Business point of view

Business systems was the ITC lecture given to us this week by Sandra, and I loved it! The reason I think I enjoyed it (other than the fact it was the last class on a Friday) was that we were covering a lot of accounting and business terminology. I have a background in Business Administration which covered accounting, so I knew a lot of what was going on which was a nice change of pace for me :-). It is important for us as IT professionals to interact with businesses in the future so an understanding of business terminology is crucial.

1. Explain the purpose of the following documents

Purchase Order: Is what the purchaser gives to the supplier to show goods ordering or services providing, price, dates, order number, delivery address etc.

Invoice: A list of ordered goods or services with a statement of how much money is owed.
Tax Invoice: Also a statement of how much money is owed for goods or services but shows whether it is GST inclusive or exclusive.

Statement: Monthly statements given to credit customers, summarising tax invoices, any credit notes, payments received and how much is owed.

Remittance Advice: Payments made to suppliers are accompanied by Remittance slips, helps the supplier identify and reconcile the payment.

Credit Note: Issued to either customer or business if goods have been returned or they were over-charged for their purchase.

Bank Deposit Slip: When a deposit is made at the bank, a bank deposit slip is completed. A copy is kept by the bank and the other given to the business.

Cheque Requisition Form: Gives the authorisation for writing a cheque, includes requisition number, payee’s details, amount, reason for payment, name of person, authorised signature and name.

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2. Using the documents above , explain the flow of documents in the following situations.

Our business buying goods on credit and then paying for them the next month

When our business is buying goods we receive a Purchase Order, which will go hand in hand with a Purchase Requisition Form basically it’s a form from the business approving this purchase. If a Credit Note is needed we will receive it. We will also receive a Tax Invoice because it is important the supplier provides us with an invoice outlining whether it is GST inclusive or exclusive. We will receive a Statement, it will outline how much we owe the supplier considering that we are paying next month. We will then begin the process of payment this is where the Cheque Requisition Form comes into play, to approve the payment via cheque we are going to make to the supplier, we will include Remittance Advice. Sending the supplier a Remittance Slip so they can identify and reconcile our payment. Bank Deposit Slip  could also possibly be a part of this process, if the business decided to deposit money into their own account to ensure they had enough for payment, or to deposit the payment into the suppliers account.

Our business is selling goods on credit and receiving payment for them the next month

Very similar to the previous process just from a different point of view. Our business sends the customer a Purchase Order entailing goods ordering, price, delivery address etc. If goods have been ordered wrong or if we have over-charged the customer we will issue them with a Credit Note. The business will then send out their Tax Invoice and then Statement, also considering they plan to pay next month. The next bit of the process would depend on whether it is a cash or credit sale. In this case it is a credit sale, so we would receive payment from the customer with either EFTPOS or credit card, they will also include a Remittance Slip. If it was a cash sale other documents like Bank Deposit Slip, would be used.

Links to Inland Revenue’s webpage
(I was unsure about which “Internet Tax Guide”, so I linked all I could find) 🙂

IR320 Smart Business

IR1010 Business Support in NZ

IR375 GST Guide

IR335 Business Guide

IR1022 Online Trading

4. List the information required on a tax invoice
http://www.ird.govt.nz/gst/work-out/work-out-records/records-tax/tax-info/

  • The words “Tax Invoice” in a prominent place
  • The name (or trade name) and GST number of the supplier
  • The name and address of the recipient of the supply
  • The date the invoice was issued
  • A description of the goods and/or services supplied
  • The quantity or volume of the goods and/or services supplied
  • It must be either GST inclusive or exclusive

5. Reflect on the importance of IT professionals understanding business terminology and document flow. 

We discussed this a bit in class, so we all have inputs into why it is important. I believe it is important because of how closely entwined the business and IT departments are in most organisations. The admin people need the computers, IT people fix and maintain those computers. Also, in some businesses the IT department install and maintain accounting software, knowing how the programme works is crucial so they need to know about accounting and the terminology. IT professionals also have to know how to communicate with customers, they will find that they will have their own customers, the way they act reflects directly on the business. When designing programmes, organising software for the business IT professionals need to know which ones will suit the business, which ones other departments will know how to use. So, to be a successful IT professional in a business environment we need to understand not only business terminology but also how the business works. Understanding things from a “business point of view”.           

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