Author: firmway

Audit Confirmation - Webinar

Story3

From Finance Chiefs to Digital Catalysts: A Look at the Evolving Role of CFOs

The past few years have witnessed a technological revolution, with advancements in artificial intelligence, block chain, robotics, and automation nudging businesses towards digital transformation. It was the Covid-19 pandemic, however, that truly served as a catalyst, propelling companies to embrace digital initiatives like never before. 85% of CFOs plan to increase their investment in the cloud according to Accenture, and Gartner reports that 78% will maintain or increase their digital investment through 2023.

Leading the Charge: CFOs at the Forefront of Digital Strategy

In this digital landscape, C-level executives play a crucial role in successfully planning and implementing transformation strategies. Among these, CFOs find themselves at the forefront of the journey. BDO’s report, ‘Do CFOs Play a Leading Role in Digitally Transforming their SMEs?’ reveals that 76% of CFOs are involved in setting the overall digital strategy for their organizations.

Beyond Finance: Architects of Transformation Across the Organization

The CFO’s role goes beyond simply implementing new technologies in the finance department. They are, in many ways, the architects of digital transformation across the entire organization. As the numbers speak for themselves:

  • Digital Ambassadors: Bridging the Gap between Finance and Other Departments: 68% of CFOs provide suggestions to implement digital ideas for faster services and growth in other departments. They act as digital ambassadors, bridging the gap between finance and the rest of the organization.
  • Driving Enterprise Value Creation: CFOs are propelling Enterprise value creation to the forefront of strategic CEO agendas. They understand the transformative power of technology and are driving its adoption for maximum impact.

Transforming the Finance Department: From Back Office to Data Powerhouse

This focus on value creation manifests in the finance department itself, which is undergoing a digital revolution. Large-scale companies are increasingly adopting automation tools for accounting and data management, streamlining processes and unlocking new insights.

Meeting Evolving Expectations: Delivering Real-Time Data for Informed Decisions

But technology isn’t just about streamlining the back office. As CEO and board member expectations shift, demanding real-time, electronically formatted data for review, CFOs need to ensure their organizations can deliver. This necessitates transforming accounting, cash flow, and auditing with data visualization, advanced analytics, and real-time reporting features.

Embracing Automation: Optimizing Operations for the Digital Age

Ultimately, gathering, organizing, and accounting for data remains a core task of managing finances. However, digital transformation opens doors to new opportunities and expands the scope of business operations. Companies can now operate across borders, catering to a larger market, resulting in a higher volume of transactions that traditional manual methods simply can’t handle. According to McKinsey Global Institute, a staggering 77% of general accounting practices have high automatability potential.

The CFO Advantage: A 7% Boost to Transformation Success

Undeniably, a company’s digital transformation success hinges on various factors like vision, organizational structure, and employee skillsets. But a CFO’s involvement in the process is a significant differentiator. Studies show that companies with CFOs actively involved in digital transformation experience a 7% higher chance of success. This is a testament to the transformative power of CFOs, who are evolving from finance leaders to catalysts for innovation and digitization in their organizations.

Conclusion: The Future Belongs to the Digitally Equipped

The future belongs to those who embrace technology and utilize it to unlock new possibilities. And in this digital age, CFOs are playing a critical role in equipping companies with the tools and strategies they need to thrive. By stepping beyond their traditional roles and becoming digital architects, CFOs are leading their organizations towards a brighter, more efficient future.

Audit Confirmation - Webinar

Story2

From Finance Chiefs to Digital Catalysts: A Look at the Evolving Role of CFOs

The past few years have witnessed a technological revolution, with advancements in artificial intelligence, block chain, robotics, and automation nudging businesses towards digital transformation. It was the Covid-19 pandemic, however, that truly served as a catalyst, propelling companies to embrace digital initiatives like never before. 85% of CFOs plan to increase their investment in the cloud according to Accenture, and Gartner reports that 78% will maintain or increase their digital investment through 2023.

Leading the Charge: CFOs at the Forefront of Digital Strategy

In this digital landscape, C-level executives play a crucial role in successfully planning and implementing transformation strategies. Among these, CFOs find themselves at the forefront of the journey. BDO’s report, ‘Do CFOs Play a Leading Role in Digitally Transforming their SMEs?’ reveals that 76% of CFOs are involved in setting the overall digital strategy for their organizations.

