Inventory Management or Supply Chain Management has evolved a lot throughout the years, thanks to the advent of advanced technologies like Automation, Data Analytics, IIOT, and Artificial Intelligence. The sudden pandemic of Covid-19 struck the businesses heavily due to unforeseen complex issues like mandatory digitalization, work from home, inventory and warehouse management failure, etc.

Click Here to learn more about Inventory Management in a detailed and comprehensive manner.

HOW DID COVID-19 IMPACT INVENTORY MANAGEMENT FOR BUSINESSES?

Improvement in inventory management systems and fluctuating customer demands are reshaping and influencing the supply chain. The lockdown has made customers rely primarily on digital means and have instigated specificity in their requirements. 86% of small businesses have adopted new techniques and developed new products due to the coronavirus. (Source: Small business economy survey). The need for the hour is for the companies to adhere to the latest market requirements. 

However, the point to bear in mind is that the transition would be far from being smooth. Adapting to the new technologies, investing in tech-forward and data-driven software, and the exponential rise to competition are just a few factors forming hurdles to business growth. 

Let us see how we can gain the upper hand through efficient Inventory Management Techniques.  

CHANGES IN INVENTORY MANAGEMENT DUE TO THE PANDEMIC

The Rise of Automation

The need to achieve the same targets with fewer employees has brought about the inherent need for automation, and post-pandemic conditions have necessitated the same. 

The perks of increased accuracy with less labor have made automation necessary for any kind of business to cope with the ever-increasing competition, ignoring the hefty price tag associated with it. Read more about automation here: How to Select the Best Accounting Software?

Analyzing Returns

The lockdown has forced consumers to rely handsomely on e-commerce sites, giving them a fantastic push due to the enormous returns in online purchases. Returns seem to be posing many difficulties for small businesses, especially ones who had not set up online inventories, such as brick and mortar retailers all across India. 

Well-informed businesses are working smart to reshape technologies for their short and long-term goals. Automation technologies like Imprezz automation software are the perfect tool for market return and foot traffic analysis for long-term planning. 

Warehouse Management

The conflicting customer demands have brought about new and complex discrepancies such as higher returns. This leads to overstocking and capacity shortage in warehouses. The influx of inventory has made warehouse managers work tirelessly to solve the capacity issues and maintain the supply chain’s flow in order to preserve reorder points.

28% were struck with shortages and had to find alternate sourcing options (source: RetailNext). This shows that the need for the hour is a perfect Warehouse management system. This involves integrating automation software with proper deployment of correct Inventory Management Techniques. 

INNOVATIVE CHANGES TO GAIN AN EDGE

1. DIVERSIFICATION OF SUPPLIERS

“Flexibility and resilience” have become the two key features in supply chain selection post-Covid-19. The businesses which can quickly look for alternative suppliers, distributors, and shipment facilitators are the ones who can gain an edge over their competitors. 

• Issue: Reliance on a single supplier causes heavy losses, which most businesses faced solely dependent on Chinese suppliers. Geographically consolidation of suppliers is a constant worry for companies because if they come to an abrupt halt, no other alternative had been pre-decided. 

• Solution: Detailed Supply chain mapping is a must for such a scenario. It requires heavy investment but can give high security during emergencies and curtail the constant source of worry. Automation software like Imprezz is a great way to plan and analyze alternate sources, get their data, and reduce absolute reliance on a selected few.

2. IMPROVED CLARITY AND VISIBILITY

• Issue: Post pandemic, more flexibility shall be expected in the supply chain. Corporations will tend to perform more visibility and stress tests to check for resilience and flexibility in inventory management. So businesses must plan ahead for the unexpected, understand the weak links and work on the potential vulnerabilities.

• Solution: Work more on innovative ideas and identify new options through inventory management software like that of Imprezz. Making payments payable in installments post covid is a great way to generate more traction and appeal, possibly through the inventory accounting automation software of Imprezz. 

Read more about accounting automation: How to Leverage Accounting Automation? – Small Business Guide

3. ADOPTION OF AI AND IIOT

• Issue: The sheer suddenness of the global pandemic brought about brand-new challenges not seen before, and these challenges were unforeseen. This created a considerable loss of working capital and precious time in identifying and efficiently tackling them. 

Efficient tracking and managing inventory is the most crucial part of a business, often not paid much attention. Inventory control is the throbbing heart of a company, which takes up most of the working capital, and causes drastic loss if not managed properly. 25% more retailers and manufacturers are investing in better technology for warehouse management (Source: Skunexus statistics). This shows the necessity of new and improved technology. 

• Solution: AI and IIoT are the latest inventory management software where real-time tracking and a centralized database are created. Deployment of such services is quite complex, but thanks to Inventory Management Software like Imprezz, it has become a breeze to use advanced technologies for our benefit. 

These technologies help track inventory progress in the supply chain, hence reducing the most common problems of over or under-stocking (stock levels) of finished goods. Read this article to know more about inventory management and inventory levels: Inventory Management 101: Small Business Guide

4. FOLLOW THE CORRECT INVENTORY MANAGEMENT TECHNIQUES

43% of retailers consider inventory management as their number one day-to-day challenge (source: RepricerExpress)

Here are the inventory management techniques which will help in having complete control over your inventory:

• Just-in-time (JIT) inventory: Involves storing and maintaining as little inventory as possible in the warehouse, minimizing dead stock. This reduces the holding cost and maintenance and avoiding the unnecessary hassles of warehouse management. 
• ABC inventory management: This technique involves categorizing inventory in terms of priority and sorting them into categories A, B, and C. A being the most significant asset bringing the most profit, and C being the least priority. 
• Dropshipping: Outsourcing the stock and never actually storing the raw material or inventory in their own warehouse forms the basis of dropshipping. Business outsourcing never actually has any contact with the merchandise, hence reducing lead time. 
• Economic Order Quantity (EOQ): Ordering the ideal quantity is the most economical way of going through inventory management during sales orders. It involves careful analysis of the inventory cost, the storage cost, and the exact demand and supply ratio. This is possible through correctly maintaining a purchase order.
• Safety Stock Inventory: This technique involves ordering stock above the predicted demand. This is a safeguard against fluctuating customer demands or incorrect forecasting. 
• LIFO and FIFO: First in, First out is selling the older inventory first, targetted at keeping the stock fresh. Last in First out targets selling the newest product first, which prevents finished products from getting spoiled. 
• Six Sigma and Lean Six Sigma: Brand of teaching providing tools for decreasing excess inventory and improving strategies to increase profit through cash flow.

A STEP-BY-STEP GUIDE FROM IMPREZZ

Step1: Analyse loopholes and vulnerabilities in the supply chain process through data analytics software. This software maintains a list of inventory and the smooth progress from one step to the other. 

Step2: Consolidate suppliers, distributors, and transporters to not face problems due to regional discrepancies. This issue is widely seen in businesses relying solely on Chinese manufacturers. Software like that of Imprezz analyses the economic problems on GST of different suppliers, accounting details finding the most suitable suppliers for you. 

Step3: Use advanced tracking software to track your inventories in real-time, like Imprezz Inventory Management software. Using such software in an informed manner helps gain an edge over other competitors. 

Step4: After signing up on Imprezz, build a detailed inventory chart using the easy-to-use friendly interface to manage the warehouse and use the ABC categorizing technique most effectively. 

Step5: Use the central database of Imprezz to communicate effectively with all the business levels and maintain a smooth supply chain flow. This requires little effort from your side, and let Imprezz manage it for you.

Sign up with Imprezz to kickstart your business, gain an edge over competitors and scale up your business like never before. 

OTHER INFORMATIVE BLOGS FROM IMPREZZ:

Planning to build a startup? Read: GST Rules for Start-ups in India

Worried about invoicing? Read: Which GST Compliant Software to Use for Invoicing?

Business Suffering due to Covid-19? Read: COVID-19 Small Business Guide

Do you find it intimidating to send payment reminders?

