Author: Prashant Gupta

Stages of AI: Enhancing Accounts with Smart Technology

Stages of AI: Breakthrough Impact in Account & Finance Tech

Navigating Different Stages of AI in Accounts and Finance Tech

Artificial intelligence is slowly becoming indispensable in every part of the business. Accounting and finance are no exception, with AI revolutionizing basic processes. Typically, there are seven stages of AI that can seamlessly enhance the finance industry. However, navigating the complex AI jargon can be confusing. Let’s dive into the seven stages with their practical application in accounting.

Rule-Based AI: Automating Repetitive And Mundane Tasks

Rule-based AI or Repetitive Machines is the most fundamental stage of AI. Its objective is to automate and simplify repetitive and mundane business tasks with the help of pre-defined rules. For instance, an AI-enabled software or virtual assistant can handle data entry, process invoices, detect discrepancies, handle account reconciliations, and generate financial reports. Hence, this stage can automate basic accounting tasks without any hassles.

Reinforcement Learning: Taking Experiential Learning To The Next Level

This stage explores one step ahead of automation. The primary objective of reinforcement learning is to imbibe the ability to learn from previous or past experiences. For instance, an AI system forecasts business growth or challenges based on historical financial data. Additionally, this stage also learns to adapt itself as the data evolves. Imagine fraud detection models adapting to every suspicious activity over time.

Machine Perception: Interpreting The World Through Data

The third stages of AI is to understand the world with the help of data from multiple sources. It tries to attain human-like intelligence and go beyond analysis and automation. Some examples are language processing and image recognition. Imagine software that helps detect critical information from contracts without any manual intervention.

Artificial General Intelligence: Solving Complex Real-Life Problems

In this stage, AI possesses superior human-like intelligence capable of solving complex real-world problems. Also known as Strong AI, General AI may seem highly futuristic. However, it is inching toward reality with higher creativity, adaptability, and problem-solving skills. Imagine a platform catering personalized financial advice in a matter of a few clicks or handling investment portfolios with accuracy.

Stages of AI Reshaping Finance with Advanced IntelligenceConscious AI: Imaginative Future Where Machines Have Consciousness

The stage five of AI is straight out of science fiction. It envisions machines with self-awareness or consciousness of their own. Conscious AI’s potential is vast and highly debated with its practical application. It can revolutionize the financial industry with its thought process. Such AI can regulate, analyze, and monitor financial markets without breakdowns.

Superintelligence: Machines Surpassing Human Capabilities

This stage is purely hypothetical at this point. However, superintelligence can soon become a grave reality. In this, machines surpass human capabilities in all aspects. Hence, its potential can be far-reaching and beyond human imagination. For instance, in the future, AI can predict economic slowdowns and recessions and construct a financial infrastructure superior to human understanding.

Augmented Intelligence: Human-AI Collaboration For A Better Future

It is the most optimistic vision of AI and human collaboration. Rather than focusing on AI as a threat and competition, it envisions it as a supportive partner for a mutually beneficial future. Hence, machine-human symbiosis can lead to profitable financial decisions by leveraging each other’s strengths. We can make informed decisions, considering technical and emotional aspects for optimal outcomes.

Navigating the Future With AI: Make Reconciliation And Confirmation Easier With Firmway

AI is an undeniable reality that will become indispensable to every business proces s. Even now, AI is simplifying various accounting and financial tasks. Firmway also leverages AI for efficient reconciliation and balance confirmations. Experience Firmway’s touchless platform and get Reconciliation done in less than sixty seconds or increase your customer response rate by two times with auto- follow-ups.

Bank Reconciliation

Bank Reconciliation In The New Age Of Integration

Is Bank Reconciliation important in the age of integration?

Integration is one of the critical links between businesses today. In this digital era, manual processes are slowly fading out in the background, with automation taking the reigns over. Hence, seamless data exchange between systems and automated transaction population is considered the most reliable. Businesses nowadays are reliant heavily on automation due to its accuracy. However, amidst seamless integration, reconciliation can act as a sounding board for addressing any discrepancies. Let’s take a look at how Bank Reconciliation is still a necessary activity in the age of integration.