Beyond Finance: Architects of Transformation Across the Organization

The CFO’s role goes beyond simply implementing new technologies in the finance department. They are, in many ways, the architects of digital transformation across the entire organization. As the numbers speak for themselves:

  • Digital Ambassadors: Bridging the Gap between Finance and Other Departments: 68% of CFOs provide suggestions to implement digital ideas for faster services and growth in other departments. They act as digital ambassadors, bridging the gap between finance and the rest of the organization.
  • Driving Enterprise Value Creation: CFOs are propelling Enterprise value creation to the forefront of strategic CEO agendas. They understand the transformative power of technology and are driving its adoption for maximum impact.

Transforming the Finance Department: From Back Office to Data Powerhouse

This focus on value creation manifests in the finance department itself, which is undergoing a digital revolution. Large-scale companies are increasingly adopting automation tools for accounting and data management, streamlining processes and unlocking new insights.

Meeting Evolving Expectations: Delivering Real-Time Data for Informed Decisions

But technology isn’t just about streamlining the back office. As CEO and board member expectations shift, demanding real-time, electronically formatted data for review, CFOs need to ensure their organizations can deliver. This necessitates transforming accounting, cash flow, and auditing with data visualization, advanced analytics, and real-time reporting features.

Embracing Automation: Optimizing Operations for the Digital Age

Ultimately, gathering, organizing, and accounting for data remains a core task of managing finances. However, digital transformation opens doors to new opportunities and expands the scope of business operations. Companies can now operate across borders, catering to a larger market, resulting in a higher volume of transactions that traditional manual methods simply can’t handle. According to McKinsey Global Institute, a staggering 77% of general accounting practices have high automatability potential.

The CFO Advantage: A 7% Boost to Transformation Success

Undeniably, a company’s digital transformation success hinges on various factors like vision, organizational structure, and employee skillsets. But a CFO’s involvement in the process is a significant differentiator. Studies show that companies with CFOs actively involved in digital transformation experience a 7% higher chance of success. This is a testament to the transformative power of CFOs, who are evolving from finance leaders to catalysts for innovation and digitization in their organizations.

Conclusion: The Future Belongs to the Digitally Equipped

The future belongs to those who embrace technology and utilize it to unlock new possibilities. And in this digital age, CFOs are playing a critical role in equipping companies with the tools and strategies they need to thrive. By stepping beyond their traditional roles and becoming digital architects, CFOs are leading their organizations towards a brighter, more efficient future.

Audit Confirmation - Webinar

Story1

From Finance Chiefs to Digital Catalysts: A Look at the Evolving Role of CFOs

The past few years have witnessed a technological revolution, with advancements in artificial intelligence, block chain, robotics, and automation nudging businesses towards digital transformation. It was the Covid-19 pandemic, however, that truly served as a catalyst, propelling companies to embrace digital initiatives like never before. 85% of CFOs plan to increase their investment in the cloud according to Accenture, and Gartner reports that 78% will maintain or increase their digital investment through 2023.

Leading the Charge: CFOs at the Forefront of Digital Strategy

In this digital landscape, C-level executives play a crucial role in successfully planning and implementing transformation strategies. Among these, CFOs find themselves at the forefront of the journey. BDO’s report, ‘Do CFOs Play a Leading Role in Digitally Transforming their SMEs?’ reveals that 76% of CFOs are involved in setting the overall digital strategy for their organizations.

Beyond Finance: Architects of Transformation Across the Organization

The CFO’s role goes beyond simply implementing new technologies in the finance department. They are, in many ways, the architects of digital transformation across the entire organization. As the numbers speak for themselves:

  • Digital Ambassadors: Bridging the Gap between Finance and Other Departments: 68% of CFOs provide suggestions to implement digital ideas for faster services and growth in other departments. They act as digital ambassadors, bridging the gap between finance and the rest of the organization.
  • Driving Enterprise Value Creation: CFOs are propelling Enterprise value creation to the forefront of strategic CEO agendas. They understand the transformative power of technology and are driving its adoption for maximum impact.

