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Finance and Accounting Outsourcing Articles

Sojy Sn
Marketing and Communication Specialist at ZiniosEdge
May 10 2021
The success stories of large business organizations do not happen in a day but are the results of optimized management of business operations, HR practices, robust internal auditing practices, and much more. Among the essentials for a successful organization, internal auditing plays a vital role… (more)

The success stories of large business organizations do not happen in a day but are the results of optimized management of business operations, HR practices, robust internal auditing practices, and much more. Among the essentials for a successful organization, internal auditing plays a vital role as it gives the in and out conditions of the business, like profitability, operation constraints, decision making, opportunities, and similar traits. Expert and experienced internal auditors handle such organizations to give fruitful results to the management. But there is always a scope of human error which may creep into internal audit reports and even a small, missed opportunity may become fatal for an organization. With the advancement of technology, Artificial Intelligence is finding its way into all aspects of our life and internal auditing is not an exception.

What is AI? Role of AI in Internal Auditing

Artificial Intelligence makes use of machine learning, deep learning, and NLP technologies by which a set of algorithms is formed. This governs all the internal processes of the business, collects all the data, analyses it, and draws patterns to give value-added reports regarding profitability, business constraints, risk assessments, periods of high and low and more. NLP along with other capabilities helps in reading and comprehending vast amounts of texts in loads of documents. These business documents are then classified into different types for data extraction and analysis.

Advantages of Use of AI in Internal Auditing

  • Error Free Auditing
  • Speeding up the Auditing Process
  • Data Collection and Analysis Reports
  • Useful Data Insights
  • Segregation of Data
  • Improved Coverage
  • Increased Efficiency
  • Aid for Internal Auditors

Challenges at Present to Adopt AI in Internal Auditing

Technology is critical for increasing the productivity and efficiency of the internal audit functions. According to an excerpt from the 2017 International Standards for the Professional Practice of Internal Auditing: “Internal auditors must have sufficient knowledge of key information technology risks and controls and available technology-based audit techniques to perform their assigned work” With reference to the Bryden Report of 2019, there is an increased line of separation among clients and auditors and companies are changing auditors often. So, automating existing data for audit tasks is underway and inevitable.

To Conclude

Internal auditing using AI is the necessity of modern-day organizations and is a must for achieving efficiency in auditing and to get fruitful insights and reports. It will surely help organizations to achieve their full potential in their respective fields.

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Cloud Records India
User
Small companies are now faced with two major problems, one is failed compliances, the resultant huge penalty payments, and the other is not being able to maintain proper books of accounts. Legal compliances are an integral part of any business. It ensures that the business runs smoothly, avoids… (more)

Small companies are now faced with two major problems, one is failed compliances, the resultant huge penalty payments, and the other is not being able to maintain proper books of accounts. Legal compliances are an integral part of any business. It ensures that the business runs smoothly, avoids penalties or legal actions that hamper operations.

Small businesses include freelancers, professionals, sole proprietorship firms, partnership firms, and private limited companies. Following are some of the compliance areas:

  • Goods and Services Tax (GST): Introduction of GST has brought in many compliance issues for small business which are covered under it. Businesses with an annual turnover of over 40 lakhs are required to get registered under GST. There are a lot of procedures like formatted invoices and eWay bills to be issued. Periodic GST returns are required to be filed.
  • Tax Deducted at Source (TDS): Similarly there are frequent changes to income tax law related issues like TDS and Tax Collected at Source. It involves collection, payment and reporting within the stipulated dates periodically.
  • Payroll deductions and taxes: For any businesses to be covered under payroll deductions and taxes, there are different eligibility criteria for each of the components. It includes professional tax, ESI, PF, TDS etc.
  • MCA compliances: Filing of incorporation forms with the MCA like Memorandum of Articles of Association and a common seal of the company; Periodic filing of financial statements with the annual returns and event-based forms, minutes of board meetings with the MCA; Filing of IT Returns and also GST Returns (if applicable).

Limitations faced by small businesses:

Trained staff: Small companies are always limited by financial resources, which has a spiraling effect on manpower resources. Small companies cannot hire highly paid qualified resources like chartered accountants and tax consultants. On the other hand, qualified staff does not want to join smaller companies as they feel they will have limited exposure and it will dent their growth prospects. Financial issues are forcing the small businesses to hire low cost untrained employees, who do not completely understand the ever changing compliance scenario.

Accounting Software Applications: Higher level of compliance can be achieved with the use of expensive accounting software applications like ERPs. ERP software applications involve high cost of installation, implementation, support, maintenance and staff training.

These companies often gets into this paradoxical situation and always ends up paying huge penalties to relevant authorities. Instead, if they are provided with a simple to use and easy to understand invoicing and accounting software application that guides and alerts them to take necessary actions and file required reports and returns, then they can better manage the risk of failed compliances and huge penalty payments.

Cloud Records Private Limited developed a cloud based invoicing and accounting software application to maintain the business records like invoices, vouchers, ledgers and generate required reports as per the guidelines given by various tax authorities governing the small companies. This application is developed in India for Indian companies.

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Cloud Records India
User
Small businesses, under the circumstances, stated in Section 23 of the Central Goods and Service Tax Act, 2017, deal with the provisions of persons who are not liable for GST registration. With the advent of GST regime in India, the accounting community is investing a lot of energy, time and money… (more)

Small businesses, under the circumstances, stated in Section 23 of the Central Goods and Service Tax Act, 2017, deal with the provisions of persons who are not liable for GST registration. With the advent of GST regime in India, the accounting community is investing a lot of energy, time and money on GST registered companies. This has created a huge vacuum in sectors like micro and small businesses, proprietary businesses, professionals, and freelancers.

Even though these businesses are not generating enough turnover to get covered under GST or handling GST exempt goods, maintenance of business records is necessary.

Business records

Business records include the sales and service invoices issued to customers, purchase invoices and delivery notes received from suppliers, and bills and receipts that were received for various business-related transactions that are recorded in the books of accounts.

The necessity of record maintenance

Even though record maintenance seems to be a non-essential issue from an income tax perspective as it has some alternative methods of calculating business profits for this segment of taxpayers, these books of records are important for applying for loans, answering any tax-related queries, business expansions, business forecasting, etc. Many small businesses are failing because of weak or lack of business accounting records.

With the imposition of stringent rules set by GST, supply of products or services by non-registered companies to GST registered companies has become increasingly difficult. Hence many small businesses are losing opportunities.

Accurate books of accounts help these businesses to forecast financial requirements in both short term and long term.

Reasons for non-maintenance

One of the main reasons for not maintaining books of accounts are the costs associated with it. There may be cases where there are very few transactions of higher value, or there may be cases where many transactions of lesser value. But they are not able to spend thousands of rupees on Accountants or not able to buy and maintain Accounting software or Invoice software applications that takes longer time to learn and maintain records by themselves.

There are many businesses which are going ahead in employing accountants in-house or who outsource it to some freelance professionals. However, they are still not able to get the desired results either because of lack of required knowledge or because of lack of focus and attention. This is also because many qualified professionals are focussing more on GST registered companies, as its payout is more lucrative.

How to resolve the issue?

Many small businesses either issue handwritten invoices or use generic tools like Microsoft Excel or google sheets) to create day-to-day transactions like invoices and vouchers. There is a higher risk of losing these documents.

An efficient, easy to work, secured Accounting software application, that can do everything for their business or profession, is required for small businesses.

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