Bank Reconciliation: Foundation for Financial Accuracy

Simply stated, bank reconciliation is the process of analyzing internal financial records with the organization’s bank statements. Such reconciliation helps in identifying errors and ensuring financial accuracy. Discrepancies such as a manual error in data entry, delayed processing, outstanding payments, and bank fees can still show up despite integration. Bank reconciliation ensures financial accuracy by identifying and resolving such errors early on. To know more on Bank reconciliation read this article.

Integration: Its Potential and Limitations

In the digital era, integration has become pervasive. Data exchange and transaction recording over ERP systems, accounting software, and banking portals leave little room for human error. Hence, such convergence leads to enhanced efficiency and streamlined workflows. Despite automation, integration still has its limitations that need regular verification.

Blind spots such as system-specific issues, manual error while data feeding, and transaction processing delays can lead to discrepancies. Integration as a system is not foolproof. For instance, the bank recorded customer payment, but the accounting software  does not reflect it. Hence, overlooking inherent integration limitations can cause significant disruptions in data over time.

Further, a small error, such as bank fees being charged but still not recorded in books, can create a mismatch. Major errors, such as vendor payments being recorded in books but not yet encashed, can skew up the financial picture. Bank reconciliation ensures such errors are remedied to ensure an accurate financial position at all times.

Bank Reconciliation Matters in Automation EraFinancial Anchor: Bank Reconciliation To The Rescue

Bank reconciliation remains the essential safety net despite integration’s advancements. Regular reconciliation helps in identifying data silos due to incomplete integration on time. It acts as an effective verification, bridging the data gap between bank statements and internal records. Hence, it identifies and rectifies data inconsistency without it snowballing into a major concern.

Ensuring Financial Integrity: Maintain Financial Precision With Firmway

Bank reconciliation is a must despite integration in place. Many businesses overlook it due to the sheer effort behind it. Moreover, reconciliation can take a backseat due to over-reliance on automation, rendering it outdated. However, bank reconciliation can prove to be the critical line of defense against financial discrepancies. 

At Firmway, we understand the importance of financial accuracy for the overall health of the business. With our touchless reconciliation platform, bank reconciliation becomes effortless and seamless. Additionally, our AI-enabled models collect and auto-reconcile data from any accounting software. Hence, no more manual resource wastage for data verification. 

With us, bank reconciliation can be done in less than sixty seconds. Take the leap with Firmway and get the process of bank reconciliation embedded in your financial system.

Easy Bank Reconciliation: The Only Guide You’ll Ever Need

To begin with, Bank Reconciliation is a crucial financial process that every business, regardless of its size or industry, should regularly undertake. It involves comparing and reconciling the balances on your bank statements with the balances in your accounting records. In this complete guide for beginners, we will break down the bank reconciliation process step by step, making it accessible and straightforward. 

What is Bank Reconciliation? 

At its core, bank reconciliation is the process of comparing your financial records, including your bank statement and your own accounting records, to ensure they match. (Learn more about Bank Reconciliation)

Why is Bank Reconciliation Important? 

Bank reconciliation serves several critical purposes: 

  1. Ensures Accuracy: Bank reconciliation helps verify the accuracy of your financial records. 
  2. Detects Errors: It helps in detecting errors, both human and system generated.
  3. Prevents Fraud: Bank reconciliation can uncover unauthorised or fraudulent transactions. 
  4. Manages Cash Flow: By regularly reconciling your accounts, you can closely monitor your cash flow. 

Getting Started with Bank Reconciliation 

Step 1: Gather Your Materials 

  • Your bank statements, accounting records, etc 
  • Any additional records such as credit card statements. 

Step 2: Compare Transactions 

Start by comparing each transaction on your bank statement to your own records. Common transactions include deposits, withdrawals, checks, and electronic transfers. 

Step 3: Identify Discrepancies 

During this process, you may encounter discrepancies. These can result from timing differences, processing delays, or errors.

Step 4: Adjust Your Records 

Once you’ve identified discrepancies, make the necessary adjustments to your records.

Step 5: Reconcile to a Zero Balance 

Finally, your goal is to reconcile your bank account to a zero balance. This means that when you add or subtract all the adjustments you’ve made from your bank statement balance, it should equal your own accounting balance. 