Transforming the Finance Department: From Back Office to Data Powerhouse

This focus on value creation manifests in the finance department itself, which is undergoing a digital revolution. Large-scale companies are increasingly adopting automation tools for accounting and data management, streamlining processes and unlocking new insights.

Meeting Evolving Expectations: Delivering Real-Time Data for Informed Decisions

But technology isn’t just about streamlining the back office. As CEO and board member expectations shift, demanding real-time, electronically formatted data for review, CFOs need to ensure their organizations can deliver. This necessitates transforming accounting, cash flow, and auditing with data visualization, advanced analytics, and real-time reporting features.

Embracing Automation: Optimizing Operations for the Digital Age

Ultimately, gathering, organizing, and accounting for data remains a core task of managing finances. However, digital transformation opens doors to new opportunities and expands the scope of business operations. Companies can now operate across borders, catering to a larger market, resulting in a higher volume of transactions that traditional manual methods simply can’t handle. According to McKinsey Global Institute, a staggering 77% of general accounting practices have high automatability potential.

The CFO Advantage: A 7% Boost to Transformation Success

Undeniably, a company’s digital transformation success hinges on various factors like vision, organizational structure, and employee skillsets. But a CFO’s involvement in the process is a significant differentiator. Studies show that companies with CFOs actively involved in digital transformation experience a 7% higher chance of success. This is a testament to the transformative power of CFOs, who are evolving from finance leaders to catalysts for innovation and digitization in their organizations.

Conclusion: The Future Belongs to the Digitally Equipped

The future belongs to those who embrace technology and utilize it to unlock new possibilities. And in this digital age, CFOs are playing a critical role in equipping companies with the tools and strategies they need to thrive. By stepping beyond their traditional roles and becoming digital architects, CFOs are leading their organizations towards a brighter, more efficient future.

MSME Vendor Identification

Unlock MSME Vendor Potential: Triumph for Chemical Giant

Ensuring Timely Payments and MSME Vendor Identification

The government has established explicit provisions to protect and reduce the credit risk of MSME vendors, including the crucial aspect of MSME Vendor Identification. To ensure that payments to MSMEs are not delayed beyond a specified period, the government mandates that companies disclose details when payments remain outstanding for over 45 days to MSME vendors. This provision necessitates accurate MSME Vendor Identification by companies.

What is an MSME?

Micro, Small and Medium Enterprises, also known as MSMEs, are defined under the Micro, Small and Medium Enterprise Development Act, 2006. The organizations that fulfill the following criteria are classified as MSME organizations:

Type of EnterpriseInvestment in plant & machinery or equipment should not be more thanTurnover should not be more than
Micro EnterpriseRs. 1 croreRs. 5 crores
Small EnterpriseRs. 10 croresRs. 50 crores
Medium EnterpriseRs. 50 croresRs. 250 crores

Thus, vendors who fulfill the above criteria will be classified as MSME vendors and consequently, the companies are required to ensure that their payments are completed within 45 days beyond which penal interest will be levied for micro and small companies. This necessitates them to verify which of their vendors are MSME vendors.

This becomes a tedious task especially when the company is dealing with thousands of vendors. Further, the MSME status keeps on changing each year. It is not necessary that a vendor who is an MSME vendor today will be an MSME vendor next year as well. Companies faced huge difficulties in verifying the MSME status of their vendors each year and automating this task was the need of the hour.

How A Ltd Automated MSME Confirmations?

A Ltd. is one of the giants in the chemical industry. Being one of the largest chemical companies, it dealt with 3 lakh vendors out of which 30,000 were active vendors. Its total annual purchases were Rs. 18,626.25 crores out of which it identified that only Rs. 110 crores were outstanding to the MSME vendors in the year end. Consequently, the huge gap in the figures raised concerns over the accuracy of the database. Clearly, automation was the need of the hour for getting MSME confirmations from such a huge number of vendors.

Earlier at A Ltd., the process for obtaining MSME confirmations was not systemised. A Ltd. obtained MSME confirmations 3 years before and the same confirmations were used each year to determine whether a particular vendor is an MSME or not. This led to inaccuracies in MSME identification and there were no updates as to whether an enterprise is still an MSME enterprise or not.

