Calculations and Modeling in Budgeting Software
Nearly every company that acquires a budgeting software product is doing so because of the limitations of spreadsheets. Most of these limitations are associated with data management, reporting, or workflow. However, there are also major differences between the ways calculations are performed in spreadsheets and in budgeting applications. This chapter discusses how calculations are performed in general ledger systems, spreadsheets, and best-of-breed budgeting products, and explains the benefits of the latter.
WHY COMPANIES USE BUDGETING SOFTWARE
The first uses of computers by accounting and finance departments were associated with automating manual accounting systems. Accounting systems were developed to handle large volumes of transactions, such as accounts payable invoices and sales orders. Later, other applications, such as material requirements planning and human resources were added to automate the other high-volume applications needed by any modern business. Eventually, the whole bundle of applications was renamed the enterprise resource planning (ERP) system.
The general ledger has always been different from the other modules in either an accounting system or an ERP system. Although it was needed to tie together all the other components, it was not just a mechanism for storing and processing large volumes of transactions. The general ledger had to do other ...