Some practicals tips – 

  1. Ideally, reconciliation should to be done monthly. 
  2. Maintaining detailed records. 
  3. Segregation of duties would help in detecting errors and mistakes. 
  4. Account for outstanding cheques and deposits in transits. 
  5. Training of staff to stay updated. 
  6. Keeping personal and business transactions separate. 
  7. Automate the process wherever possible. 
  8. Lastly, review of reconciliations done. 

How can technology help in Bank Reconciliation? 

In fact, Technology and Automation play a significant role in streamlining the bank reconciliation process. By automating one can: 

  1. Automatically import bank statements and financial data, reducing manual data entry errors. 
  2. Utilise algorithms to match transactions between bank statements and accounting records, identifying discrepancies more efficiently. 
  3. Provide real-time updates, enabling businesses to reconcile their accounts more frequently and stay up to date. 
  4. Automatically generate reconciliation reports, saving time and ensuring accuracy. 
  5. Flag unusual transactions and potential errors for review, reducing the risk of fraud or oversight. 
  6. Increase the overall efficiency of the reconciliation process, freeing up resources for more strategic financial tasks. 
  7. Seamlessly integrate with accounting software, further streamlining financial operations. 

Additionally, automating can enhance the accuracy, speed, and efficiency of their bank reconciliation, leading to more effective financial management. 

Firmway’s automation software for bank reconciliations help businesses streamline and standardise the process of bank reconciliation making the process seamless for the organisation.

It efficiently manages communication with parties and generates reconciliation reports as and when required. It can reconcile large volumes in minutes. It highlights mismatches and classifies entries into different buckets for ease of operations.

Manual Reconciliation Risks: How To Avoid Errors & Save Time

Reconciliation is a vital financial process that involves meticulously comparing and matching financial records to ensure accuracy and consistency. For many years, businesses have traditionally relied on manual reconciliation procedures to perform these tasks. Nevertheless, this strategy is not without drawbacks. In fact, manual reconciliation can be inefficient, error-prone, and resource-intensive.

That said, let’s explore the drawbacks of manual reconciliation and unveil strategies to sidestep these pitfalls. Let’s get started!

Prevalent Drawbacks of Manual Reconciliation

1. Manual Processes: A Time-Consuming Drain on Productivity

One major drawback of manual reconciliation is its time-consuming nature. Human operators often spend countless hours sifting through data, cross-referencing records, and identifying discrepancies. This not only hampers productivity but also increases the likelihood of problems due to fatigue and oversight.

2. Absence of real-time insights: hindered decision-making

Another drawback is the lack of real-time insights. Manual reconciliation processes are typically slow, especially when dealing with large datasets. This delay in identifying discrepancies can hinder a company’s ability to respond swiftly to financial challenges.

3. Scalability Challenges: Strain on Resources

Furthermore, manual reconciliation lacks scalability. As businesses grow and transaction volumes increase, manual processes become overwhelming and unsustainable. Handling a higher volume of data manually requires additional manpower and resources, escalating operational costs. This can strain the company’s finances and limit its ability to invest in more strategic initiatives.

4. Error-Prone Nature: Risks to Accuracy and Reliability

Manual reconciliation is inherently error-prone, posing risks to the accuracy and reliability of financial reporting. Data entry mistakes, misinterpretations of records, and outdated information can all contribute to discrepancies and inaccuracies in the reconciliation process. These errors not only undermine the integrity of financial data but also erode stakeholder trust and confidence.

5. Lack of Standardization: Subjectivity Breeds Confusion

Manual reconciliation processes lack standardization, making them susceptible to discrepancies caused by different interpretations. As each individual may perceive and interpret data differently, inconsistencies arise, further complicating the reconciliation process. This lack of standardization not only prolongs the reconciliation timeline but also introduces the risk of errors and miscommunication within the organization.
To avoid these drawbacks, businesses can adopt several strategies

Manual Reconciliation Best Practices

Manual

 