But in the ideal business model, you have to ask for payments against the product or service offered to keep your cash flow healthy. Having a system to send payment reminders is the first step in making it a habit.

With the automated payment reminder tool from Imprezz, you can send reminders to your client for the payments due and write customized payment reminder emails to them.

Also Read: Are you tired of creating manual invoices. Read this guide on – How to Automate Invoice Processing?

No one likes haggling for late payments. However, many solopreneurs and small business owners have to constantly send reminders to the clients for the payment due.  Apart from sending reminders for the outstanding balance, the payment reminders help you clear invoicing errors or payment issues. Sending a reminder is a great way to inform your client about upcoming measures like late fees or additional charges.

Sending payment reminders doesn’t have to be a complex process or eat up a lot of your time and efforts. Having a platform to sell products, an automated tool to send quotations and invoices is great. With everything getting easy, it’s time to move out of sending emails, SMS, or even making calls, every time client forgets to make the payment.

Late payments can fret anyone whether you run a business or work as a salaried employee. But sending payment reminders doesn’t have to be tough or sound harsh. Sometimes the delay in payments can be followed by multiple reasons. Remember it is professional courtesy to send reminders as long as they’re worded nicely and sent promptly.

It’s ideal to send payment reminders shortly before the due date, one shortly after the due date is over. Later follow up with the client on basis of your payment terms i.e the payment will be cleared with 14 days of the due date.

A step by step guide to sending automated payment reminders with Imprezz

Let’s understand how the process of payment reminders look for you. Checking with your clients through e-mails. What if they don’t read your emails? Making constant calls and SMS to remind them of the payments overdue. It seems to be a time-consuming task where you chase your clients constantly and ghost them to make the payments.

This might not be an ideal case for the other party. The client might be swamped with some work, he might have taken some time off or anything. Following him throughout can worsen the situation.

Are you searching for the ideal time to send a payment reminder?

Imprezz automation tool helps you get rid of this tedious task, create customized emails and even send payment reminders on your behalf. Additionally, you can find e-mail templates and other features on the tool.

Let’s walk through this tool and understand how it works.

1.Refer Invoices

Once you login to the Imprezz, you’ll be directed to the main page. Locate the option of ‘Invocies’ and click it.

If you have created invoices, great. Otherwise, you can create one with this feature. Mention the invoice number, the invoice amount, and the due date while sending the invoice to the client. Mention the products or services for which the invoice has been sent. It will help the client to access the invoice and pay faster.

Once you enter the relevant information, the tool offers you an option to set the payment terms. Imprezz offers multiple options for payment terms to businesses and individuals while creating an invoice. These payment terms have a huge impact on the payment process and make the client aware of when the invoices have to be cleared.

Select the option ‘payable upon receipt of invoice‘ if you want to get the invoice cleared immediately. You can select the number of days after which the invoice will be due after the receipt of the bill. If you want the client to make an advance payment, choose the option payable in advance. Likewise, you can choose a payment method that you have discussed with the client. If you have already forecasted the time for payments, you can select the option ‘not specified‘.

When the payment is 14 days overdue, you are can add interest and compensation to the payment amount. Update the payment terms for reference of the client and send a clear message about the legal measures you can take if the payment is not made on the due date.

2.Set automating payment reminders

Once you create invoices and save them next move to the feature of recurring payments. You will be asked to create a recurring invoice. Mention the date when the initial invoice was sent and when you want to send the reminder i.e weekly, 14 days, 2-months, 3-months, etc. Next, enter the email of the recipient, so that the tool sends an automated reminder on the email.

Once you enter the email of the recipient, you’ll find an option for more settings. This option allows you to customize your subject line and the message.

While creating a recurring invoice, you’ll be asked to enter all the details such as the name of the customer, invoice no., article details.

Once you create a recurring invoice and save the details, you’ll be redirected to a subscription account. On the top right bottom, you’ll find two options: Edit and Start subscription.

If you click the Edit option it will allow you to make changes to the recurring invoice. The subscription button allows you to send reminders as per the selected duration i.e 7 days.

Remember: Once you select the subscription button, you won’t be able to make edits to the recurring invoice. If you want to end your subscription, there’s an option for that too.

The recurring payment setting allows you to create individual payment reminder invoices. The recurring settings automatically send the invoice emails to the client on a set due date.

If required you can change the settings for discounts etc. The easy-to-handle feature minimizes the workload and helps to receive your payment quickly.

Any questions?

What else would you use when it comes to payment, Imprezz has got multiple features that can help you send quotations, generate invoices, send purchase orders, and manage inventory.

Tutorial: How to write invoices with Imprezz

What is Billing And Invoicing Software – Advantages of Billing System And Its Types

The automated cloud-based software is easy to use and can be accessed globally. The tool helps you schedule payment reminders automatically which are sent at the right time. It helps you save a lot of time, effort and significantly reduce the risk of late payments.

Test Imprezz for free: Simply register with your e-mail address and password – and you can access all the features immediately.

Inventory management is important for the smooth functioning of your business and to keep your stock levels in control. Both excessive and surplus inventory can disrupt the financial flow of your business and pose a serious threat to its liquidity position. Inventory optimization is important to ensure that you have minimum levels of inventory to meet the demand of end-users. It helps to manage the business risk and reduce the holding cost. In this blog, we’ll walk through the best inventory management software.

Read- Detailed information on Inventory Management in the Imprezz blog post “A Complete Guide To Inventory Management”

Why companies need Inventory Management Software?

• Every organization, no matter how small or big have inventory in the form of raw materials, work-in-progress, finished goods. It might include something as small as a needle or can be assembling units of a car. Hence, it is important for companies to effectively manage their inventory.
• Mishandling of inventory or laxness in evaluating your inventory can largely hamper the functioning of your business. It might further propel the situation of inventory surplus or shortage leading to huge financial losses.  For business, it is the loss in productivity and sale.
• Companies should introduce inventory management software free that helps them reduce the possibilities of deadlocks, spillage, and unwanted storage and holding cost. Automating the process means reducing the chances of human errors and saving the time and efforts of employees, who can now concentrate on the core competencies of the business.

Let us understand the situation in a typical business setup.

Customer purchases product from you and you keep track of stock, the raw material to meet the demand of customers. In an ideal situation, you know what is the level of inventory and if you need more inventory to meet the demand of end-users or not. However, if there is no proper structure or coordination among manufacturers, suppliers, customers, and salespeople it might result in a situation where you either have excessive inventory or facing an inventory shortage. You might have inaccurate information regarding the stock levels or face poor customer satisfaction.

Types of Inventory Management Software

There are different types of inventory management software ranging from free to expensive ones. They don’t only differ in terms of cost but vary in terms of features, deployment methods, etc.

There are three main deployment methods of Inventory Management Software :

• On-premise inventory management systems.
• Software-as-a-service (SaaS) inventory management systems
• Cloud-hosted inventory management systems

Best Inventory Management Software

The aim of every company is to meet the needs of its customer, offering the best customer satisfaction. There are many free and open-source inventory software that helps companies automate their inventory management process and meet the demands of their inventory.

Inventory management software helps your track your products, items, or assets, understand your storage needs and manage the stock levels in the company. It helps to save your time and efforts. A good inventory management software system should be able to couple your company’s strategic goals, sales, production, and materials requirement planning. It should help you automate the purchase based on the forecast of your sales order.

Best cloud inventory management software by Imprezz is a comprehensive tool that offers you all the features to streamline your inventory and create a seamless customer experience. The inventory management software for small businesses and beginners who want to effortlessly manage their inventory across multiple levels and channels.

All the companies that are anticipating huge growth and have large stock levels can rely on free inventory management software by Imprezz, which helps them automate the entire process and reduce human efforts.

Imprezz inventory evaluation tool is simple and easy to use. The tool has distinct features such as creating articles and tracking the stock movement.

