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Accounting/bookkeeping in a small consultancy/technical service office.

Bookkeeping and accounting are time consuming chores that yield no revenue whatsoever. Unfortunately ignoring them ends up being very expensive, so all businesses have to become involved in the exercise whether they want to or not. There are many reasons why financial records are kept, but of these two are of major importance:

1. To keep track of the way in which money is being spent to ensure that there will always be enough to pay the bills, and:

2. For determining the profitability of the enterprise, which has ramifications both for the owners and for Revenue Canada.

Why bother getting involved, when there are hordes of freelance bookkeepers out there who love to do nothing better than to tend to books? There are several reasons, particularly for anyone operating a technical service company:

1. Technical people and bookkeepers communicate on very different levels, and unfortunately these do often not intermesh. The technical person may end up acquiescing to the bookkeeper's will in the matter, because concepts such as general ledger, journals and double-entry bookkeeping do not appear to have a significant meaning.

2. The bookkeeper may know even less about the technicalities of the business, and therefore is concerned with the figures as seen, and may force them to fit a preconceived notion of what the business is about, eg. a material may be used as a shelf reagent, but occasionally it is also purchased especially for specific projects. The bookkeeper may not catch the difference with the result that the costs could be allocated incorrectly.

3. An incompetent bookkeeper can tell a convincing story to the owner, who would not be aware of a disastrous situation. I personally saw this happen in the case of a contractor who trusted the bookkeeper because she spoke so knowledgably and nicely. She allocated cheques to the wrong account and did not enter a number of the payables, so the contractor thought he was a lot better off than he really was! He gave the bookkeeper a raise, and three months later he was bankrupt ! In addition to the bookkeeper, the owner of a small business has, once a year at least, to face the accountant, who will cheerfully allocate the revenue to the government tax collectors, if the books have not been prepared properly, and the owner doesn't feel that his business needs the luxury of an audited account.

The computer has abolished the tyranny of the bookkeeper for good. Now all the owner needs to do is turn on the computer and lo and behold, the bookkeeping problem is solved.

Accurate reports are printed on time, and the financial state of the company is known to the nearest half a cent. If only this were true! Unfortunately, in order to be able to use a computer-based accounting system, one needs to know something about accounting and bookkeeping (and computers), and there must be a method for getting the data put into the computer in a timely fashion.

Total Trak is a comprehensive double-entry bookkeeping/money management package designed specifically for technical service companies, consulting engineers and architects, all of whom sell expertise as the prime commodity. It was developed by Wind-2 Software, Inc. (Fort Collins, CO). It is the company's smallest bookkeeping software package and has been designed for small professional companies with no more than 10 technical service employees.

The system is modular in nature, to allow for selection of different accounting functions, eg. general ledger (GL), accounts payable (AP) and business management (BM). The accounts receivable (AR) facility is incorporated in the business management section. Although the system was developed for architectural, engineering and other technical consultants, it could also be used to track the financial efficiency of an operating unit within a larger operation. For example, an analytical chemistry facility within a large industrial organization could be set up as an internal business. It would have just one client, the main organization, but it could issue invoices for the work performed, and these would keep track of the time spent on the different tasks assigned to the lab. This way the lab manager would have a precise control on the costs of running the operation. Areas where effort is being directed can be highlighted, and those where improvement could be achieved pinpointed. If, for example, it was being asked to provide an excessive amount of service to a particular group, then this would show itself very quickly, and the reason for this established. Because the program has a budgeting facility it also permits tracking the financial record against a projected financial plan.

It will be appreciated that, because the program permits such a careful and detailed accounting of cash flow into and out of an enterprise, it will only work if the business is properly organized to take advantage of the program's features. This means that working procedures have to be set up, or altered in order to accommodate the software. A chart of accounts is needed, ie. a list of numbers that represent different transactions, office equipment purchases, rent, telephone and other overhead expenses, payroll, purchase of materials used on projects, and so on. A fair amount of work is needed even before the data is loaded into the computer for processing. Then a procedure has to be devised to ensure that data is transferred to the program in a timely fashion. Time cards have to be processed promptly, and all invoices received from outside vendors have to be entered immediately upon receipt. The reason for this is that a meaningful financial picture must take all assets and liabilities into consideration. Likewise, projects must be set up to reflect the accounting system. They must be identifiable in some way, usually by a code number. This can create problems if a particular client simply keeps on re-ordering the same service, for example analysis of effluent discharge: in this case a decision has to be made whether to regard each analysis as a separate project, or to consider the project as being the service provided on, say, an annual basis.