  • Establish Standardized Procedures: Combat non-standardization by creating clear guidelines and checklists for reconciliation tasks. Maintain a resource library for new or complex items, ensuring consistent interpretation and handling.
  • Request Standardized Data Formats: Minimize time spent deciphering third-party data by requesting vendors and customers to provide information in standardized formats. For example, encourage the use of standard Excel sheets for ledger or statement of accounts sharing, simplifying data interpretation and reconciliation.
  • Utilize Automation Tools in Excel: To achieve real-time insights, implement standardized reconciliation formats that are updated daily in a central dataset. Utilize Excel macros and other features to automate repetitive tasks, speeding up the reconciliation process and providing timely insights into financial data.
  • Regular Training and Communication: Ensure all team members involved in reconciliation tasks are trained on standardized procedures and communication channels. Regularly communicate updates or changes to reconciliation processes to maintain consistency and accuracy.
  • Implement Cross-Checking Mechanisms: Introduce cross-checking mechanisms within the reconciliation process to verify data accuracy and identify discrepancies promptly. This can include double-entry verification or peer review processes to enhance reliability.
  • Continuous Improvement and Feedback: Encourage a culture of continuous improvement by soliciting feedback from team members involved in the reconciliation process. Analyze feedback to identify bottlenecks or areas for optimization, implementing changes to enhance efficiency and accuracy over time.

Harnessing automation for streamlined Reconciliation processes

Automation plays a pivotal role in overcoming the challenges associated with manual reconciliation. By leveraging advanced reconciliation software and tools, businesses can significantly streamline their processes. Automation allows for real-time reconciliation, ensuring that financial data is always up-to-date and accurate. Automated systems can swiftly identify discrepancies, flagging them for further investigation, reducing the time and effort required for resolution.

Moreover, automation enhances scalability. Automated reconciliation tools can handle vast amounts of data efficiently, adapting to the growing needs of the business without the need for significant increases in manpower. This scalability ensures that businesses can manage their reconciliation tasks effectively, even as transaction volumes expand.

Additionally, automation reduces the risk of human errors. By automating routine and repetitive tasks, businesses can minimize the likelihood of data entry mistakes and misinterpretations of records. This results in more reliable financial reporting, empowering businesses to make better-informed decisions.In conclusion, the drawbacks of manual reconciliation, including its time-consuming nature, lack of real-time insights, and scalability challenges, can be effectively mitigated through time-tested strategies.

Further automation can also prove revolutionary. By integrating Firmway’s innovative AI-based algorithms and customizable logic capabilities, businesses can transform their reconciliation processes. With the ability to achieve up to 90-95% matches and seamlessly reconcile unstructured data, we effortlessly handle voluminous datasets from various formats and accounting software. Firmway offers a comprehensive solution for upgrading reconciliation tasks, ultimately optimizing financial operations and decision-making.

Balance Confirmation

Benefits Of Balance Confirmation in Finance: Peace of Mind Guaranteed

Unlock Financial Peace With Balance Confirmation In Finance

It is an irrefutable fact that accuracy and reliability are paramount in the finance and accounting domain. Businesses employ various auditing procedures to ensure the veracity of financial statements and strengthen the trust of stakeholders. One such crucial process is balance confirmation, which plays a vital role in validating the accuracy and completeness of recorded balances. Companies can obtain essential feedback on their financial transactions by exchanging information with external parties, such as customers, suppliers, or financial institutions.

This article shall act as a comprehensive guide that sheds light on the benefits and importance of balance confirmation in financial transactions. We will explore how this process enhances the integrity of financial statements, helps detect errors or discrepancies, and promotes transparency and accountability. Furthermore, we will understand the role of automating the balance confirmation process of your company to improve your overall accounting efficiency.

What do you mean by balance confirmation?

Balance confirmation denotes a process used in accounting to check the precision and completeness of the balances recorded in a company’s financial statements. It typically involves exchanging information between a company and its external stakeholders, such as customers, suppliers, or financial institutions.

During the balance confirmation process, a company will send out balance confirmation requests to its stakeholders, requesting them to confirm the balances they hold or owe to the company. These requests are typically sent in writing through a balance confirmation letter, email, or online platform. The balance confirmation process is commonly used across various industries, including manufacturing, retail, banking, and services. It is particularly essential in industries with significant accounts receivable or accounts payable balances, where confirmation helps validate the accuracy of these balances.