Create a new article

The feature of the tool allows you to create a new article, add prices and information related to the article. Once you create an article, click the save button.

Article List

The option allows you to track all the articles in one place, instead of hunting them on the tool. Supposedly, you want to track a particular article, simply enter the name of the article in the search bar, it will automatically detect the article.

The option of an article list helps you track the current stock, which means the total items available in the inventory. It states the opening balance of the stock. You can even check the value of the current stock which is calculated on the basis of current stock * Average price. The best part of this option is that it allows you to ‘add or remove’ an article from the current stock.

Stock Movement

The feature of the inventory management tool allows you to track the purchase and sale of an individual article. Any action of the stock is reflected here. You can check the amount of stock purchased and sold here. Even if can track the historical cost, the value of a stock before any purchase or sale was made.

Conclusion

There is a huge demand for inventory management software in the market and is expected to grow tw0-fold in the next 5 years. The inventory management tool by Imprezz isn’t restricted to accountability but offers a source of competitive advantage in demand-driven organizations.

Buying behavior and demands are uncertain however investing in a good inventory management tool help you decide your action and plan well in advance. The software will help you in the automation of inventory management, result in cost reduction and save time and effort to walk through spreadsheets.

If you are looking to take your business to another level invest in the best cloud inventory management software by Imprezz.

It’s best to try the Imprezz demo right away. Simply register with an e-mail address and password. And immediately the full range of functions is available to you free of charge.

Inventory is the lifeline of every business which helps in the smooth functioning of business and meet the need of customers. The effective management of your inventory determines the success of your business. The importance of managing your inventory should be a primary objective to overcome the gap between supply and demand. Any laxness in terms of inventory management puts the risk of either overstocking or understocking – contributing to increased holding cost.

In this guide, we help you understand everything about inventory management with relevant information necessary for your business.

What is Inventory Management?

Inventory management is a process where you track your inventory and stock in and out of the warehouse. The objective of tracking your inventory is to understand the total inventory at a given time and what are the levels of your inventory.  Earlier companies were dependent on the traditional pen-paper approach to track their inventory, but, with the rising complexities, companies have adopted various inventory management software.

If companies don’t manage their inventory, it might be difficult for them to predict whether the existing level of inventory will meet the demand in the future or not. Consequently, the companies might see a fluctuating level of inventory – sometimes below the desired level and sometimes more than required. Hence companies should adopt a stringent inventory management practice.

What is Inventory?

The term inventory is used multiple times in this blog. What actually accounts for inventory – Raw materials, finished goods, or stock for the purpose of selling? Inventory is basically goods that a company handles with the objective of selling which might include raw materials acquired to manufacture goods or the final product from which various constituents are extracted. It might even include intangible items like software, patents, trademarks, and copyrights.

Different types of Inventory

Inventory can be classified further based on their end-use. Let’s understand the different categories of inventory:

Raw Material: This includes inventory that is used to make the finished product.

Work-in-progress: Inventory that is unfinished and is in the process of manufacturing.

Finished goods/Goods for sale: This includes the final product which is ready to be consumed by the end-user.

MRO Inventory: Manufacturing, Repair, and Operating inventory that helps in the manufacturing process.

Safety Stock: The inventory that is stored in the warehouse to meet the supply shortages and increased demand during the uncertainties.

Key Stages of Inventory Management Process

The inventory management process starts right from the beginning when the stock moves from your suppliers to the warehouse. The companies keep a track of their inventory management process at five stages.

1.Purchasing: It means tracking inventory when it is purchased as a raw material to turn into products or sell with no further processing required.

2.Production: Not all companies are involved in the production stage. Some companies make finished products from raw materials or constituents, hence it is important to track the inventory at this stage.

3.Holding Stock: It constitutes the raw material stored before it is used in the manufacturing process or finished stock before it is sold.

4.Sales: Once you sell the stock to the customer and get the payment, it’s time to keep a track of your inventory.

5.Reporting: Under this step, the business estimates the total sale made and the amount received against that sale.

Inventory Management vs. Inventory Control

Most people use these terms interchangeably, but it is important to know that both terms have distinct meanings and are two different processes of inventory.

The inventory management process starts from the beginning till the stock is out and sold to the end-user. However, Inventory control is limited to managing stock which you currently have in the storage. Inventory control is limited to understanding how much stock is available, where it is and what condition it is in. The objective of inventory control is to reduce the cost of holding excessive inventory, minimize the time in estimating the total inventory in the warehouse.

Inventory management is a broad concept that encompasses your supply chain, manufacturing, fulfillment, sales, and reporting. Later, it is followed by inventory control where you focus on optimizing the purchase, control, production, or sales.

Basic terminologies used in Inventory Management

Once you deep dive into the inventory management process, you’ll come across basic terms and formulas. It is important to have a clear understanding of these concepts to ease the process.

Cost of Good Sold (COGS)

Also, known as Cost of sales refers to the direct cost of producing goods, which includes the cost of raw material and labor.

Days inventory outstanding (DIO)

It refers to the average number of days the company holds inventory before selling it.

Economic order quantity (EOQ)

Economic order quantity refers to the optimal order quantity at any given point in time, which helps to minimize the total holding and ordering cost.

Finished goods

It refers to manufacturing items/products that are ready to sell.

Inventory accounting

As stated above that the inventory is available in three stages: Raw materials, Work-in-progress, and Finished goods. The inventory accounting system keeps a track of changes to inventory at all three stages and adjusts their asset values and costs accordingly.

Inventory Cost

Inventory cost refers to the cost involved in procuring, storing, and managing inventory. It is also categorized into three categories namely – ordering cost, carrying costs, and shortage costs.

Inventory Management Software

Automated software to track inventory levels, orders, sales, and deliveries. The software helps in maintaining minimum stock levels and sends the notification every time the stock is below the desired level.

Lead Time

The time period between an order placed and when the order is received is called lead time.

Point of sale

Point of Sale is the time and place in which a retail transaction is completed.

Purchase order

A purchase order is a document created by a buyer requesting a vendor for the delivery of goods or services. It specifies the type and quantity of products, the agreed price, and delivery and payment terms.

What Next?

To understand more about inventory management, take a look at our inventory management software, which has all the added features to keep your inventory in control and save time.

Bengaluru, India, March 12 2021 – Inventory management is an important process in any organization to meet customers’ demand. That’s why Imprezz is introducing an advanced inventory management feature in India.

Imprezz is one of the most reliable, recognized finance and invoicing program that helps solopreneurs and small businesses to create their invoices, send quotes and payment reminders directly in the cloud – easily, intuitively and in seconds.

The company have extensively designed this feature for business, organizations, who still use manual and inefficient inventory management methods.

The company said that inventory management software would help companies save time and efforts by managing their inventory effectively. As a business expands and grows, Imprezz inventory management software will make it more simple to track inventory.

To sign up for the feature, please visit here.

With the evolvement of technology in the last few years, the demand for automation has also increased. More tools & systems are being created, which will make it easier for people to do things in the workplace and execute sophisticated processes in the organization.

Imprezz offers small and large scale companies a new feature of inventory management. With the help of this feature, they can create articles, track articles in inventory.

The feature is available to everyone who needs to keep their inventory in control and take their business to the next level. Companies no longer have to track every article individually; rather, they find them assorted at a single place.

“Now, companies can track a particular article; instead of going through the entire list, they have to simply enter the name of the article in the search bar, which will automatically detect the article. This feature will allow them to save a lot of time and effort,” said the CEO.

The company also have feature for sending quotations, payment reminders, creating purchase orders, invoices etc. That’s why it is suitable for professionals, business owners, working professionals, and people looking to reduce the chances of storing excess inventory and ultimately reduces the holding cost.

About Imprezz

 Imprezz is one of the leading cloud-based accounting software that has helped several small businesses in India proliferate. It helps manage GST tax filing, data reporting, reconciliation, and various other financial tasks under a single accounting platform. Users can utilize the dashboard to get insights from the overview of the total expenses, income, and key performance indicators.

