544 Making Key Strategic Decisions
Accounts receivable systems serve two purposes. On one hand, they allow
the company to control an important asset, their accounts receivable. Also, the
availability of credit enables customers to buy items, both commercial and re-
tail, that they other wise would not be able to buy if they had to pay in cash.
Credit card companies, which make their money from the transaction fees and
the interest charges, understand this function well. Frequently, they reevaluate
the spending and credit patterns of their client base and award increased credit
limits to their customers. Their goal is to encourage their customers to buy
more, without necessarily paying off their balance any sooner than necessary.
Information systems make it possible for the companies to both control and
promote their products, which in this case are credit card transactions.
These examples of horizontally integrated systems, as well as the under-
standing of the strategic and competitive uses of information technology,
demonstrate where industry is headed.
ACCOUNTING INFORMATION SYSTEMS
As mentioned earlier, computer-based accounting systems were, for most com-
panies, the first computerized applications. As the years progressed, these sys-
tems have become integrated and consist of the following modules:
- Accounts Payable.
- Order Entry and Invoicing.
- Accounts Receivable.
- Purchase Order Management and Replenishment.
- Inventor y Control.
- Human Resource Management.
•Payroll. - Fixed Assets.
- General Ledger and Financial Statements.
Whereas in past years some of these modules were acquired and others were
self-developed, today most companies purchase packaged software.
In the 1980s, “shrink-wrapped” software was developed and introduced.
Lotus Corporation, along with other companies, was a pioneer, selling software
like its 1-2-3 application in shrink-wrapped packages. The software was accom-
panied by sufficient documentation and available telephone support to ensure
that even companies with limited technical expertise could manage their own
destinies.
There are a host of software packages that will satisfy the needs of com-
panies of all sizes. Smaller companies can find software selections that run on
personal computers and networks, are integrated, and satisfy most of the com-
panies’ requirements. Quicken and Computer Associates have offerings that