REA Technology

Design Principles

How to build and understand an REA software application.

English Edition by Springer		Japanese Edition by Nikkei BP

Features of REA Business Applications

What is difficult in traditional business solutions is much easier in REA.

Management of Business Ecosystems

Compared to traditional business solutions limited to a single company, REA applications provide business management of groups and supply chains, both tightly and loosely-organized, including emergent groups where individuals or companies join and leave the group on ad-hoc basis. Although business ecosystems are a frequent business forms, accounting for emergent groups is very complicated using traditional business solutions.

Highly and Easily Customizable

Complete REA business applications can be customized to your specific needs and even developed from scratch in minutes, rather than days, weeks and months. Model-driven software architecture and generic business knowledge encoded in the application dramatically increases the efficiency and productivity of application development, and increases application responsiveness to your changing needs.

Accounting that Non-Accountants Understand

REA applications express financial and other business processes in the user’s own language, instead of the language of credits, debits, assets, liabilities and owner’s equity. For example, registration of using equipment is called using equipment, instead of forcing you to understand that debit depreciation expense account and credit accumulated depreciation means the same thing. You only need to deal with well-known concepts from your own business, such as sales orders, invoices and payments. You can define these concepts yourself, and they can vary from business to business, due to the high customizability of REA applications.

Business Consequences of Your Actions

Compared to traditional accounting solutions that focus on the results of the past, an REA application provides you with precise, clear, and complete prediction and explanation of the future economic consequences of your management decisions. The accounting reports use your own language, naturally. You can even simulate various scenarios to decide upon the right actions at the right time.

Integrated Production and Financial Processes

The REA model makes no difference between monetary and non-monetary resources. Therefore, REA applications can plan, monitor and control trade processes where money is not involved, and also provide uniform reports that include both production and trade processes for companies that outsource activities on ad-hoc basis.