Imprezz provides cloud access that allows enterprises to work remotely. The inventory management module enables supervisors to view the available stocks, create customized units, import financial data in excel or PDF format. It helps businesses link their bank accounts that allow real-time tracking of cash flow and daily transactions. The software offers a 14 days free trial software program for SME’s in India. Log in to know more!

Media Contact

For India            Amit Mundra	0049 2735 776248	info@imprezz.in	https://www.imprezz.in/

 

The Goods and Services Tax (GST) implementation has primarily impacted the way start-ups operated in India. It has significantly increased the number of new start-ups in the past three years of successful implementation. The advent of a new tax regime was crucial to abolish various indirect taxes. GST rules for startups were introduced with the slogan “One Nation One Tax” to ease the compliance procedure for MSME, especially for start-ups.

In this article, we have coupled all the necessary information every start-up in India must know. The eligibility criteria for start-ups, the impact of GST benefits for startups, Tax exemptions, consequences of tax evasion, and more!

Eligibility for New Start-ups in India

The start-up India campaign was proclaimed by Prime Minister Narendra Modi in 2016 to encourage entrepreneurs and boost India’s entrepreneurship. The campaign was focused on promoting bank financing, simplifying incorporation processes, granting tax exemptions and providing other benefits to the start-ups.

In India, start-ups can leverage several benefits and exemptions under GST, provided they qualify to be an “Eligible Start-up”. What are the necessary conditions to be met for a new business to be eligible as a start-up? There are various conditions to be fulfilled by a company to become an eligible start-up. As per the Start-up India Action Plan, the following criteria makes a small business idea suitable to become a start-up.

• A business has to be incorporated or registered in India for about seven years (ten years for biotech companies) from the date of incorporation.
• Annual turnover of business should not exceed INR 25 crore in any of the previous financial years.
• An eligible start-up is a business aiming to work towards innovation, invention, deployment and commercialization of business processes, goods or services. Start-ups must be technologically advanced; driven by intellectual property and technology.
• A start-up cannot be formed by reconstruction or break-off of a business that already exists.
• A start-up venture is mandated to obtain an eligibility certificate from the Inter-Ministerial Board setup.
• A start-up can be registered either as a private limited company, registered partnership or limited liability partnership.

Budget 2021 – Latest Update: Tax exemption for start-ups has been extended till 31^st March 2022, one more year of the tax holiday.

Impact of GST on Start-ups in India – GST Benefits

The Goods and Services Tax (GST) in India has successfully subsumed all the indirect taxes, curating a unified tax system. As mentioned above, the “One Nation One Tax” regime has created a positive impact on emerging start-ups. Several start-ups across the nation have been enjoying the benefits GST has been offering over the years.

GST Registration – Higher Threshold Limit for Start-ups in India

As per the previous tax system, businesses with a turnover exceeding INR 5 lakh in a financial year (FY) were mandated to register under the VAT system. Since the GST implementation, companies with a turnover exceeding 40 lakh (20 lakh for service providers) in a financial year are mandated to register under the GST regime.

The higher threshold limit under GST aims to provide compliance relief for small businesses, including startups in India. GST regime has also introduced the composition scheme for small businesses and entrepreneurs in India, lowering the amount of tax for start-ups having an annual turnover up to INR 1.5 crore.

Tax Credit on Purchases

Before GST, service-oriented start-ups were supposed to collect and pay service tax to the government. Since most start-ups in India fall under the service industry, non-utilization of VAT paid on business transactions was one of the major concerns. No provisions allowed to claim credits on state VAT amount paid against the service tax liability.

Since GST has bought several indirect taxes under a single tax system, availing Input Tax credits is no longer a matter of concern. Start-ups can now set off taxes paid on their purchases with the taxes p]id on their sales under the Goods and Services Tax (GST) regime.

Hassle-Free GST Registration & Return Filing Procedures

Over the past decade, India has transformed primarily by moving from manual operations to digitalization. Businesses no longer have to run around from one government office to another and submit paper files to obtain a GST registration number. Digital India has made each process a lot simpler and extremely quick. Once all the accounts and records under GST are arranged, getting a registration number is a no brainer task.

Several start-ups undergo the burden to budget-strain; these start-ups can now benefit from the GST regime. Since its implementation, GST has increased the threshold limit for registration and tax credits on purchases. The ease in the return filing processes has brought relief to start-ups and small businesses in India.

Simplified Tax Calculations

Start-ups often work with a constrained budget; they cannot afford to allocate different resources to take care of various compliances under Excise, CST, VAT, Service Tax etc. The GST regime’s advent has instead simplified tax compliance procedures, thus saving time for start-ups to better focus on other business operations.

The digital compliance system in India has increased the scope of accounting software. Imprezz, the GST invoicing and billing software pioneer in India, has been successfully helping small business tax calculations and return filing. Leverage accounting automation, do it all with a click of a button.

It is much easier for start-ups dealing with both goods and services to file single tax returns and pay GST instead of multiple compliances and tax payment. As per the 22^nd GST council meeting held on 6^th October 2017, Start-ups with annual turnover up to INR 1.5 crore can submit quarterly returns; taxes are paid quarterly. The compliance relief aims to ease the tax burden for small businesses and start-ups in India.

E-Commerce & Online Start-ups in India

Modern start-ups are primarily driven by technology; most innovative start-ups today leverage online presence rather than giving it all into the conventional setups. They transact online, that is, selling products and services through the internet. E-commerce and other online start-ups face no complications regarding the inter-state movement of goods as GST is applicable throughout the country.

Previously, different VAT tax was applicable in different states. For instance, an online website delivering goods to Karnataka must have the registered delivery truck and VAT declaration file for that state. The state’s tax authorities might seize the goods under circumstances where there is a failure to produce necessary documents.

However, states like Rajasthan, Kerala, and West Bengal treat these suppliers as facilitators or mediators and do not require registering for VAT. All these differences in treating supplies usually created confusion in compliances. GST has subsumed all these under a single tax regime to remove the hassle of tax compliance.

Increased Efficiency in Logistics

In India, logistics businesses maintained multiple warehouses across states to rid of the CST and state entry taxes on inter-state movement of goods. Most warehouses operated below their capacity increasing their operating costs. Currently, GST has removed the restrictions on inter-state movement of goods, bringing warehouse consolidation across the nation.

As a result of this, warehouse operators and e-commerce businesses in India show interest in setting up warehouses in strategic locations. It reduces unnecessary logistics costs, increasing the profits early for start-ups involved in the supply of goods through transportation.

Tax Burden on Manufacturing Start-ups in India

Start-ups in the manufacturing industry bear the brunt. Manufacturing businesses with an annual turnover above INR 1.50 crore were liable to pay excise tax as per the excise laws in India. However, GST has reduced this turnover threshold to INR 40 Lakh increasing the tax burden for several manufacturers.

Tax Exemptions under the Start-up India Program

The flawed tax system in India is a story from the past. GST has eradicated all the tax compliance confusion and eased the processes for businesses across the nation. Here are some of the necessary tax exemptions allowed for eligible start-ups in the country.

1.   Tax Holiday for About 3-Years in a Block of 7-Years

Start-ups incorporated between 1^st April 2016 and 31^st March 2021 are eligible for this scheme. However, as mentioned above, budget 2021 has extended the tax holiday for businesses incorporated till 31^st March 2022.

These start-ups are eligible to claim a 100% tax rebate on their profits for three years in a block of seven years, provided their annual turnover threshold doesn’t exceed INR 25 crores in any financial year. The scheme aims to help start-ups meet their working capital requirements during the initial years of incorporation.

