It is hard to escape digitisation, irrespective of how large or small your organisation is. Since the past decade or two, every enterprise across the globe has been adopting the use of technology in some form or the other. In India, the rise in stringent regulatory policies has also contributed to enterprises digitally transforming their finance function.
Over the past two years, some of the primary finance functions taken digital have been AI-based data reconciliations, one-click return filing, automated vendor communication, digital payments, supply chain financing, etc.
Smart enterprises have realised that the only way to build organisational resilience amongst a changing compliance landscape is to adopt technology and to do it fast. Digital transformation enables faster processes, reduces errors, optimises workflows, and improves overall organisational efficiency. And once businesses have gotten a taste of this, there is no going back.
How does digital transformation help navigate the tax ecosystem in India
Compliance in India has undergone a transformative change. The government is in the process of merging tax compliance with the supply chain through the linking of FasTags with e-way bills, e-invoicing with GST returns, direct and indirect taxes, etc.
Further, the regulator is using a real-time approach to detect and prevent misreporting and fraud through the use of data analytics and artificial intelligence (AI). The introduction of stringent tax laws spanning e-invoicing, GST returns, and input tax credit claims shows that is no longer any leeway for errors. Any non-compliance is dealt with seriously.
Hence, when the regulator is digitising, it is high time enterprises do too. Financial transformation not just enables more efficient financial processes in any organisation but serves the two-fold goal of accuracy and efficiency in tax compliance too.
The top tools and technologies that are digitally transforming Indian businesses today
AI – Artificial intelligence or AI is the best thing that has happened to business compliance. AI has eliminated the need for manual, tedious, and error-prone data reconciliations. AI has enabled 100% accuracy in tax compliance. AI helps businesses save time and money by detecting invoices not reported or tax credit not claimed.
Automation in compliance – System integration, often done through a SaaS platform, enables enterprises to fulfil their compliance needs with a click of a button. Be it return filing, data reconciliations, or vendor payments. The days of manually exporting data, reconciling the same, and preparing tax returns is a thing of the past. Automation in tax compliance saves hundreds of manhours and pays for itself in the long run.
Real-time data visualisation – Every business leader requires real-time visibility of their business and financial information at their fingertips. Data analytics helps monitor performance, understand key trends, identify areas of profitability and cost control, mitigate risks, etc. Most importantly, they help flag discrepancies in real-time.
Business partner onboarding – The stringency in regulatory compliances has heightened the need to do business only with compliant business partners. Now, automated KYC processes, for instance, run frequent checks at the onboarding stage as well as at regular intervals of time to ensure that the enterprise only deals with compliant business partners.
The phases of digital transformation
The adoption of technology in digitally transforming the finance function typically happens in three phases.
Phase 1 comprises software-assisted compliance. Here, enterprises make use of software for tax filings, semi-automated data reconciliations, and through the use of utilities for uploading and verifying GSTINs, PANs, etc. Enterprises in Phase 1 have begun their digital transformation journey but are not yet reaping all benefits that modern technology has to offer.
Phase 2 comprises integrated compliance. In this phase, enterprises integrate their ERPs with a compliance platform. The direct data flow between the ERP and compliance platform facilitates a host of compliance-related functions such as one-click tax return filling, automated data reconciliations, e-invoice and e-way bill generation, etc. This phase has a lot to offer technology-wise but still requires a good amount of manual intervention.
Phase 3 is the ultimate phase of the digital transformation of an enterprise and involves real-time compliance. Here, enterprises fully automate their finance processes and make use of the most advanced tech-based tools. There is little to no manual intervention and no scope for error. Let’s take, for instance, automated data reconciliations between the purchase and sales books, GSTR-1/2A/2B/3B, e-invoice and e-way bill data, etc. They need to be scheduled only once, after which they take place at regular intervals through data flows between the ERP and the GST portal.
Enterprises in Phase 3 also have access to other advanced technology such as automated tools to check the GST compliance of their business partners, tools to withhold payments of non-compliance vendors, tools to ensure accurate TDS deductions before making supplier payments, etc.
The CFOs role in effective digital transformation
A modern CFO’s priorities have undergone a massive shift over time. Given the economic uncertainties and the dynamic change in the regulatory landscape, CFOs are now looking to digitise critical business functions in order to optimise costs and drive growth. For a CFO, it’s about initiating a digital transformation strategy with the C-suite and then collaborating with the CIO on choosing an enterprise solution where the benefits outweigh the costs.
The CFO’s role further involves getting mid-level managers onboard the technology revolution instead of being at odds with it. And finally, it involves providing adequate guidance with every step of the financial transformation journey, which can be achieved through strategic partnerships across the enterprise.
Clear’s tech-enabled solutions are amongst the leading software for enterprise tax compliance in India
Clear’s AI-based solutions are created keeping in mind India’s dynamic compliance landscape. They not just take enterprise compliance up a notch but help in the digital acceleration of an enterprise’s finance function. Users benefit from one-click returns and data reconciliations, hassle-free data sharing, smart reports for decision-making, 8-year audit trails, smooth workflows, and intelligent data utilisation to flag anomalies even before they become issues.
Clear’s solutions span GST return filing, AI-based data matching, input tax credit optimisation tools, integrated e-invoicing and e-way bill solutions, all of which are powered by multiple validations at each stage. We have the top CAs and engineers who work round-the-clock to incorporate changes in the software as soon as any tax law is amended to ensure that our software is always 100% up-to-date and your compliances are always accurate.
DISCLAIMER: The views expressed are solely of the author and ETCFO.com does not necessarily subscribe to it. ETCFO.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.
(Brand Content Initiative)