Benefits of E-Commerce
Technology opened the door to many new and exciting innovations in the accounting and finance worlds. As brick-and-mortar businesses have experienced some decline, online retail businesses have increased exponentially. Many businesses engage in e-commerce, using the Internet to conduct business-related transactions to sell products and services to customers all over the world. The advent of the Internet of Things, which refers to computers and machines communicating directly with one another using the Internet, has made possible the transfer of financial and other data in real time, or as they occur.
By conducting business online, companies are able to sync financial transactions, such as their sales information, directly with their accounting software via the Internet. Also, these companies are better able to receive updated accounting information in real time. For example, if Company ABC's customers are purchasing products directly through its website, at any given time the company is able to determine information such as the number of products sold, the number of products in inventory, the amount of revenue generated from those products, and the overall profit. For financial reporting and management purposes, this allows an organization to have accurate financial information to make timely and informed decisions.Online Shopping Cart
Other Accounting-Related Uses of the Internet
Many companies have realized the value of using the Internet for e-commerce to conduct business. In addition there are other ways companies can take advantage of the Internet for accounting. For example, supply chain management (SCM) has been adapted as an Internet application that assists companies with planning supply needs and coordinating those needs with vendors or suppliers. The use of Internet applications for accounting drastically reduces the need for hours of counting supplies on hand. Similar to a perpetual inventory system, the idea of automating the supply check process saves companies time and money. An example of this process is used by a grocery store. As a cashier is ringing up milk and bread purchased by a customer, there is a real-time update to the number of cartons and loaves remaining in the store's inventory. Once this number gets below a certain threshold, a notification is sent to the supplier to deliver more milk and bread.
Other applications include customer relationship management (CRM), also adapted for the Internet, which is used to plan and coordinate sales and marketing strategies for an organization. Also, product life-cycle management (PLM) is an Internet application that is used to plan and coordinate the development of a product as well as the design process.
Many companies, large and small, use online accounting programs and systems that can track and generate real-time accounting data. Cloud software for accounting can connect to and access financial information off-site, such as bank accounts, and can automate, store, and backup accounting information. These Internet applications generate accounting-related data in real time. As many companies conduct business electronically, more applications are being developed. Newer applications have the functionality to sync with other applications, and accounting information is easily accessed from anywhere. This direction is giving way to more automation within the accounting practice as well as the creation of more efficient processes.