2.   Tax Exemption on Long-Term Capital Gains

Businesses that invest for long-term capital gain in a fund notified by the Central Government within six months from the date of transfer of business assets are exempted from paying taxes on such long-term capital gain under section 54 EE. The maximum amount a business can invest in specified long-term assets is INR 50 lakh. For three years, such amount remains invested in specified funds. In case companies withdraw before the span of 3 years, the exemption will be revoked respectively.

3.   Tax Exemptions on Investments Above the Fair Market Value

Eligible start-ups above the fair market value are exempted from levying taxes on investments. These investments include resident angel investors, funds that are not registered under capital venture funds, and family. Any investments made by the incubators above the fair market value is also exempt.

4.   Tax Exemption to Individuals/HUF on investments in Equity Shares

Section 54 GB exempts taxes on long-term capital gains for the sale of residential properties. It is applicable when gains are invested in the Smaller and Medium Enterprises Act, 2006. Recently the section has been amended to include exemption on capital gains invested in the start-ups.

Individuals or HUF’s sell residential property and invest in the capital gains to subscribe 50% or more equity shares for the start-ups. In this case, tax on long-term capital gains will be exempt provided these shares remain unsold or not transferred within the five years from the date of acquisition. The start-ups can also benefit from the amount invested on purchasing assets, provided they have not transferred assets purchased within five years from the date of purchase.

This scheme under GST aims to boost investments for eligible start-ups to promote their growth and expansion.

5.   Set-Off Carry Forward Losses & Capital Gains

Businesses can carry forward their losses if all the shareholders in an eligible start-up carrying the voting power on the day in which losses were incurred. GST has provided relaxations on the previous restriction of holding 51% of the voting rights remaining unchanged under Section 79 for eligible start-ups.

Consequences of Tax Evasion under GST Laws

The GST Council of India has now mandated e-invoicing and digital return filing processes to curb tax evasion. A practical implementation of GST law requires strict penalties against offenders. It is crucial to understand the know-how of the GST laws. Otherwise, start-ups and new businesses might have a hard time dealing with penalties. Here are some of the common offences under GST for small business in India and their penalties.

• Penalty for not registering under GST

10% or INR 10,000 penalty for tax due, whichever is higher.

• Penalty for not issuing GST invoices

10% or INR 10,000 penalty for tax due, whichever is higher.

• Penalty for not filing GST returns

10% or INR 10,000 penalty for tax due, whichever is higher.

• Penalty for committing fraud under GST

10% or INR 10,000 penalty for tax due, whichever is higher.

• Penalty for not filing GST returns in time

The late fee is INR 200/day (INR 100/day under the CGST Act & INR 100/day under the SGST Act) will be applicable up to a maximum fine of INR 5,000.

• Penalty for utilizing the composition scheme even though the start-up is not eligible

In case of fraud – as per Section 74, a penalty of INR 10,000 or 100% of the tax due (whichever is higher) will apply.

In case of no fraud – a penalty of INR 10,000 or 10% of the tax due (whichever is higher) will apply.

• Penalty for unlawfully charging higher GST rates

10% or INR 10,000 penalty for tax due, whichever is higher (in case additionally charged GST amount is not submitted to the government).

• Penalty for unlawfully charging lower GST rates

10% or INR 10,000 penalty for tax due, whichever is higher (in case additionally charged GST amount is not submitted to the government).

• Penalty for filing incorrect GST returns

A penalty of INR 25,000

• Penalty for issuing incorrect invoices

A penalty of INR 25,000

• Penalty for unlawfully charging the wrong GST type (IGST/CGST/SGST)

There is no penalty charged for this type of tax evasion. Businesses can pay the right GST amount and claim for a refund on the wrong GST payment made earlier.

How to Make the E-invoicing Process Easier for Start-ups?

The advent of the GST system in India has impacted mainly small businesses and start-ups. Most small businesses in India are still struggling to adapt to digital accounting processes. How can businesses issue correct e-invoices without hiring an accountant? Can companies successfully handle their financial operations without a dedicated accounting team?

The answer to these questions is Imprezz, the pioneer of invoicing and billing software in India. It is one of the leading business intelligence software that helps start-ups and small businesses generate GST-compliant invoices in just a few clicks. The software is a cost-effective replacement that allows new businesses to manage accounting without an accountant. Businesses can issue e-invoices in only three simple steps by using Imprezz accounting software.

Create the Invoice

The platform allows you to create multiple invoices in no time. You have to enter all the necessary details of goods or services supplied to the customer. The automated accounting system calculates the total value and helps you add the relevant GST rates applicable. The customizable templates enable you to edit the invoice template as per your business requirements. Once you have created the invoice, you can save and generate the invoice, ready for use.

Send Invoice to the Customer

After creating a GST compliant e-invoice, you can directly send it to your customer through email or SMS.

Receive Payment on Time

The invoice templates on Imprezz lets you link your bank account details. Your customer can immediately initiate the transaction and clear the invoice payment.

In addition to this, your customer can download and save the invoices for future reference. The software allows you to create and send invoices and helps manage various accounting tasks like tally, purchase order management, create and send quotations, import customer data, and more! The software also provides timely reports and business insights that fasten the decision-making process and develop business strategies.

Conclusion

Execution plays a vital role in bringing ideas to life. Similarly, GST plays the same position in implementing an effective tax system that intents to create a positive impact for businesses in India. Moreover, the new tax calculation system is better than the old, inefficient tax system as it is facilitative and efficient. It is fair to conclude that GST is playing a significant role in boosting start-ups in India to achieve its full potential.

If you are a new start-up struggling with accounting tasks, GST returns filing and adapting to the digital processes, let us run the errands for you. Imprezz accounting software enables you to issues bills and invoices in just a few clicks. Alongside, the software also helps file GST returns directly on the portal. Stay GST compliant, implement Imprezz GST billing software.

We offer a 14 days free trial software program for small businesses in India. Login to get started!

The advent of GST has led to significant changes in the way businesses operate across the nation. In the past few years, the need for corporate restructuring has increased the scope for transfer of business ownership. It is done majorly to increase the value of an enterprise, revive an organisation’s downfall, or gain an advantage over the competitors in the market. Either way, it is one of the extreme events, changes or decisions for a company.

Post COVID-19 economic crisis, organisations are primarily focusing on corporate restructuring through the transfer of existing business or a part of the business to another entity. Companies in India must evaluate the GST implications of transferring a business as per the recent tax relaxations. In this article, we have discussed the necessary implications and impacts of GST that might help business owners take significant decisions concerning business ownership changes.

Transfer of Business – Definition

Transfer of business is one of the basic accounting terms that define the action of transfer, assignment, conveyance, transmission or succession (by operation of law or by agreement) of the whole or significant part of a business, establishment or undertaking as per the applicability of this arrangement.

How to Transfer Business Ownership?

The means of transferring business ownership depends on whether a corporate entity is entirely up for sale, looking for partners/significant shareholders, or being taken over by a new member. Below, we have elaborated on the methods of transferring business ownership.

Partnership – Adding a New Partner

Adding a new partner is a go-to option for most MSME owners while transferring business ownership. Both parties have to follow the operating agreement, which describes; how to add a new partner to a small business idea. The agreement also states the ownership interests amount to be paid by the new partner entering into the business. The transaction is usually executed through payment in cash. However, other GST payment arrangements are also possible.

Sale of Business

Sale of business is initiated to revive the business’ value in the market. There are two effective methods to sell a private company.

• Cash or Finance

Interested buyer can either pay via a loan or from his resources to be a company’s partner. The amount of money on each asset distributed is determined by the residual method for ordinary income and capital gains.

• Owner-Financing Sale

Financing sale is an instalment method of purchasing a company. In this payment method, owners offer to train the potential partner while paying for their share of ownership over a certain period. It is an effective method to avoid the default risk that occurs when a company borrows money from the banks. In this method, the default risk is forbidden as the buyer might forfeit the business back to the owner.

