accounting and finance - topic 10

nature of EFTPOS

allows transactions to occur without actual cash being used, debit & credit sales can be used and allow for immediate transfer of money from customers account to retailers account at the point of sale

nature of bill payments

this system allows agencies for example, post offices to accept payments from customers on behalf of a third party, the money is then forwarded to the third party

nature of credit cards

using a credit card to buy goods and services later, the money is owed to the amount and if the amount purchased is paid within 30 days statement being issued, it is usually interest free

nature of online banking

businesses can conduct their banking transactions online including changing account details, making payments, setting up direct debits

nature of direct debts

this system allows users to instruct their bank to make payments on certain dates usually regularly. Often used for payments of regular bills eg. loan repayments and electricity bills

benefits of EFTPOS

can be used internationally, elimination of bad debts due to immediately declining if the customer doesn’t have sufficient funds and ability to make purchases without visiting a bank or ATM

risks of EFTPOS

loss of function during power outages, potential for overspending beyond financially safe limits leading to financial hardship and costs of the system and installation

benefits of bill payments

all information and pricing can be easily updated online, increased cashflow as customers can make payments outside normal business hours and no loss of stock from customer theft

risks of bill payments

increases expenses as agencies charge a commission to collect funds, possible loss of security of personal and financial details due to security breaches in business computer system and possible losses cause by fraudulent purchase

benefits of credit cards

no cash on premises so, theft risk lowered, capacity to borrow small amounts of money to make purchases without having to apply for a loan and a record of transactions made on the customers credit card statements

risks of credit cards

credit cards can be stolen, money borrowed has a high cost if amounts owing on the card are not paid by the due date and fees involved for processing

benefits of online banking

convenience, reduces processing, printing and mailing costs of bank statements because customers can print their own statements at home and less staff are needed in person reducing cost because online staff can be located anywhere

risks of online banking

subject to fraud, lack of personal interaction to ask for help and potential interference from hackers due to using the internet

benefits of direct debts

all transactions are documented and can be verified, reduces time needed to make bank deposits and reduces risk of internal fraud

risks of direct debts

inadequate funds in their account meaning the bank will not make the payments on time and a stop payment order has to be made to ensure the bank doesn’t continue

assets in balance sheet

classified as either current or non-current. current are those which are expected to be converted into cash within 12 months and non-current are those which are expected to be retained by the business for a period longer than 12 months

liabilities in balance sheet

classified as either current or non-current. current are those which are to be repaid within 12 months and non-current are those which will be repaid in a period long than 12 months