An automated solution was the need of the hour. That’s when they implemented Firmway’s MSME confirmation solution. Being a statutory compliance, it was important to ensure the accuracy of data. Due to non-accurate and untimely compliance led to penal interest @ 3 times of the bank rate notified by the RBI compounded with monthly rests. Consequently, this led to huge outflows in terms of penal interest which was a direct loss for the business.

How Firmway Helped A Ltd. Automate MSME Confirmations?

Firmway’s MSME confirmation tool allowed A Ltd. to automate its MSME confirmations. Following were the results that they witnessed after implementing Firmway’s MSME confirmation solution:

  • 30,000 MSME confirmations sent in a single click
  • 35% of the confirmations received in the first confirmation request itself
  • Overall, 80% response rate achieved. Earlier, it was just 15%-20%.
  • Nil error in detecting the MSME vendors.
  • 90% OCR verification success rate
  • 15,000 man-hours saved

Streamlining MSME Vendor Identification and Compliance

Earlier, they used to invest 100+ man-hours behind this confirmation exercise which eventually dropped to Zero after implementing the solution. Further, vendor education played an important role here. Firmway helped vendors understand the importance of MSME confirmations and why they were asked for their MSME status. Consequently, this led to a significant increase in their response rate.

Efficiently Managing MSME Vendor Data

Further, the solution auto-rejected old vendors from the system who claimed themselves as MSMEs earlier but were not MSMEs now. In fact, it identified that 40% of vendors were no more MSMEs. Further, the company had 3,000 new MSME vendors in the database and Firmway’s solution was able to identify MSME vendors with a 0% error rate.

Successful Implementation of Technology for MSME Compliance

A Ltd. was able to avoid penal interest rates as well as future ROC and CARO non-compliances. Identifying MSME vendors is posing significant difficulties for many such companies. However, by implementing technology, it is possible to automate the confirmations and ensure timely and accurate compliance. 

Section 43B

Section 43B Boost: Empower MSE Payments Now!

Introduction to Section 43B Amendment

The recent Union Budget 2023 stirred discussions, especially regarding the unprecedented inclusion of payments to MSE vendors. This falls within the ambit of Section 43B of the Income Tax Act 1961. Section 43B contains provisions pertaining to “Income from Business and Profession.” It lists all the expenses a given business entity can seek as deductions from their business income only in the financial year when they make the actual payment, disregarding the year when the entity incurred such expenses. Thus, it advocates deduction of spending on an actual payment basis.

Section 43B: An Overview

 The inclusion of payments to MSE vendors in the above regulatory framework strives to address the key issues MSEs counter as a result of prolonged payments. MSEs make up a fundamental segment of the Indian business ecosystem. According to quantitative analysis estimates by the Economic Times, delayed payments to MSMEs in India have resulted in approximately Rs 10.7 lakh crore being held up, which represents around 6% of India’s Gross Value Added (GVA) for the financial year 2020-21. 

MSE Inclusion in Section 43B

The addition of the MSE payments clause (h) in Section 43B can prove as a cornerstone amendment to streamline the payment receipt process for MSE ventures. Business organizations dealing with MSE suppliers, need to duly comprehend the applicability of the amended Section 43B on your payments. You also need to pay attention to the requirements of Section 15 of the Micro, Small, and Medium Enterprises Development Act (MSMED), 2006. The latest Finance Bill 2023 permits the deduction of expense paid to MSEs in line with Section 43B only when it abides by the time limit specified in Section 15 of the MSMED Act 2006. Thus, one can claim deduction on payment to MSE vendors if they are paid within 15 days in cases where there is no agreement. Or 45 days or as per the time period in a pre-defined written agreement, whichever comes first.

Guide to Section 43B Amendment for Businesses

Practical Insights and Illustrations

We provide practical insights on the treatment of payments to MSE vendors in various scenarios, assuming a predefined written agreement. Let’s explore specific situations to determine eligibility for deductions on MSE vendor payments based on the new clause addition.

Illustration 1:

A made a payment to a MSE after the time limit set by section 15 of the MSMED Act, 2006, but within the same financial year in which the expense was incurred. 

In this situation, A settled the payment after the specified time limit of Section 15 of MSMED Act, 2006. This activates the revised provisions of Section 43B. However, as the payment was made within the same financial year that the expense was accrued, deduction shall be permitted in that financial year as outlined by the regulations of the Income Tax Act, 1961.