Leasing the Ownership

Lease-purchase enables the lessee to run the small business until the lease period expires. It is an ideal purchase method for the buyer as it rids the risk of making a wrong purchase decision. Once the lease ends, the buyer can either purchase the business for a set price or drop the idea. It allows the buyer to lease another company or only walkway by giving complete control back to the owner.

Transfer of Business to a Family Member

Most Indian communities follow this method, where they transfer the business’ ownership to one of their family members. Businesses run under family ties also benefit from the tax deductions. The government has a different set of tax rules for these ventures. It helps avoid the estate taxes at the death of the current owner. It enables the business to tap on the lifetime gift tax exemptions.

Impact of GST in Business Transfer

The new goods and services tax (GST) Act has altered tax procedures across the country. The impact of GST on the corporate transaction has primarily affected the fulfilment of mergers and acquisitions, arrangements, amalgamation, and takeovers. Thus, the corporate sectors must analyse the provisions of GST laws and rules and their impact on businesses.

Here, we have listed some of the crucial aspects impacted by GST in a business transfer.

1.   Registration

The GST rule for business transfer under section 22 (3) of CGST Act 2017, states that a person buying the company in case of business transfer shall obtain a fresh certificate of ownership. The person is liable to register as the new owner and get the ownership certificate with the transfer date mentioned on it.

However, when a business is transferred due to an official order from the High Court or Tribunal, the transferee is liable to obtain the ownership certificate dated on the actual date of incorporation mention on the company’s registrar. As per section 22 (4) of CGST Act, 2017, the law states that the transferee shall do so under the order of High Court or Tribunal.

2.   Input Tax Credit

Input Tax Credit is one of the most discussed topics among individual planning to take over an existing company? What happens to ITC when the business ownership is transferred? Under section 18 of the CGST Act, the GST rule specifies that the taxable person can avail of ITC.

Further, section (3) of CGST Act, 2017 under GST rule 41 specifies that, in case of a change in the constitution of a registered taxable person due to a merger, sales, demerger, amalgamation, leasing or transferring of business, the registered person is granted transfer ITC to the transferee. In case of a demerger, the ITC will be allocated as per the asset value ratio of each unit mentioned in the demerger scheme.

3.   Itemized Transactions

What is an itemised transaction? It is defined as transferring assets and liabilities with assigned value on each item being transferred while transferring a business. Itemized transactions mainly concern the sale of particular items. Wherein, during a merger or acquisition, each item value is calculated separately. The transferee is liable to levy GST on itemised transactions; the sale covers the definition of goods as mentioned in Schedule II of the CGST Act.

4.   Crash or Slump Sale

What happens when you purchase a company on a crash or slump sale? Generally, crash/slump sale is no different from regular sales; they are treated equally. The CGST Act states that the registered taxpayer is liable to pay the applicable taxes. In case of transfer of company ownership, the supplies including activities mentioned in Schedule II of the CGST Act 2017, (Notification No. 12/2017 Central Tax dated (Rate) 28.06.2017) are exempt from GST under transfer of going-concern either whole or independently.

No GST is applicable on crash/slump sale. Thus, as per the virtue of Re Rajeev Bansal and Sudershan Mittal (GST AAR Uttarakhand) Advance Ruling No 10/2019-20 (date of judgement 09.01.2020 mentioned herewith below), it can be concluded that the agreement of business transfer as a going concern consisting an under-construction project is exempted from GST.

5.   Accountability of Businesses

At times, two or more small businesses in India merged or under the amalgamation/merger processes tend to involve exchanging goods or services before the date of enforcement ordered by the court or Tribunal for the transfer of business. Under such a scenario, the section 87 of CGST Act states that the companies are liable to pay tax on any such transaction of supply. The receipts shall either be included while calculating the turnover of supply or shall pay tax accordingly.

6.   Trading Securities 

Trading securities is one of the most common ways of acquiring a company. Buyer offers the shareholders to buy the securities of the transferor’s company at a specifically mentioned price. Trading securities is not considered as a transaction under GST. Thus, GST does not apply to the sale of securities.

GST Prospects & Implications on Business Transfer

The COVID-19 pandemic has caused chaos around the world. The disruption has caused a significant change in the economy, and the way businesses operate across the globe. However, on the other hand, it has also created tons of opportunities increasing the importance and flexibility of supreme businesses.

“Right time, right place and right opportunities”. It is the market condition that reflects the right time to leverage opportunities and exploit the ones at the bottom in any given situation. In the present-day scenario, businesses are determined, focused and consistently networking to assess various business niches and their performance. It helps them prepare themselves to sky-rocket their business both organically and inorganically through restructuring.

While the emerging prospects are floating across the tax system, MSME owners need to hunt for the opportunities and analyse the implication of GST on the transfer of business. Post COVID-19 pandemic, small businesses in India plan to retrieve their market value with a prospect to reinforce and grow amid. It is crucial to raise above the distress caused due to the adverse effects of the pandemic.

The information below is structured to provide detailed insights on the prospects of transferring business ownership and its tax implications.

Prospect 1: Transfer of Business as Going Concern

A running business capable of being owned and operated by the new owner/purchaser as an independent business, the transfer of ownership is listed under going-concern. As per this prospect, assets are sold as a part of the company when the purchaser intends to utilise the same resources to keep the business running and unchanged.

The internationally accepted guidelines of revenue and custom (referred by advance ruling authorities in India) also state that an enterprise should operate separately when only a part of the business is being sold. Further, the guidelines also forbid a series of immediate and consecutive transfers.

Tax Implication Under GST – Going Concern

When a running business is sold as going-concern, it is considered as a slump sale. Here’s how to analyse the relevant provisions of the GST law under such a scenario.

Provision No. 1

Schedule II of the CGST Act, 2017, states that the GST can be levied on the permanent transfer of business assets when a taxable person carries out the transaction; it is deemed to be performed by him in the course or before he transfers the ownership of another person. However, it is only applicable if the business is transferred as a going concern or a representative who is deemed the taxable person.

Provision No. 2

Serial No. 2 of Notification 12/2017 – Central Tax (Rate) dated 10-06-2017 states that the business as a going concern transferred either wholly or as an independent part is considered as the supply of service and its entire value is exempt from the levy of GST.

Explanation (Prospect 1)

The provisions mentioned above prove that the transfer of a business as a going concern includes the supply of services exempt from the levying GST on its transaction value. Concerning this, the GST Advance Ruling Authority (GST ARA) in India also runs the business transfer agreement analysis.

Prospect 2 – Transfer of Business as Itemized Sale of Assets

When a business is not transferred as a going concern, the assets and liabilities are transferred by allotting specific value to each item and is known as an itemised sale. As per this prospect, the slump sale, merger and amalgamation of business transfer are carried out item-wise where each asset’s value is calculated separately.

Tax Implication Under GST – Itemized Sale of Assets

As per the provisions mentioned above, under GST, the transfer of business assets is considered a supply. Goods that are a part of the business’ assets carried on by the taxable person is deemed to be supplied by him/her before the person ceases to be taxable. In simpler words, GST can be levied on itemised sales as per the GST rates applicable to the respective goods.

Prospect 3 – Transfer of Business as Sale of Securities 

Sale of securities is one of the most common methods of transferring business ownership. As per this prospect, the share of the company on sale is transferred to the purchasing company. It is done by making an offer to the existing company’s shareholders with a specific price for the purpose.

Tax Implication Under GST – Sale of Securities

It is crucial to analyse the tax implications for this prospect as per the applicable GST provisions. Here’s how to analyse the relevant provisions of the GST law under the sale of securities.

Provision No. 1

Section 2 (52) of CGST Act, 2017 defines goods as a movable property excluding money and securities. However, it includes actionable claim, agriculture, or goods forming a part of the land either served or agreed to be served before supply or under a supply contract.

Provision No. 2

Section 2 (105) of CGST Act, 2017 defines services as activities that concern the use of money, or its conversion through cash or any other transaction mode from one form to another form of currency or denomination; they are charged separately. In simpler words, services are anything other than goods, securities and money.

