If all these suggestion are taken into account then there are chances that its users may increase along with its market share. Despite demerits associated with accounting software, there is scope in the accounting field which would reduce the complexity associated with the accounting system (Smith, 2015).
Angeles S., 2016, “Xero Review: Best Accounting Software for Mac”, Business News Daily.
Clements M., 2015, “QuickBooks Enjoys 80% Market Share with 29 Million Small Businesses but Keeps on Growing”, The Market Strategies.
Fairbanks L., 2017, “Xero Review”, Top Ten reviews.
Howells F., 2015, “Xero - am I missing something”, Accounting web.
Lynn M., 2011, “Segmenting and Targeting Your Market: Strategies and Limitations”, School of Hotel Administration Collection.
Pulakanam V., 2010, “Implementing accounting software in small businesses in New Zealand: an exploratory investigation”, Accountancy Business and the Public Interest, Vol. 9, pp 100-110.
Redrup Y., 2016, “Xero primed to keep gaining market share in Australia”, Financial Review.
Ryan E., 2012, “The evolution of accounting software: past, present and future”, The Journal of the Global Accounting Alliance.
Scott B., 2015, “The Accounting Journal: Accounting Software Grows Up”, the pulse.
Smith, H., 2015, “Xero for dummies”, John Wiley & Sons.