Masonry Magazine August 1992 Page. 10
get a reduction in workers comp premiums, survey respondents agreed.
Bill Customers Sooner-According to the study, companies can issue bills an average of 3.3 days faster using computerized accounting systems, which in turn generates bill payments faster as well. Assuming money not collected is borrowed at 12 percent (.033%/day), earlier collection can save thousands of dollars per year in borrowing costs.
Speed Up Accounts Receivable
The survey revealed that companies can realize an average three day reduction in the number of days outstanding for accounts receivable balances in relation to annual sales volume with computerized accounting. Assuming that money not collected is borrowed at an annual rate of 12 percent, staying on top of accounts receivable can significantly improve cash flow. Specifically, computerized accounts receivable produces aged receivable balances, listed by customer. Amounts owed are detailed by invoice, job and date. Early warning signs are easy to see, and companies can take quick action on delinquent accounts. Additionally, late charges can be assessed, and even compounded, to encourage quick payment.
Eliminate Service Bureau Costs-According to survey respondents, internal computerization eliminates the need for external service bureaus to handle payroll processing and other accounting functions. Handling these functions internally eliminated average monthly service bureau costs of $560 for the companies surveyed who used service bureaus.
Increase Accuracy-The increased accuracy of computerized accounting systems results in a .8 percent increase in net margins, the survey revealed. Inaccuracies such as underbilling, or accounting errors that increase audit time and costs can have a significant negative impact on a company's performance and profits. Since sophisticated computerized accounting systems are fully integrated, the number of times an item is entered into the system is reduced, which in turn reduces the opportunities for mistakes. In addition, controls are built right into such systems to make sure that entries, such as journal entries, balance.
Improve Clerical Productivity-With fully integrated computerized systems, new information needs only be keyed in once, freeing clerical staff an average of thirteen hours per week to carry out more productive tasks, the survey found. Peak times can be handled without chaos, and the resulting morale improvement leads to fewer mistakes, better quality work and reduced employee turnover. In addition, as the company grows, there may be no need to add people to handle the increased workload.
Manage Cash Flow-Since computerized systems provide up-to-date reports on outstanding accounts payable and receivable, companies can closely manage incoming and outgoing cash. Cash needs can therefore be more accurately controlled and predicted. Decisions on whether or not to accept a job can be based on projected profits and the company's cash flow position.
Increase Availability of Credit-Financial institutions have more confidence in the validity of computerized financial statements than they do in manually produced ones, survey respondents believed. This can translate into an increased line of Continued on Page 52
10 MASONRY-JULY AUGUST, 1992