Explanation (Prospect 3)

GST has been explicitly excluded for the transfer of securities. As per the Goods and Services (GST) law, the securities Contract/Regulations Act, 1956, securities transfer include scripts, derivative instruments, shares, bonds, etc. Thus, the transfer of business ownership through the sale of securities, including the shares is not subject to GST.

Conclusion

The introduction of the GST regime in India has wholly modified traditional tax methods. The unified tax system of accounts and records under GST has increased the clarity in a business transfer; enterprise owners can now rely on GST. Transfer of business via amalgamation merges, and other means do not attract tax liabilities under the GST law.

With the advent of GST, it has become crucial for businesses to consider the prospects of restructuring their enterprise. It is essential to thoroughly understand the availability of relevant credits of Input and Input services to check from the GST prospective. Transfer of business requires an in-depth study of cost benefits, GST implications and appropriate due diligence as per the business combination.

Implement Imprezz GST accounting software and stay GST compliant. The hassle-free software system offers a 14 days free trial program. Log in to leverage accounting automation.

Coming up with small business ideas and making it requires you to take actions. There’s a lot of thoughts that go into taking that call of making it happen. The success of your business is inversely proportional to the number of sales you crack every day. It involves a lot more than just trading goods for money. Emerging technologies have been remarkably helping businesses succeed, and it is high time to understand how to leverage accounting automation.

As a business owner, you need to puzzle out product merchandising, stock control, market research, advertising and marketing, customer service, negotiation and more. It doesn’t end there. You need to understand small business accounting; cash flow, taxes, payroll, tally,  ledgers, purchase orders, and other accounting tasks need to be tracked carefully. You don’t want to let an entry slip away through the cracks.

In simpler words, the key to run a successful business is to keep detailed records, and that is where accounting automation software can help. This article is a part of our comprehensive small business guides – here’s how you can leverage accounting process automation in 2021.

What Is Accounting Automation?

Manual processes consumes most of an accountant’s workday. Accounting automation can complete the significant financial tasks automatically, or instantly. The concept of automation for small business in accounting is not entirely new; there have been different forms of computerised accounting systems since the late 1800s (source: https://www.accountingnotes.net).

Until recently, accounting automation tools were unable to work without human intervention. Accountants mostly operated them, and the manual operations still took a tremendous amount of time. Modern accounting automation has successfully removed these hassles by eliminating the least effective financial tasks. They provide more time for accountants to work on analysis, accounting strategies and other crucial business operations.

Automated software systems are advanced in crunching numbers and tracking each real-time transaction of a business. They have erased the need to build complex ledger files and countless rows and columns of data entry. Computerised software has built-in formulae that help create and send reports with the click of a button. AI in the field of finance strives to streamline the overall business operation by automating accounting processes.

Impact of Automation on Accounting

Several business organisations have been continuously seeking efficient results through fair use of accounting automation tools and services. According to one of the recent surveys, the accounting automation statistics suggest that a more significant number of transactions are being processed and reported automatically by AI machines (source: https://www.researchgate.net/). Modern AI software work alongside humans to make financial operations more effective and productive.

Several CFO’s are concerned about the impact of automation on customers. Recent reports estimate that more than 50% of the back-end functions can be potentially automated; except roles related to knowledge-base management and shared services (source: www.ibanet.org). That is professionals, including the data scientists, cognitive tech geeks who can convert insights into meaningful communication.

Several big businesses and CFO’s are now focused on utilising this opportunity by identifying individuals who are passionate to learn and expand their skill sets in the process of becoming the real business-minded partners. Today’s business world needs the next generation leaders capable of driving changes that can reshape how accounting operations are done.

What Is Accounting Automation Software?

The practical results of implementing accounting automation are beyond learning accounting or cloud accounting. Automated accounting is more potent than the traditional computerised system. Employing an automated system rids accountants from performing manual data entries or 3-way data matching.

Business automation tools automate a significant part of small business accounts payable processes. It automates everything from recording each transaction to GST returns filing procedures. Accounting automation software might require humans to intervene only when there are certain exceptions or need a higher level of thinking.

What Are the Benefits of Using Automated Accounting Software?

Automation in finance resolves the manual accounting hazards through smart software solutions that can instantly take care of the problem. If you are a small business wondering how accounting automation can benefit your enterprise, here’s a curated list that answers all your questions.

Strategic Management of Cash Flow

Mismanaging cash flow is one of the primary reasons why businesses go bankrupt. Cash flow crisis mostly arises due to inadequate accounting protocols that are unhealthy to a company. These protocols limit an enterprise from scaling and expanding their business. On the other hand, automation focuses on strategically managing cash flow that immediately provides a clear picture of business funds.

Automation allows business owners to quickly estimate their profits; where is the business spending the most, when can the company expect income. They no longer have to create manual reports to know their financial position. It provides visibility that contributes to making critical decisions when necessary.

Saving Time Through Automation

Automation is generally known to save time and manual efforts across various industries. Likewise, in accounting, automation allows accountants to conveniently work on ledger entries, client information and other financial details. They no longer need to spend countless hours trying to interpret data or matching them.

Automated accounting systems auto-updates each record and relates the existing data in no time. Further, the systems also generate structured financial reports and install accurate timestamps on the related data. Soon, automated accounting software might replace the need for manual data configuration as well.

Advanced Cloud Access

Businesses using cloud programs can never settle for anything less. It is much easier to work when data access and document sharing is just one click away. Accountants and business owners can immediately process transactions and analyse each document anytime, anywhere. Cloud systems like Imprezz makes it easier to work as a team with shared data access.

Cloud accounting software is comparatively much secure to manage accounts payable; it is purpose-built for professionals with round the clock data access. They strive to provide the highest safety and enterprise-grade data security standards to keep the business operations streamlined.

Flexible Features & System Functionality

Supreme quality accounting software provides features that are adaptable enough to sync with various business requirements. Implementing an accounting system that can adapt to the everchanging business environment is crucial for enterprises to succeed amid challenging competitors.

An integrated software system like Imprezz allows standard formatting and provides customisable templates to formulate different business ledgers. These are some of the vibrant features and functionalities that make accounting software highly flexible for a wide range of businesses and industries.

Cloud Storage & Data Organization

Automated accounting platforms are capable of elevating businesses beyond their current capabilities. Data organisation becomes easier with accurate data entry, processing and storage. Business operations become significantly convenient when you know where to locate specific information precisely.

Automated accounting software guarantees streamlined data. It automatically saves the details by immediately identifying the information entered in the database. Advanced computerised systems like Imprezz offers secure cloud accounting that helps perform automatic, regular back-ups to prevent businesses from losing crucial data.

Enhances Data Security

On the dark side, the internet of things has made it difficult for businesses to survive. Although there are various advancements in today’s technology, the chances of being harmed by cyberattacks are equivalently high. Accounting automation is built with encryption technology that offers advanced security features to ensure maximum business data protection.

Alongside protecting businesses from being hacked, automated platforms enable business owners to control the shared data access, allowing them to share what is necessary. The feature helps maintain the confidentiality of ledger information by preventing the unauthorised employee from accessing the information.

Quick Data Recovery

Physical storage of paper files can be a daunting task; data storage can slowly turn into countless records. The thought of retrieving or reviewing physically stored data can haunt accountants. They have to search for each document, sometimes piled in different rooms to match them and interpret the data.

Accounting automation is a boon to accountants; it is effortless to find records online. Instant location of files, entries and records has never been this easy before. Automated systems are programmed to make ledgers and document reporting easier to categorise and store safely.

Comprehensive Data Analysis

Besides offering data security and organisation, modern accounting platforms also supports quick presentation and distribution of financial data. Analysed files can be accessed by any individual working in the enterprise; making reconciliation of audits and records much more manageable.