Benefits & Importance

Balance confirmation holds significant importance in finance for several reasons:

  • Upholding Accuracy: Account Confirmation helps verify the accuracy of financial records by reconciling them with the records of external parties. It allows businesses to validate the balances they hold or are owed and identify any discrepancies or errors that must be addressed. This process enhances the overall reliability and credibility of financial statements.
  • Detecting Errors and Fraud: Account Confirmation plays a crucial role in detecting errors, omissions, or even fraudulent activities. Companies can identify discrepancies by comparing their records with those of external stakeholders, such as incorrect postings, unauthorized transactions, or missing balances. This helps in promptly investigating and rectifying any anomalies.
  • Strengthening Auditing Procedures: Auditors heavily rely on balance confirmation as an essential tool during the auditing process. By obtaining confirmations from external parties, auditors gain independent verification of the balances, transactions, and obligations recorded in the financial statements. This enhances the accuracy and thoroughness of the audit, assuring stakeholders.
  • Enhancing Transparency and Accountability: Account Confirmation promotes transparency and accountability in financial transactions. It demonstrates a company’s commitment to open communication and fosters stakeholder trust. By obtaining confirmations, businesses can demonstrate that their financial information is accurate and reliable, enhancing the confidence of investors, lenders, and other stakeholders.
  • Resolving Discrepancies: Account Confirmation allows companies to address any discrepancies or disagreements with external parties promptly. If a stakeholder provides a different balance or raises a concern, it will enable both parties to investigate and resolve the issue on time. This helps maintain healthy business relationships and avoids potential disputes in the future.
  • Compliance with Regulations and Standards: Many regulatory bodies and accounting standards require using balance confirmation as a standard practice. By adhering to these requirements, companies ensure compliance with legal and regulatory frameworks, thereby avoiding penalties and maintaining their reputation.

In this digitized age, automation for balance confirmation tasks is necessary. By leveraging automated systems, businesses can streamline their confirmation procedures, reduce manual efforts, enhance data security, and improve their financial operations’ efficiency and effectiveness.

Firmway offers a one-of-its-kind balance confirmation solution. It is a user-friendly tool that constantly monitors your customers and vendors, protecting you from unforeseen surprises. With its intuitive interface, the software significantly increases third-party response rates without manual intervention. Experience the ease and effectiveness of Firmway’s balance confirmation solution now!

Outsourcing Reconciliation Services

Reconciliation Services: Unlock Hidden Benefits Now

Why Outsourcing Reconciliation Services Drives Business Success

In today’s dynamic business landscape, maximizing efficiency and focusing on core competencies are paramount for sustained success. One area where businesses can streamline operations and drive growth is through outsourcing reconciliation services. As businesses navigate complex financial landscapes, outsourcing reconciliation tasks can offer a multitude of benefits, ranging from cost savings to enhanced accuracy and scalability. Let’s delve into the top 5 advantages of embracing outsourcing for your reconciliation needs:

The Growing Trend of Outsourcing Account Reconciliation Service

Outsourcing has emerged as a ubiquitous phenomenon for business enterprises worldwide. Particularly, outsourcing in the finance and accounting segment has gained remarkable momentum. The approximate value of the global market for Finance and Accounting Outsourcing in 2022 was US$43.1 billion. This market is projected to expand and reach a revised size of US$68.8 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 6%. One of the emerging sub-domains in the finance and accounting outsourcing sphere is outsourcing account reconciliation. Outsourcing can be the most reliable reconciliation solution business ventures can utilize to automate reconciliation processes.

Are you contemplating outsourcing business reconciliation activities such as receivable reconciliation, payable reconciliation, or bank reconciliation? We have some compelling reasons that outline the relevance of outsourcing your account reconciliation process.

Top 5 Key Benefits of Outsourcing Reconciliation Services to Boost Your Business

Outsourcing Reconciliation Services : 5 Key Benefits to Boost Your Business

1. Expertise and Accuracy

Account reconciliation processes, such as intercompany reconciliation, AP AR reconciliation, and payment reconciliation, are crucial for maintaining accurate financial records. These processes demand meticulous attention to detail and a deep understanding of accounting principles. By outsourcing reconciliation services to professionals with expertise in this area, businesses can ensure accurate and precise reconciliation of financial data.

