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Narrative of Existing System

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    The existing A/R system of Bangalow PTY. LTD. CO. is still considered manually done despite the fact that they use computers. It has two sub-companies namely: Marand Properties (rent to own townhouses) and Marand Nest Dormitory (student accommodation for males and females). Before any engagement, the administration clerk accepts inquiries from prospective tenants about the units available. Once a prospective tenant agrees to engage, he is required to pay a reservation fee to the accounts clerk, which is immediately recorded manually using Microsoft office excel. Upon entry, the tenant will fill up a contract that contains the following: general information about the tenant; definitions that specify commencement date, expiry date and unit details; license for use; rental bond; lessee’s obligations; lessee’s terms of payment, costs and occupation rights; default and termination terms; general rules; and the landlord’s obligations. The tenant’s information based from the contract is then entered in the tenant’s list file.

    Tenants are charged based on the unit types with different rates. The company is collecting payments every start of the month. As initial payment they accept one month advance and one month deposit as to rent and a bond is collected as a security deposit. MN:The chosen room will then be marked occupied by the admin clerk and entered in an excel file where payments are simply entered opposite tenants’ names. A separate excel file is kept by the accounts clerk where tenants are separated according to whether they are “active”, the “moved out” or “did not continue tenancy”. For reporting purposes, on the other hand, the accountant also keeps different excel file with the complete list of tenants and their payments with supporting computations considering the differences in rates and terms.

    Accounts receivables are only reflected whenever a tenant defaults payment upon due date- thus updating the accounts receivable accounts of the late payers only. Since the records are updated whenever tenants settle their accounts and every payment is recorded in various excel files, cash flows aren’t closely monitored. MP:A fixed list price of 1,796,000 is pro-rated based on the tenant’s income and term of payment to arrive at a monthly rent. Expenses added are insurance, association dues, electricity and water. Tenant’s data are kept in a single excel file separating them in different
    sheets- that are labeled by unit number. Every sheet contains payments and dues by a single tenant which is updated monthly, thus having a running total. Accounts receivables are hardly reflected since tenants are charged based on different monthly rates.

    Accounts receivable balances are finalized prior reporting date by totaling and reconciling the accountant’s copy with the actual report from the accounts clerk. The accountant makes necessary adjustments for certain discrepancies.

    PROBLEM AREAS:

    As to method:
    MN:Referring to numerous/ disorganized excel files makes updating records time consuming and complicated, thus exposing it to inaccuracy. MP:Manually updating tenants’ accounts involving large amounts is prone to error- risky.

    Not separating tenants according to the specified rates applied to them adds confusion as to determining significant amounts which becomes the constraint during transactions.
    Since transactions are manually entered, unauthorized access to data may result in improper changes to data.

    As to manpower:
    The accounts clerk is assigned with flexible tasks, that maintaining an organized record of tenant transactions is hardly practiced.
    Reporting takes a while because of matching and reconciling transactions for further adjustments.
    Some transactions are not reflected because the accounts clerk failed to update which is at risk of losing data.

    As to materials:
    The company uses excessive excel files that cause the computers to overload.

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    Narrative of Existing System. (2016, Nov 18). Retrieved from https://graduateway.com/narrative-of-existing-system/

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