Illustration 2:

Within the specified time limit under Section 15 of the MSME Act, 2006, B completes payment to an MSE and accrues the expense in the same financial year.

The provisions of section 43B of the Act would not apply to the payment that B made to the MSE. In the financial year in which the expense accrued, he will be permitted to take a deduction.

Illustration 3:

C dealt with an MSE where he had expenses that accrued in March 2024. However, he paid the vendor during the subsequent financial year in April 2024, within the deadline specified under Section 15 of the MSMED Act, 2006.

In this situation, C made the payment as per the time limit specified under section 15 of the MSMED Act, 2006. In the financial year 2023-2024, C will be able to calculate the payment in its tax on an accrual basis.

Illustration 4: 

D incurred an expense in the financial year 2023-2024 that was payable to an MSE. However, he settled it in the subsequent financial year, 2024-25. After the expiration of the time limit specified in Section 15 of the MSMED Act, 2006.

In this situation, because D made the payment beyond the time limit specified in Section 15 of the MSMED Act, 2006, and in the subsequent year, 2024-25, D will not be eligible to claim a deduction for that payment in the financial year 2023-2024 when the expenses initially accrued.

Illustration 5:

On March 16, 2024, E received an invoice from the MSE (Micro and Small Enterprise) for the supply of goods. E dealt with the MSE. The delivery person delivered the goods on the same day. On March 18, 2024, E communicated concerns about the quality of the supplied goods to the MSE vendor. Both parties resolved the dispute on April 30, 2024, and E made the payment on May 31, 2024.

Regulatory Compliance

It’s important to note that the disputing party raised the invoice dispute within 15 days of the delivery date. Therefore, the time limit defined in section 15 of the MSMED Act 2006 starts from the resolution of the dispute. E can claim a deduction for the payment in the financial year 2023-24. If E makes the payment within 45 days from the resolution of the dispute when the expenses accrued.

In summary, to ensure timely deductions and optimize your tax liability. It’s crucial to adhere to the regulatory requirements outlined in both the Income Tax Act 1961. The MSMED Act 2006. Failure to confirm your vendor’s MSME registration status could result in disallowed payment deductions and late payment penalties.

Firmway’s MSME Status Confirmation Tool

Collaborate with Firmway to gain an avante-garde solution in the form of an MSME status confirmation software. By using Firmway’s MSME Status confirmation tool, you can seek MSME status from your vendors and verify the same through MSME government databases and OCR technology. It simplifies the process of getting your vendor’s MSME status validation by leaps and bounds. 

Reach out to know more about this software.

Firmway is a SaaS based startup that has successfully automated Balance Confirmation and Ledger Reconciliation, for well-known companies such as Sodexo, Asian Paints, IPCA, Bluestar, Gati Logistics, and 500 more.

MSMEs

Struggling MSMEs: Timely Payments That Drive Hope In 2023-24

Introduction

The Indian government’s unwavering commitment to promote Micro, Small, and Medium Enterprises (MSMEs) growth remains a cornerstone of economic development. This sector significantly contributes to employment, production, and exports, making it a focal point in the recent Budget 2023-24.

Budget 2023-24 Highlights

In her recent Budget 2023-24 speech, Finance Minister Nirmala Sitharaman introduced pivotal measures, consequently aiming at incentivizing timely payments to MSMEs. Now, let’s delve into the key proposals, thereby shaping the landscape for MSMEs in India.

Understanding the Proposed Clause

A critical aspect of the budget is the proposed insertion of clause (h) in  section 43B of the Income Tax Act. This clause dictates that any sum payable to a micro or small enterprise beyond the time limit specified in Section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006 is deductible only upon actual payment.

The MSMED Act 2006 defines the time limit for payments as 45 days from the date of acceptance or the date of deemed acceptance of any goods or services.

Empowering MSMEs

The new clause not only promotes timely payments but also bolsters the bargaining power of MSMEs in negotiations with larger businesses. This is a significant stride towards creating a more equitable business environment.

Challenges in Identifying MSMEs Vendors

Despite these positive developments, identifying MSME vendors poses challenges due to turnover limit fluctuations and UDYAM certificate migrations. The need for a reliable solution is evident.

