Chapter 1

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Chapter 1

THE PROBLEM

Background of the study

The evolution of technology has changed the world of business wherein if

an organization wants to thrive it should adapt to fast changes especially when

talking about the competitive nature of business.

However, while some businesses managed to catch up with the trend with

regards to technology advances, others were left behind. (Bendoza, et. al.,2013)

Some small -sized, medium-sized and emerging enterprises (SMEs), still

maintain manual system in controlling and maintaining business transactions.

Most businesses envision to grow bigger and to achieve that, it must keep up

with the fast change of business and technology environment. One of these

changes is computerized-system that most successful organizations rely on

today. (Valaich, et. Al, 2012)

Using manual system could result to human error, delayed of reports are

likely to happen and its undeniably time consuming compared to computerized

systems. Installing a computerized-system to businesses reduces the labor time in

preparing financial transactions and decreases the risk of inaccuracies.

Moreover, billing and collection is one of the liquid assets of a company. It

represents the claim of the company in exchange for the goods and/or services

it offered. Its management is of essence as it is also a source of funds for the firm.

(Baui, et. al.,2016)


Carmak Motors Corporation is a retail store network of motorcycles, motor

scooter and auto-parts which operates mainly in Luzon. Carmak Motors

Corporation sells these products in cash and installment mode of payment. One

of the primary needs of this generation is transportation and due to the

advancement, they demand a high quality and the up-to-date version of which

they will use to travel safely and fast from one place to another and others use it

also for social status. With these reasons, the demand for these products is high;

cash and credit sales are also rapidly increasing. Therefore, recording a large

volume of transaction is very time-consuming and the risk to make an error is high

if a business will continue to use manual system.

Billing and collection system is applicable to businesses that are rendering

services and selling products like Carmak. It is mostly concerned in keeping and

updating records of all the transaction in the business. One purpose of billing and

collection is to record the payment and collections from customers. It includes

activities necessary to manage its collections, discounts and uncollectible

accounts. Billing and collection system is beneficial for Carmak Motorcycles

because it helps them make reports easier and faster; and update their

collections with minimized errors.

Statement of the Problem

This study primarily aims to design a computerized billing and collection

system which can help Carmak Motors in minimize, if not to eliminate, the

inefficiency and ineffectiveness of their existing billing and collection system.

Specifically, the study seeks to answer the following questions:


1. What are the processes involved in the existing billing and collection

system of Carmak Motors?

2. What are the problems encountered by Carmak Motors in their existing

billing and collection system?

3. What is the best possible design of a computerized Billing and Collection

System for Carmak Motors in order to solve the existing problem encountered by

the entity?

4. What will be the benefits of the proposed billing and collection system?

Objectives of the Study

This studys main goal is to create a design and introduce a computerized

billing and collection system that will enable the company to achieve a higher

level of operational efficiency.

Given the general objective, the researchers will address these specific

objectives:

1. To enumerate the processes involved in the existing Billing and Collection

system of Carmak Motors.

2. To list down the problems being encountered by Carmak Motors in their

existing Billing and Collection system.

3. To create the best possible design of a computerized Billing and Collection

system for Carmak Motors in order to solve the existing problems encountered by

the entity.
4. To list down the benefits of integrating the proposed system.

Scope and Delimitation

This study is restrained specifically on transactions related to Billing and

Collection System of Carmak Motors, a retail industry, located at 109 Bonifacio

Street, Baguio City. The main focus of the study is on the billing and collection

and no other systems such as payroll system, bookkeeping system, inventory

system, and etc. It will not also include the preparation of financial reports of the

company such as statement of financial position, statement of financial

performance and statement in changes in owners equity. It only aims to design

and formulate solutions to the existing problems through computerized system

that will lead to a more effective and efficient billing and collection of Carmak

Motors.

The billing and collection system covers all procedures involving the

customers accounts, from the recognition of revenue through the computation

of periodic payments and surcharges, collection and automatic update of

customers accounts and report generation. The process also includes the credit

investigation of customers applying for credit sales. However, the credit

investigation, filling up of application forms, repossession currently done manually

will remain to be done manually even with the aid of the computerized

proposed system.
SIGNIFICANCE OF THE STUDY

Technology is created to help us manage and solve problems easier and

faster. The researchers need to study the problems that the company is going

through to come up with a suitable solution. Hence, the researcher need to

come up with thorough stipulations of what the system will accomplish based on

the data that they gathered.

The researchers findings could also contribute to facilitates their day to

day operations and improve the service being offered by the company. As a

result, it could benefit the company, cashier, bookkeeper, clients and the

researchers.

To the Management:

This system when adopted and implemented, can provide a more

efficient way of accounting and recording billing and collection of Carmak

Motors. This study helps the management explore and appreciate the

importance of computerization in the industry as the business continually

expands.

To the Researchers

The study serves as a learning experience allowing the researchers to

better understand the importance of an efficient computerized-system. The


engagement in this study has an important effect in educating the researchers. It

also is a venue for applying and developing the researchers accounting

knowledge and skills that could be useful in their future careers.

To the Readers:

The study serves as a source of information to readers who are interested

in Billing and Collection System. It will also help them understand situations of

business establishments in the real business world.

To the Customers:

This study will improve and ensure the accuracy of payments they have

on their accounts. This would also lead to greater customer satisfaction.

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