Many Small Micro-Medium Enterprises (SMMEs) fail within their first year of operation in South Africa mainly because of the lack of proper financial management skills. To address this, a number of software applications have been developed. However, they fail to cater for the needs of SMME owners. In this Chapter, we intend to design and implement a software application to address some of these financial management challenges faced by SMMEs. To achieve this, a through literature review was conducted. Then we designed and implemented a new system with additional features missing from the existing applications. The main objectives of this new system, is to help SMME owners manage their finances from anywhere, have access to real time data and be easy to use. To implement the system, PHP and MySQL database was used. Usability testing was done to evaluate the effectiveness of the system. The system performed 20% better in keeping records as compared to the manual accounting system.
TopIntroduction
In the last five years, about 440000 SMME businesses closed down in South Africa (ADcorp (2012) In: Fatoki (2014:922)). Some of the contributing factors to the failures of most of the SMMEs were poor business and financial management competencies (Naqvi, 2011:98). To address the problem of lack of proper business record keeping, much software has been availed over the years to help business owners with their financial management but very few cater for the needs of the SMME owners.
The problem with many of the accounting systems out there could be viewed as complexity, whereby the accounting systems are not different to the manual accounting practiced by any accountant who still writes on a piece of paper. This has led to most of these softwares to be only usable to people who have a strong accounting background which most business owners do not have or require the users to have some form of training before using them.
This Chapter seeks to develop an accounting system that will help SMME business owners with their financial management challenges regardless of their accounting background, by making it possible for them to have access to real time data, reduce the time needed to enter data, make it easy to use and make it accessible anywhere. This Chapter also seeks to make the following contributions in the academic field:
- 1.
The development of a prototype as a proof of concept that shows the theoretical validity of the online accounting system to solve the financial management challenges faced by SMME owners.
- 2.
The formalization automation, transaction-based, process-driven accounting, which contributes to system optimality and usability.
- 3.
The discovery of additional application specific features that could greatly help SMME owners with their accounting.
This Chapter is organized as follows. In Section 2, we provide background information of Accounting Information Systems (AIS). In Section 3, we present related work. In Section 4, we present the system design and architecture. In Section 5, we present implementation. In Section 6, we present system testing and results. We conclude the Chapter in Section 7.
Accounting Information System (AIS) is a tool that was built to help in management and control of economic-financial activities (Grande et al., 2011:26). It can further be explained as a vehicle or enabler that makes the work of the financial custodian easier by having standardized formats of recording transactions which could further be processes to reports that could be interpreted by anyone with the knowledge of accounting.
Financial management systems between the periods of 1990 to 2000 were not very efficient. This is because they were very complicated and not user friendly, running such systems was expensive because they required a connection from client to accountant and timing had to be very critical if they wanted to get information in due time. Such systems did not work on live data because the user had to update the information stored there with current information before starting the work (Philips, 2012:6).
There have been many changes done to accounting systems over the years, these started from the basic Microsoft Excel spreadsheet to the development of more specialized software designed to do accounting in a more professional manner. The different types of accounting systems are explained in the following sub-sections.