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On top of on-line

Paul Wellings

YOU MAY not want to be an e-entrepreneur, but no accountancy practice can afford to ignore the potential of the Internet business.

THE DOTCOM world has suffered a few problems lately and you may not be quite so keen to chuck in the consultancy work to launch yourself as the latest e-entrepreneur, but the Internet still has some valuable uses for accountants in practice. Whether you wish to market your services to a wider audience, or develop an on-line service, working out your web strategy will pay dividends -- if you get it right.

The digital revolution has allowed companies to interact with customers in ways they could previously only dream of. Everyone wants a part of it, and the market is responding with dozens of new companies offering software tools for building websites, web shops and e-commerce solutions. But in the rush to join this `evolution' many companies have neglected to consider how they can integrate these new e-commerce technologies with their existing support and back-office functions.

The potential of e-commerce cannot be underestimated. A pan-European survey by KPMG Consulting predicted that the new medium would account for 16 per cent of consumer sales by 2000. Likewise, a recent survey by the Confederation of British Industry (CBI) revealed a 50 per cent growth in Internet-traded business over the past year, while 94 per cent of banking respondents thought that the Internet and e-trading constituted a fundamentally important change to their working environment. Furthermore, over t wo-thirds of those questioned believed that tomorrow's market leaders would be companies that had `mastered' e-business. Already, many new, dynamic businesses are emerging to take on the established names.

And, while many businesses are using the Internet to sell products, it is just as important for selling services -- even accountancy services. The trick is to establish what you want to achieve before you go outlooking for a web solution; otherwise you w ill be sold the latest all-singing all-dancing solution that could run a mini-empire, but does not help you to grow your business in the slightest.

Of course, for management accountants in practice, understanding the web does not just mean you will be able to establish a web presence and build your profile. It also means you will be able to assist your clients when and if they decide to go down the Internet route.

Put simply, a web solution consists of four components: The marketing website; the webshop (including both business-to-business and business-to-consumer functions); the transaction broker which establishes the information link between components; and the accounting system.

To trade successfully on the Internet, companies must ensure that their e-commerce site is successfully linked to their accounting system. Ordering on the Internet should be a seamless process. It cannot be dependent on a clerk downloading a file, manipu lating the information and then re-inputting the data manually into your accounts software. This creates delays and opportunities for human error. E-commerce that is not end-to-end could result in increased costs and administrative headaches, as well as unhappy customers waiting for overdue orders, instead of increased profits and efficiency.

As for why you should be talking web-solutions with your clients, consider a usual business transaction. After a few adverts, mail shots and sales visits from a local representative, your customer sends in an order for a product. The accounts department receives this order. The accounts clerk then checks the sales ledger to see whether or not the customer has an account.

If he does not have an account, the clerk has to create a new customer record, contact the customer for full details and begin a credit cheek. Luckily, this customer does have an account. The clerk checks his account status and credit limits before keyin g the order into sales order processing. Stock levels must then be checked to make sure that the requested goods are available. At last, the invoice is raised. Time required for back office processing: Up to 15 minutes.

An e-commerce transaction begins with an individual browsing a website. A descriptive home page, additional pages and gallery of products persuade the customer to place an order in the webshop. The customer benefits from a self-service system, allowing h im to inquire about the sales statement and credit status, and can even view the progress of any outstanding orders. It also allows him to receive special prices available on his account.

New buyers have the opportunity to place an order without an account, as the webshop will insist on a credit card payment. To complete the purchase transaction, the system automatically sends the customer an e-mail notification, confirming acceptance of the order, items are moved out of stock and an invoice is raised. Time required for processing: Seconds.

And, in addition to all these time-saving benefits, the e-commerce system can inform any number of internal (or external) staff that the transaction has occurred. This facility will help to ensure better account management and customer relations.

Of course, not everyone needs a fully fledged e-commerce strategy, but the likelihood is that most businesses could derive considerable benefit from establishing what aspects of the world wide web they can take advantage of. If you or your clients are in terested in attracting new clients, cutting down on administration, promoting new products or simply keeping up with the competition, there is likely to be an on-line solution.

(Source: Financial Management -- The magazine from CIMA, February 2001.)