Firmway’s MSME Confirmation Software

To address this issue, the introduction of Firmway’s MSME confirmation software comes as a great relief for enterprises. The software helps enterprises identify the MSME status of their vendors, collect UDYAM certificates, and validate them using OCR technology.

By using Firmway’s software, enterprises can ensure that they are not only making timely payments to MSMEs but also saving them from incorrect information pass by MSME vendors.

The software efficiently streamlines the process of identifying MSMEs, consequently eliminating the need for manual verification and significantly reducing the chances of making mistakes.

Conclusion

In conclusion, the Indian government’s initiative to promote timely payments to MSMEs. Firmway’s MSME confirmation software and, consequently, go hand in hand in promoting the growth and development of this vital sector. Additionally, the software provides a simple and efficient solution to the challenge of identifying MSME vendors. Consequently, it aids enterprises in taking advantage of the tax benefits offered by the government.

  • Data collection with customized forms and follow-ups
  • MSME confirmations to help you know whether an entity is an MSME or not

It is time for all our readers to accelerate processes in their respective companies through efficient automation. Click here if you wish to take help.

Business Automation

Business Automation: A key to Growth and Accuracy

Learn how Business Automation process can benefit you?

Business Process Automation (BPA) is the use of technology to automate business processes and reduce human intervention. It basically automates the workflows of the enterprise to make it faster and more efficient. Business Automation is the key digital transformation strategy for today’s businesses. A BPA solution can help businesses as:

  • It automates repeatable tasks so that employees can focus on more productive tasks.
  • It replaces manual tasks that are prone to human errors. Thus, it increases the accuracy of the tasks.

Types of Business Process Automation :-

It is upon the organization to decide the level of automation it wants to achieve. Following are the four different types of Business Process Automation that organizations can implement:

  • Basic Automation: This involves automating simple and fundamental tasks using basic automation tools. Additionally, it requires little to no coding, eliminating errors and accelerating the process. Examples of basic automation include file transfer and order entry.
  • Process Automation: Process automation involves automating business processes for bringing transparency and uniformity. This is handled by dedicated software that enhances productivity and efficiency while also providing valuable insights into the business. Automating the hiring process, employee onboarding, logistics and supply chain management etc. are examples of process automation.
  • Advanced Automation: Advanced automation supports more complex processes within the organization. It further coordinates between humans and machines to handle complex tasks. ­­­­­­It relies on machine learning, natural language processing and analysis, etc. for automating business processes. Safety monitoring, error detection and recovery, and repair diagnostics are some examples of advanced automation.
  • Intelligent Automation: Powered by Artificial Intelligence, business intelligence automation enables the machine to learn and stimulate human intelligence and make decisions accordingly. Intelligent automation has use cases in several industries. It can pull data from the database, update records etc. Further, it can be used by insurance companies to extract data from claims form and port information to the CRM.

Discover Business Process Automation (BPA): Learn how automating workflows boosts efficiency, reduces errors, and enhances profitability for modern businesses."

Benefits of Business Automation :-

Achieving automation with the best automation software for business can unlock the following benefits:

  • Lower Operating Costs: As business automation automates manual a
  • Advanced Automation
  • Intelligent Automation

 

  • nd redundant tasks, consequently, it directly reduces the operating costs of businesses.
  • Faster ROI: Automated business improves the speed of operations and processes. This provides a better and faster return on initial  investment in automation.
  • Being More Competitive: To remain competitive, businesses must enhance operational efficiency. In doing so, they should focus on core competencies and prioritize objectives. Automation is the key to achieving these goals.
  • Reduced errors and increase in speed: Business process automation reduces errors due to reduced manual intervention. This further helps in speeding up the reconciliation exercise.
  • Increased Profits: Profits tend to increase as the business moves from manual redundant tasks towards more productive tasks.

Business Automation with Firmway

Business automation software that allows you to automate accounting functions. This includes:

  • Automating sending manual emails and documenting the response for Balance Confirmation
  • Integrating with ERP for Ledger Reconciliation
  • Unique algorithm enabling businesses to achieve 95% GST reconciliation between the purchase register and GSTR-2B
  • Collection management by sending weekly outstanding and automating reminders
  • Data collection with customized forms and follow-ups
  • MSME Confirmation to help you know whether an entity is an MSME or not

It is time for all our readers to accelerate processes in their respective companies through efficient automation. Click here if you wish to take help.