2. Time and Cost Savings

Reconciliation can be a time-consuming and resource-intensive process, diverting valuable internal resources away from core business activities. A report by Ventana Research found that organizations that rely heavily on manual reconciliation processes spend an average of 13 days on a monthly close, while those with higher levels of automation complete the process in just 5 days. Outsourcing reconciliation services allows businesses to free up their staff’s time, enabling them to focus on strategic initiatives and revenue-generating tasks. Additionally, outsourcing eliminates the need for investing in expensive financial reconciliation software, infrastructure, and training, resulting in cost savings for the business.

3. Scalability and Flexibility

Business operations often experience fluctuations in transaction volumes and reconciliation requirements. Outsourcing account reconciliation services offers scalability and flexibility, as service providers can quickly adapt to changing business needs. Whether it is handling increased reconciliation volumes during peak periods or adjusting the scope of services, outsourcing allows entities to scale up or down without the hassle of getting additional staff.

4. Access to Contemporary Technology

One of the benefits of outsourcing reconciliation services is gaining access to the latest technology and reconciliation tools. Reconciliation service providers invest in the best account reconciliation software and tools to streamline the reconciliation process, improve efficiency, and enhance accuracy. By leveraging the different transaction reconciliation software, businesses can benefit from automation, real-time reporting, data analytics, and other innovative features that may not be readily available in-house.

5. Focus on Core Competencies

According to a survey by Accounting Today, 64% of small businesses outsource their accounting functions, highlighting the popularity of outsourcing among small and mid-scale enterprises. Outsourcing reconciliation services allows companies to focus on their core competencies and strategic goals. By offloading the time-consuming task of reconciliation to experts, businesses can allocate their resources towards driving growth, improving customer service, and enhancing overall operational efficiency. Outsourcing the financial reconciliation process enables enterprises to leverage specialized skills and knowledge while streamlining their general operations.

Conclusion

By leveraging automated reconciliation strategies and outsourcing financial reconciliation services, organizations can achieve greater accuracy, improved productivity, and enhanced financial control, ultimately leading to better decision-making and operational efficiency. Bank upon the reconciliation software offerings by Firmway to manage your outsourcing requirements related to financial reconciliation. Our reconciliation solution in the form of ledger account reconciliation, GST reconciliations and Form 26AS reconciliation software can give an edge to your reconciliation outsourcing objectives.

Audit Confirmation - Webinar

Audit Confirmation Training Session

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.

Balance & Audit Confirmation

Balance & Audit Confirmations: What You Need to Know About

All About Digitized Balance & Audit Confirmations

A balance & audit confirmations letter is a crucial request sent to third parties in order to gather specific information regarding items that significantly impact the financial statement. Consequently, this process plays a pivotal role, as it aids in substantiating various assertions made in the financial statement, ultimately contributing to the formation of a well-informed opinion about its accuracy.

Importance of External Confirmation in Auditing

In the field of auditing, external confirmation, especially for financial elements like banks, loans, payables, receivables, and more, is a widely practiced method. To secure compliance and standardize the confirmation process, the Auditing and Assurance Standards Board (AASB) empowered by the Institute of Chartered Accountants of India (ICAI) issued SA 505: External confirmations. Further, to assist the professional accountants in implementing the confirmation process, ICAI issued the guidance notes that provide for obtaining confirmations for receivables, cash and bank balance, and liabilities.

Automating the Balance & Audit Confirmation Process

Conventionally, auditors use letters, posts, or emails to obtain confirmations from external parties. Click here for manual balance confirmation samples – negative or positive. However, it is not a sustainable solution for a high volume of accounts of large-scale businesses. Thus, there is a need for digital transformation. In this article, we will delve into the concept of digital balance confirmation letters. Additionally, digital transformation plays a crucial role in assisting auditors in automating tedious parts of audits. Furthermore, in the context of external confirmation, automation will not only lower clerical errors but also significantly enhance the efficacy of the audit evidence.

Streamlining Confirmation with Firmway

An affordable way to automate the external confirmation process involves the adoption of software such as Firmway. Furthermore, Firmway stands as India’s premier online software for balance confirmations. Leveraging cutting-edge technology, it streamlines and standardizes the process of obtaining external confirmations.

