GENERAL LEDGER UPDATE PROCEDURES
At the end of the day, the batch update program searches the open sales order file for records marked closed and updates the following general ledger accounts: Inventory-Control, Sales, AR-Control, and Cost of Goods Sold. The inventory subsidiary and AR subsidiary records were updated previously during the real-time procedures. Recall from Chapter 2 that batch updating of general ledger records is done to achieve operational efficiency in high-volume transaction processing systems. An alternative approach is to update the general ledger accounts in real time, if doing so poses no significant operational delays. Finally, the batch program prepares and mails customer bills and transfers the closed sales records to the closed sales order file (sales journal).
ADVANTAGES OF REAL-TIME PROCESSING
Re-engineering the sales order processes to include real-time technology can significantly reduce operating costs while increasing revenues. The following advantages make this approach an attractive option for many organizations:
1. Real-time processing greatly shortens the cash cycle of the firm. Lags inherent in batch systems can cause delays of several days between taking an order and billing the customer. A real-time system with remote terminals reduces or eliminates these lags. An order received in the morning may be shipped by early afternoon, thus permitting same-day billing of the customer.