Business System - Commerce PDF Download

Meaning of Business System:

The system helps the business organisations to achieve their goals.

A business system is a combination of policies, personnel, equipment and computer facilities to co-ordinate the activities of a business organisation.

It establishes the rules and procedures of that organisation, which are to be governed.

Business system decides how data must be handled and is methodically processed. It also controls the procedures of the processed data and the results to be displayed. For e.g. a system may automatically order parts for an inventory, monitor future corporate profits or post credit card sales to the on line customer accounts. The overall nature of the business system will reflect the efficiency of its designers.

Objectives of Business System:

The objectives of business system are:

1. To meet the user and customer needs.

2. To cut down the operating costs and increase savings.

3. To smooth the flow data through various levels of the organisation.

4. To speed up the execution of results with the reliable data available in a system.

5. To handle data efficiently and provide timely information to the management.

6. To establish the most desirable distribution of data, services and equipment’s throughout the organisation.

7. To define a proper method of handling business activities.

8. To eliminate duplicated, conflicting and unnecessary services.

Types of Business Systems:

There are five major types of business systems (Fig. 13.6).

1. Payroll business system

2. Personnel business system

3. Accounts receivable system

4. Accounts payable system

5. Inventory system.

1. Payroll Business System:

A payroll system consists of all forms, procedures, files, equipment’s, personnel, and computer support necessary to completely process the payment of employees. A payroll system fully handles all tax deductions, personal deductions, and the update of payroll data related to each employee.

It provides for the actual payment of employees, a record of that payment, the modification of all payroll records, and the preparation of payroll reports. The payroll system must also generate all tax documents to include pay-cheques, W-2 statements, 941 quarterly reports, and a wide range of state and municipal employment tax filings.

Another payroll responsibility is the accurate reporting of all personal deductions to include bonds, medical and life insurance, profit sharing plans, stock options, credit union deductions, and the garnishing of an employee’s salary by a creditor.

These accumulated totals must be reported accurately to both the recipient of these movies and the individuals from whose salaries these amounts were deducted. The computer’s support makes it possible to accurately and promptly process a payroll, providing the input data are properly handled on a timely basis.

2. Personnel Business System:

Personnel system describes varied aspects of an organisation’s work force. The outputs generated by personnel systems are frequently used in compiling central & state labor power reports. Retail organisations are major users of accounts receivable systems, since these systems detail monies that are owed to an organisation.

Conversely, accounts payable systems focus on the monies that are owed to an organisation. These two systems parallel to each other, requiring the continued maintenance of files, their update reporting on movies due and owed, providing customer statements and invoices, and recording payments made.

3. Accounts Receivable System:

An account receivable systems are monitors the flow of money. An accounts receivable system monitors the people who owe money to a business. It provides the means to process all data for credit cards and other kinds of charge accounts.

The files contain the individual customer data, including names, addresses, financial charges like, payments received and current charges. The information is issued as monthly statements of each customer and also provides useful information for management’s use.

4. Accounts Payable System:

Accounts payable system monitors the organisation to which money is owed. The file structures and input/output (I/O) formats are similar as the accounts receivable system. It contains the accounts of vendors to whom money is owed. Input will have goods and services received by the company while outputs include issue of payments and management reports.

5. Inventory System:

Inventory system monitors the status of items held in an inventory. These systems report on the quantities of goods on hand, as well as when items should be purchased to replenish stock and what critical items are needed. Inventory systems are crucial to organisations that maintain large and costly inventories.