The package is in reality a specialized database that enables banks of information to be utilized to produce invoices, update accounts and produce a variety of financial reports. Once the system has been properly set up, activities such as preparing invoices, paying bills and determining the current financial situation on the business can be determined very quickly. However, in order to use the system efficiently it is essential to prepare the operating procedure very carefully, otherwise the information produced by Total Trak will not be exactly what is required. For example, Total Trak will keep a track of the different activities that company personnel are involved with in undertaking projects, but if some of these activities are not described precisely enough at the beginning, it could be difficult to elaborate on them at a later date, particularly in the case of data that had been entered some time previously.

Invoice preparation is one of the most tedious chores that a technical service company has to undertake, yet it is one of the most essential: no bill, no pay. Total Trak is very adept at collating data from many different files (timesheets, materials, equipment, instruments used, travel expenses, and so on), and ensuring that these data are assigned to the correct projects for compilation into invoices. The entire process is automated, ensuring that accurate invoices are produced in a timely fashion, and keeping the cash position of the company more secure.

In practical terms, master files have to be established by filling in the spaces in appropriate fields in the different records. This is done by selecting the correct' record sheet'from the appropriate menu. The databases are organized in modules, of which there are four: Business Management, General Ledger, Accounts Payable and Payroll. (It should be noted that the basic package includes all the modules except payroll, which is an optional extra. As the payroll is set up for US conditions, it has marginal utility in Canada, and accordingly is not offered for sale in this country.)

Figure 1 shows the interrelations of Total Trak's various functions. The modules may operate separately or interactively. The interrelationship between all the modules ensures that entries made in one will be reflected in the others, particularly the general ledger. However, once the different modules become interconnected it is very important that the whole bookkeeping procedure for the organization is critically examined before implementing the Total Trak system, and to the credit of the Wind-2 people this point is stressed very emphatically in the System Set Up Manual.

Total Trak needs an IBM-compatible system with a minimum of 512k of RAM and a hard disk with 10meg available. The package comes with 10 - 20 diskettes, four manuals and a tutorial manual. The files on diskette are in archived form. An elaborate install procedure expands the files. Wind-2 offers effective technical support.

Once installed, operation is reasonably friendly and menu-driven, so that the correct function can readily be accessed. There are some quirks. When the main menu is accessed, the appropriate number is typed; then the enter key must be pressed to effect the selection. On some of the submenus, simply typing on the key will initiate the required action. A consistent operating mode would have been preferable.

Hardware matching is also menudriven, and relatively straight forward - except for the printer. Unlike other software packages that the author has worked with, where one inserts the appropriate escape codes for controlling the printer, Total Trak requires different codes and unless they are known for the printer to be used, it is impossible to select the required features. The author uses a NEC Pinwriter P2200, a 24-pin dot matrix printer. So far it has not been possible to find the options for underlining or bold printing. Although minor points, they are nevertheless a little bit annoying.

A well-written and comprehensive tutorial package is provided, but such tutorials do not work with everyone. In the author's experience, the best way to acquire competence with a software system is to use it, make mistakes and then learn how to avoid making the same mistakes in the future.

Although Total Trak has the capability of sophisticated financial management, its benefits can only be realized if a lot of thought and effort are taken in setting it up. Attempts to bring it onstream slowly are not likely to give the desired results, because almost inevitably the data put into the program would not be in the optimum state to get the desired results. Several weeks of work are required to implement a Total Trak-based accounting system. Total Trak is designed for companies with up to 10 technical service employees; it may not be feasible for companies with three technical employees or less to make use of it. If a company grows in size and requires a more comprehensive package, Wind-2 has its full blown software available that will read Total Trak data to enable switching to the more comprehensive software with minimum delay.
COPYRIGHT 1991 Chemical Institute of Canada
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Chemputing
Author:Bobker, R.V.
Publication:Canadian Chemical News
Article Type:evaluation
Date:Jun 1, 1991
Previous Article:The professional scientist in Canada.
Next Article:Petromont.

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