Effortless Responses

It allows auditors to efficiently process bulk requests and provides a comprehensive synopsis of reconciled and unreconciled balances. It allows debtors/creditors/banks to respond easily in the following ways:

1: Click on the unique link to respond & will be directed towards response sheet

2: Click on “amount is correct / incorrect” as per your deal (Only valid for positive & negative confirmation)

3: Incase of blank confirmation ask responding party to add the amount as per their books

4: Responses confirmed with auto-generated OTP verification shared on third party email id

5: Live Tracking of responses on dashboard for audit trail purpose

 

Balance & Audit Confirmation

Balance & Audit Confirmation

Balance & Audit Confirmation

Leveraging Audit Automation Tools

In this way, audit automation tools make confirmation easier for third parties and resolve the issue of manual follow-ups, fewer responses, tracking the data, collecting & accumulating the data. All leading accounting and auditing firms are automating the labor-intensive part of the audit to focus on analytical work. Thus, it is high time to leverage technology to smoothen the audit process.

Understanding Sec 194Q

Understanding Sec 194Q: How it impacts And Why It’s Important

Background

Business returns constitute less than 2% of overall Income Tax Returns filed in India for AY 2021-22, underscoring the pressing need for Step-by-Step Understanding  Sec 194Q. Furthermore, clearly indicating evasion of taxes. To combat tax evasions and non-filing of returns, the Indian government has expanded TDS and TCS provisions in the past two years.

The government is working towards bringing dividends, purchases, sales, e-commerce operators, etc., all under the scope of TDS and TCS as it makes tracking transactions easier. Specifically, the TDS/TCS provisions on purchases and sales are redefining steps for India’s taxation system.

Understanding Sec 194Q: Gaining Proficiency in Step-by-Step Mastery of Section 194Q and Understanding Its Impact

Section 194Q, introduced under the Finance Act, 2021, effective from 1st July 2021, aims to curb tax evasions and fraud. Additionally, it mandates that buyers with turnovers exceeding Rs 10 crores in the preceding financial year deduct tax on purchases over Rs 50 lakhs, given the seller’s Indian residency.

Moreover, with 194Q in effect, all high-volume sale/purchase transactions will come under record, thereby significantly reducing the chances of evasions. However, these provisions inevitably add to the concerns of the CFOs and tax heads of large-scale companies in terms of its implementation and reporting.

Challenges faced by large-scale companies are:

Since large-scale companies have a high volume of sales and purchases both, availing of accurate TDS credits as well as deducting vendor TDS get wearisome for tax and finance teams.

Year-on-year locking of tax credits is a common problem among large-scale enterprises. Errors in availing of TDS credits and deducting TDS affect working capital efficiencies and invite tax scrutiny.

The process of maintaining vendor records, obtaining low tax deduction certificates, tracking vendor payments, availing TDS/TCS credits, reconciling 26 AS, etc., is voluminous and time-consuming, especially when done manually.

Thus, finance and direct tax teams should find the automation and technology-enabled solutions. 

Understanding Sec 194Q

Understanding Sec 194Q: Streamlining Compliance through Step-by-Step Automation

Technology and automation make it easier to handle TDS/TCS deductions, availing credits, and reconciling Section 194Q step by step. To ensure complete TDS and TCS credits, it’s vital to reconcile 26 AS regularly and maintain accurate accounts. Instead of waiting until year-end, companies should aim to reconcile 26AS quarterly to avoid credit losses. Businesses have to try to complete this reconciliation every three months.

Automation enables companies to incorporate reconciliation into their regular assessments. This, in turn, helps in proactive communication with vendors and reduces the risk of working capital shortages and credit losses.

Firmway is one such software that assists with 26 AS reconciliations. It is a web-based SaaS product that automates time-consuming reconciliations. Many big firms in India rely on it to simplify the reconciliation procedure for massive 26 AS entries and books of accounts. It includes a PAN-TAN connection, automated reconciliation, and communication of differences. As a result, it simplifies the implementation of new tax regulations, such as 194Q.

Conclusion

The Indian government is taking steps to make the country more tax-compliant, and large businesses should assist. Businesses can quickly comply with new tax requirements thanks to technology. Automation helps highlight unresolved issues regarding 26 AS reconciliations and gives CFOs data-driven insights. Therefore, businesses should use automated technology and software to help create a tax-compliant economy.