With yet another change in VAT Rate looming at the end of the year, the importance of using a flexible accounting/ERP system that allows for the creation of new VAT codes, rates, etc. is brought to the fore.
Many 'older' systems provide little support in making such changes and allowing 'old rate' invoices and be processed at the same time as 'new rate' invoices. With the consequence that considerable effort is required around the time of actual rate change. Invoices being either to customers or from suppliers.
At least this time around many firms will have faced the problem in recent times and should be able to cope without major costs/holdups.
Inflexible systems are those that have codes and rates 'hard coded' into the program so that version upgrades are needed to meet new requirements. Where as flexible systems allow users to create and maintain entries to control it. This not only concerns tax rates, it covers all aspects of program control.
Of course with more sophisticated systems, the day to day requirements placed upon users is increased, as they need to understand more about the system and the interaction between various settings. However, this drawback is more than compensated for by the ease of changing the system when required.
My recommendation is to always look for and install the most flexible system you can find. That way you can be independent of the software supplier and still be comfortable in being able to meet the requirements of changing legislation and the overall business environment.
Discusses views from the UK both cultural and political. With a distinct interest in software.