Furthermore, analysing trends becomes easier with accurate means to check variances and predictability feature offered by the software. It enables accountants to make data-driven, smart business decisions by providing access to readily available reports.

Tax Compliance & Deductions

The advent of the GST regime in India has made returns filing mandatory for registered businesses. The recent tax relaxations have led to confusion. Business owners are struggling with sales tax deductions during the tax seasons. Running errands with tracking receipts and expenses might lead to mistakes that can have severe consequences.

The rise of automation in bookkeeping has eliminated the hassles of GST returns filing. Accounting platforms are now capable of updating records immediately as the transaction is processed. Accountants need not enter information as real-time accounting systems auto-update transaction data. They need to have an eye on these details to make sure if the information is accurate.

Automated GST accounting software like Imprezz are capable of figuring the deductibles. It allows the business owners to understand and estimate the tax preparation time immediately after processing the transaction.

Professional Development & Expert Learning

Any job role requiring manual, repetitive work can be replaced with the right tools and automation. In finance, accountants can easily replace their traditional, regular-basis work through automated accounting systems. It enables accountants to be more productive as they are free to focus on personal development and other efficient tasks.

Despite all the advancements, accounting platforms do require human intervention. Accountants must ensure that these applications are working accordingly from time-to-time. Automation has been a turning point in the career of every accountant. It helps enrich their employment experience, improve their value within an organisation, and share their knowledge.

Implementing an ideal accounting platform can eliminate the most tedious and frustrating accounting tasks. It must allow business owners to better focus on other crucial business operations, such as managing the bank accounts, developing business and accounting strategies, and better communication with the employees.

How to Select Best Accounting Automation Software?

Automated accounting systems aren’t just for accounting. Business owners must know how to leverage accounting automation by integrating various business functions under a single platform. Instead, they should look up for software programs offering integrated business intelligence tools that help manage other aspects of the business.

For instance, Imprezz integrated system allows businesses to leverage invoicing and quotation maker feature as a marketing tool. The software also integrates various essential tools like tally, purchase order management, import functions under a single platform.

Here’s a curated list of what to look for when you decide to purchase accounting software.

1.   Does the software work well for your business requirements?

Before taking the call on buying software, make sure if the accounting system is designed to make ends meet for your business. You can refer to online forums and detailed specifications to understand the functionalities of the software.

2.   Does the software offer multiple access levels?

As discussed earlier, it is best to implement different data access levels for owners, managers, employees and other authorities. You don’t want all your employees having easy access to your accounts data.

3.   Is the software capable of recording transactions and managing the payroll system?

Although any accounting platform is capable of recording transaction, not many systems offer payroll management. Most software offer payroll as an upgraded feature. Please check for the features before you purchase the software.

4.   Does the software offer inventory tracking?

Only some software features include inventory tracking; others don’t. You do not want to link other tracking apps to your main accounting software. It will just multiply the amount of money you will have to spend on automating your accounting processes. Do thorough research about the software features, but what is useful for your business. Do not pay for unnecessary features.

5.   Is it a cloud-based software?

We have already discussed the detailed benefits of cloud system in the article above. If the software is cloud-based, it will provide remote access. You will have the freedom to work from anywhere. It also offers lower support costs, automatic back-up facility and hassle-free integration for payment and other applications.

6.   Is the software extensible and scalable?

Small businesses have a greater scope of expanding with time. Thus, it is crucial to implement a scalable remote business accounting system, a software that can grow as the business does. Scalable software feature enables businesses to add new users as they expand. Wherein, the extensible feature allows users to purchase new add-on applications.

Regardless of which accounting software you choose to purchase; ensure you always keep your essential files archived. Do not share the access for your data concerning sales records, bank information, loan statements and tax data. These crucial documents play a vital role in formulating tax returns and business audits.

Quick Tips for Successful Small Business Accounting

Using your accounting software to accomplish your regular business operations will help you get the best results. Here’s a list of quick tips, make this your daily accounting small business checklist, so you don’t miss out on anything.

• Record Each Transaction
• Check & Reconcile
• Review the Difference b/w Incoming & Outgoing Cashflow
• Collect Required Tax Data
• Cross-Check the Defined Ledgers
• Keep Your Ledger Entries Updated
• Get an Outside Perspective from Your Financial Advisor
• Create Regular Reports
• Keep a Trail of Paper Records (Receipts & Invoices)
• Do Not Intermix Your Personal Accounts & Business Accounts
• Stay GST Compliant – File Returns On-Time
• Watch Your Business Cash Flow

Combination of Automated Accounting & Smart Spending Software

By now, the reasons why your business finances require automation must be pretty clear. Accounting software saves time, avoids manual errors, and keeps business documents at your fingertips. There’s no excuse for not implementing accounting software.

Alongside enjoying the benefits of implementing accounting software, have you considered leveraging automation to track your expenditures? While giving your finance team a customised control over your finances, you can also deal with your expenses in the same manner.

Combining accounting and expense tracking features makes your business operations more efficient, accurate and help confidently deal with your accounts at the end of every quarter. But the question remains; how to combine both functions? If you do not know where to start, consider implementing Imprezz accounting software, a complete package of business intelligence tools—leverage automation in every way possible. The software offers features that can help beyond your accounting needs.

Will Automated Accounting Software Replace CPA’s?

Automation replacing accountants in the near future is a mere myth. As we advance, businesses are still going to require accountants to ensure cost efficiency and effectiveness. Although automation simplifies a large role of accountants, it cannot entirely act like an accountant. Instead, it is the modernisation of the traditional practices of accounting which allows accountants to make exceptional advancements in their profession.

Automation in accounting has increased the scope for accountants. It has eliminated their need to spend enormous time doing the tedious yet essential accounting tasks; enabling them to limit their errors and provide accurate results. Accountants can now work on their vital roles as financial officers. They can further become finance consultants who create strategies, budgets and advice the CEO’s to help increase their organisation’ overall profits.

The emergence of advanced technology does not mean businesses can do away with employing humans. They still need bookkeepers who can understand the fundamentals of accounting, analysing and explaining how finance works for an enterprise. Businesses do require individuals who are capable of doing more than just interpreting financial data. Accounting software has transformed CPA’s into custodians of financial information.

Most people believe that AI (Artificial Intelligence) and machine learning will take over employees’ roles. However, it is far from the truth. In accounting, businesses will always require an expert to keep an eye over software functionalities. All-in-all, AI has increased CPA’s efficiency by enabling them to deal with numbers much faster and in more accurate ways. The process of strategic decision making is now easier than ever for CPA’s.

Business Automation Guide – Cut Short!

Having known the basics of accounting automation, here’s a list of new strategies working great for businesses in 2021.

• Automate transaction accounting tasks (bookkeeping, payroll, purchase order, etc.)
• Automate your business cash flow, tax calculation, planning and tax research.
• Automate accounts and records under GST.
• Leverage AI right away and save yourself loads of time.
• Auto-verify data to keep up with the quality.
• Become an automated and fully outsourced accounting professional for your clients (forecasting, financial modelling, business planning and more).
• Pick financial service providers who offer most accounting automation features and capabilities.

Conclusion

Technology has enabled business owners to manage their enterprise more efficiently. As a result of automation, the business now has an easy means to perform improved data analysis and reporting. Ideal accounting platforms enables business owners to see the overall business performance. If your company still adheres to manual accounting processes, you are running last in the race.

Automation enables you to keep your fingertips on the pulse of your business, helping you to meet the everchanging demands in the marketplace. We hope this guide to accounting automation – 2021 was helpful for your business. Now we leave it all over to you.

Do you want to install strategic accounting software for your business? Implement Imprezz, pioneer of business intelligence software for small businesses in India. The company has been helping MSMEs in India succeed despite the everchanging business environment. The platform has been helping several small businesses sustain despite the economic crisis caused due to COVID-19.

We offer a 14 days free trial software program. Login to automate your transactional works and financial advisory right away!