Struck off Companies

How to Identify Struck-Off Companies and Avoid Risks

What is the Meaning of Struck Off Companies?

The term struck-off, on the other hand, implies that the Registrar of Companies (ROC) has removed the name of a company from the register of companies for certain reasons. For example, this could happen due to non-compliance with certain laws or regulations. Once the register removes the company’s name, the company’s legal existence is lost. As a result, it cannot continue its operations until it restores its name in the register.

The striking of a company’s name can happen either voluntarily; furthermore, it can occur due to a compulsory strike-off by the ROC.

Voluntary Striking Off:

To clarify, in this case, the company decides to shut down its operations and liquidate the company. Additionally, the company shall file an application with the ROC for dissolution and the consequent striking off of the name of the company.

Compulsory Striking Off:

For instance, if the company fails to comply with the requirements of the law or any rules or regulations made henceforth, the ROC may strike off the name of the company from the register considering the intensity of the contravention. In such cases, the company has no option but to comply with legal formalities to restore its name.

Disclosure Requirements for Struck-Off Companies

While we understood the struck-off meaning, it is equally important to understand the associated disclosure requirements. Furthermore, as per the requirements of the Ministry of Corporate Affairs (MCA), companies need to disclose their transactions with struck-off companies. This disclosure requirement is effective beginning from FY 2021-22. In detail, they shall disclose their relationships with the company as part of additional regulatory information.

The following are the disclosures required:

  1. Name of the company being struck off
  2. Nature of transactions. This can include:
  • Receivables
  • Investment in securities
  • Payables
  • Shares held by the struck-off company
  • Any outstanding balance

3. Balance outstanding

4. Relationship with the company

Steps to Identify Struck-Off Company on MCA

To identify struck-off companies from the register firstly, you can visit the Ministry of Corporate Affairs website. Follow the below steps to identify:

  1. Visit the MCA portal
  2. Navigate as follows: MCA Services >> Master Data >> View Company / LLP Master Data
  3. Add a company name or CIN number and enter the captcha
  4. Check the status of the company.

How Firmway Identifies Struck-Off Companies?

Finding the companies on the MCA website can be cumbersome and time-consuming, especially if you transact with multiple companies. The solution, therefore, is to identify such companies with Firmway!

Firmway allows for bulk searches using the list of struck-off companies; consequently this helps in determining if it hasn’t been struck off. Following are the steps to identify companies using Firmway:

  1. Download the template, Input & upload the party list with the Name or PAN
  2. Automate Matching the Name with the list shared by MCA
  3. Highlight the risk associated in the percentage
  4. Automate scrutinize the data highlighted with the MCA list for 100% verification

Firmway has a data repository storing 1-year data. Its software checks and share the probability % and helps you identify how many companies are there in the list of struck-off companies. Ease your search with Firmway and ensure accurate disclosures!

Automate TDS Reconciliation with Firmway: Benefits & Challenges

TDS Reconciliation Made Easy: The Benefits Of Automated Solutions

Why companies need to Automate TDS Reconciliation?

Customers deduct TDS on every sale of goods and services above a certain limit, requiring TDS reconciliation. Companies need to reconcile TDS periodically by extracting transaction data from Accounting Software as well as 26AS form from the government portal to ensure that the client has given proper credit and avoid penalties and audit risk. The TDS and TCS that are eligible for credit are reflected in the statement while reconciling with the ledgers.

The deductee pays the amount stated in the statement as advance tax, making it eligible for credit. Hence, matching the amount with the TDS/TCS in the receivable ledgers of the deductee is of utmost importance. If you are doing it manually, the process is very vast, but Firmway can help you automate TDS reconciliation in 60 seconds.

TDS Reconciliation

Unlocking Efficiency: The Role of Automated TDS Reconciliation

The majority of organizations today manually perform this crucial process. A survey revealed that Tax managers dedicate, on average, at least 8 hours a week to manual data tasks, with 25 percent reporting spending over 20 hours a week on such tasks.

