Question

Assessment 3: MYOB Exercise

Core 7 Fitness Overview

Core 7 Fitness, a fast growing business in the past 9 years, provides elite personal training programs in 5 locations across Sydney. Recently, due to high demand in the services, Core 7 Fitness planned an expansion into other major capital cities throughout Australia.

Problems at Core 7 Fitness

Core 7 Fitness has been using a manual accounting system, where they keep track of the financial records, including fitness supplies, tax, payroll, accounts receivable and payable etc. with a written ledger of transactions. However, with the growth in sales, complexity of managing 5 businesses, and the inefficiency and errors involved in using a manual system the owners need a change.

You are required to consider a solution for Core 7 Fitness:

MYOB is a leading provider of business management solutions for small to medium size organisations in areas including accounting, payroll, job management and financial reporting. By reviewing the various case studies discussed on the MYOB website as a guide1 , you are required to write a report to the owners on the benefits of converting to the online accounting software tool MYOB.

This report should address the following information:

1. Outline the economic transactions that would take place at a small business.

2. Outline the benefits of using an online accounting software tool.

3. Outline the problems Core 7 Fitness face by using a manual accounting system.

4. With reference to three (3) specific economic transactions that would take place at Core 7 Fitness, detail how MYOB would be used and useful.

5. Outline any limitations or risks that Core 7 Fitness may face in the implementation of MYOB.

Answer 1

1. Economic Transaction that would take place at a small business

In a small business unit the number of transactions may be less but they have a variety of transactions to be adhered to in order to determing the operating efficiency of the business. Some of the most frequently used economic transactions that take place at small business unit are as follows:

• Transactions relating to fitness plan opted by the customer for training and health care customized meal to keep the body healthy, invoices relating to them can be made online and a continusous update needed every time to knwo the performance of business.
• Processing of payrolls for the training staff. Considerinv to the nature of industry where there is a high turnover ratio of employees, payroll process becomes quite complex.
• Book keeping of day to day transactions and journal entries are required to be done frequently on day to day basis.
• Making entries for day to day Bank transactions to get periodic cash flow statement to assess the liquidity position of business.
• The applicability of various indirect taxes on output goods and services tax, various compliance deadlines to meet the due dates for legal compliances
• Various MIS reports are to be prepared to know the performance and also for the purpose of Financial Reporting of transactions of the business.

2. Benefits of using an online accounting software tool

When the business is in the growth stage of the life cycle of the business, then making automation of theday to day routine activities help to increase the focus on expnding the business and getting innovative plans to increase the reach of customers.

Accounting of books is a very basic and routine activity which is to done at entity level for better reporting to government and other legal purposes also. This activity needs proper concentration and becomes full time activity of 3-4 people in the organization. Whereas with the help of online accounting tool, the hassles of mannual accounting can be removed and automation can bring more accuracy and focus in business.

Online accounting and making online invoices reduce the possibility of errors while making manual entries in books. Also automation can reduce the effort and bring accuracy in doing business with ease.

Hence it is suggested for businesses that are with an aim to grow the business should explore the benefit of automation and reduce the hassels of manual intervention.

3. Problems that Core 7 fitness face by using manual accounting system.

The problems that are faced by Core 7 fitness are as follows:

• Due to mannual accounting they have to make invoices for supply manually and then again do posting entries for the same seperately.
• The management of accounts receivables are difficult to follow as the exact stagus of each customer can seen only when the accounts are updated by the accountant. This means a delay in recovery process of the receivables
• The management of the assets owned by the business is difficult to track manually and everytime with a change in law and estimates there is difficulty in determining the depreciation to be provided in business.
• Processing of the payroll and keeping attendance records on hourly basis and making payments after considering all the social contribution and tax deductions payment is to be made to the employees. This becomes difficult with manual accounting.
• Determining of the profitability as and when required in the mid of closure does not show a true picturepf the business.

​4. How MYOB can be useful

• First, for the automation, it has to start with automizing the invoicing process. Here, MYOB’s invoicing tool canbe used which will help in customizing the invoices and reducing manual intervention.
• Second, The next most Important economic transaction is about the payroll processing can be made more simpler by the Account right software solution of MYOB
• Third, the third transaction that is more crucial to business is the tracking of the accounts receivables of the business. This can be made easy and managable by the MYOB essentials plan where the most nasic software solutions are available for a small business that is looking for exapnsion.

​5. Limitation or Risk in implementation of MYOB

As per the basic understanding the fitness service activity has many customised plans which differ from customer to customer based on the loyalty quotient of the customer. This should be taken care while customizing the online invoicing tool for the company. Also, as the company is looking on increasing the branches, then it has to chstomize the software such that it can get the profitability results at branch-level and if more specifically needed then with the help of assigning cost centres it could get the results at service level