In another survey of over 280 companies, respondents reported that they could eliminate a large part of inefficiencies by using automated tools, with 62 percent indicating this. Just like the other financial functions, TDS reconciliation is faced with a similar fate. Accurate reconciliation of TDS credit reduces the tax burden and ensures no loss of TDS credit. However, due to manual intervention, faces the following challenges:

Challenges spelled out 

  • The possibility of manual errors in inputting amounts while filing returns can result in a mismatch.
  • For a deductee with a large number of customers, matching amounts is a herculean task.
  • The frequent updates to 26 AS make it time-consuming to reconcile and track on Excel worksheets.
  • Adopting manual work involves different people and their different ways of working. This lacks standardization and discipline. Communication usually happens over email and is easy to falsify or spread misinformation.
  • Proactive tracking of discussions with the tax deductor or collector for corrections due to identified mismatches. Teams in finance need to manually communicate over endless emails and calls.
  • Version control of Excel sheets and other documentation can cause issues in many instances.
  • While working in a manual model, you might keep the reports in disparate places.
  • The booking of TDS in the books of the deductor and deductee can be for different periods. Time differences spill over from one quarter to another quarter in the form of 26AS, causing further discrepancies.

Automating this process will enhance accuracy for 26 AS and significantly reduce time spent processing low-value-adding activities. It also enables us to manage TDS and TCS credits as per Form 26AS and books of accounts and almost nullify leakages.

What are the benefits of automating the reconciliation process? 

Running a tax department equates to having a plethora of responsibilities, especially concerning compliance and regulations like TDS. However, using reconciliation automation tools helps expedite the reconciliation process and closure while also improving compliance, enhancing accuracy, and promoting transparency.

  • Firmway’s 26 AS Reconciliation Software is also one such piece of software that makes the reconciliation process seamless for the organization.
  • Maps the TAN number with the PAN number for reconciling
  • It can reconcile large volumes in 60 seconds.
  • With the flexibility, it offers in quarterly, half-yearly, and annual reconciliations, it highlights mismatches and classifies entries into different buckets for ease of operations.
  • Efficiently manages communication with parties and generates actionable reports as and when required

Automation of the reconciliation process is truly the need of the hour for any business. With manual processes, it’s difficult to scale in response to the reconciliation when there is an increase in transactions. However, automation of the process makes the entire process effortless.

Audit a dying profession

Is Audit a Dying Profession? Unlock the Future of Fintech

Is Audit a dying profession?

The audit industry is at a crossroads: as market expectations are shifting, technology is empowering auditors and improving quality, the case for audit’s evolution is growing, and more and more businesses are realizing the importance of the audit and assurance industry. In fact, many businesses that previously did not conduct audits now see the value in doing so.

People feel auditing is a dying industry, but it is not. As per research by Deloitte, the audit industry will grow rapidly in the coming 10 years. Times are challenging and auditing is evolving with the help of AI, which helps auditors to automate time-consuming manual activities and focus on higher-value activities. They are realizing the importance of returning to basic management principles in order to identify and correct problematic management practices; auditing plays an important role in this regard because only a genuine and effective audit can drive effective fraud detection and risk management procedures within a company.

AI helps auditors optimize their time by allowing them to perform better and smarter, allowing them to use their human judgment to assess a broader and deeper range of data and documents. The incorporation of modern technologies such as machine learning (ML), cloud computing, and artificial intelligence (AI) with audit software will drive market expansion. These products are used to improve organizations’ risk management skills.

As new standards enable Artificial Intelligence to create new chances for evidence generation, there is also an opportunity to rethink the skills that auditors can gain on the job. As data-driven methodologies grow more common in today’s audits, auditors may now claim to be learning key business skills as well as AI skills. The knowledge that auditors gain through these automation tools equips them to do their job better and deliver better quality reports and results to their clients.

Some people assume that when a part of a profession becomes automated, the human element of the same is devalued. I see the opposite happening with audit automation. As auditors are freed from the more tedious and manual aspects of auditing that are spreadsheet-driven and tick-and-tie tasks — there is more room for strategic insights and critical thinking. This only expands the significance of the work auditors carry out, the influence they have, and their relevance to the capital markets and the global economy.

 

About the Author:

Prashant Gupta is a Chartered Accountant by qualification but an Entrepreneur by passion. He comes with 5 years of experience as a Statutory Auditor before starting his own company Firmway Services, with a vision to Automate Audit Confirmation & Reconciliation for Auditors & Corporates.