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Just as the COVID-19 situation appeared to be getting better in a post-vaccinated world and the economy slowly began to recover, countries across the globe have been hit by a third wave. India, too, is predicted to be on the brink of it. Digitisation, social distancing and remote-working continue to be the keywords for any business – but CFOs across industries are truly concerned about what the coming year has in store. It’s still early, but if past learnings have taught us anything, here’s what 2022 will have in store for CFOs.
Almost every organisation has jumped onboard the technology bandwagon over the past two years as remote working became the new norm. Digital transformation is not new, but the pandemic brought on the ultimate push. Every CFO wants to enable growth and profitability while keeping business and compliance risks minimum. The key to achieving this is bringing in the right technologies that help deliver organisational value.
Some of the ways of digital transformation 2022 will hope to see the rise of AI-based tools for tax compliance, digital financing options, and using cloud-based technologies for better data sharing, storage, communication and improved customer experiences. For a CFO, it means working closely with the CIO to find areas where paper-based and offline modes of working can be replaced and derive the maximum monetary benefit from investing in digital infrastructure.
A CFO requires real-time visibility of business insights and financial data. Financial information is now required to build an overall organisation strategy, and this data must be obtained in real-time and no longer at the end of the month or financial year. This is where real-time data analytics come in.
2022 will see a rise in real-time data analytics, giving CFOs access to financial information on tap to understand key business trends, identify areas of profitability, cost control, anomalies in tax compliance, and more. SaaS platforms provide CFOs with real-time data such as their vendor compliance history so that they can choose only to do business with compliant business partners. Any discrepancies can now get flagged in real-time, and the necessary action can be taken with a click of a button.
Small and mid-sized businesses are often cash-strapped and cannot obtain traditional forms of funding due to lengthy KYC processes, heavy interest costs, or the inability to provide collateral. This creates blockers along the supply chain and leads to these enterprises missing out on future orders. Digital supply chain financing began to take off in 2021, and this year will see the rise of even more digital funding options.
For CFOs of small and medium-sized enterprises, obtaining funding will no longer be the stressor that it once was. FinTech companies like Clear offer supply chain financing such as invoice discounting, etc. that help shorten the cash conversion cycle. Cash infusion helps enterprises accelerate their payments and take on new projects. Even CFOs of large enterprises are now turning towards digital financing options offered by FinTech companies for the faster, easier, and more efficient process, with far lower borrowing costs.
It’s just been a few days into 2022, and we have already seen tighter tax restrictions in the GST law. Removing provisional input tax credit means businesses now need to reconcile their purchase invoices on an ongoing, frequent basis. They can now only claim an input tax credit on invoices that their vendors upload. This new restriction has stressed businesses, especially finance heads, who know that non-compliance with tax laws could directly hit working capital and profitability. The stress to remain compliant is unprecedented.
With the government tightening every aspect of tax compliance, most modern CFOs rush to automate their tax compliance. Everything can now be automated, from return filing to reconciliations to vendor communication and payments. Automation ensures 100% accuracy in input tax credit claims and GST returns filed. No finance leader wants to take the chance of incorrect data being reported. CFOs should adopt a GST solution to streamline their tax compliance and reduce the risks of interests, penalties and blocked working capital.
Cloud-based solutions have begun to disrupt the compliance landscape in India and globally. It has led to almost every CFO asking the pertinent question – Why spend on permanent digital infrastructure when you can only pay for what you use? In keeping with the other CFO trends of digitisation, tax automation, and real-time data analytics, cloud solutions have forayed into the compliance space and now deliver all of this and more.
Further, by taking business and tax compliance aboard a consolidated cloud-based solution, CFOs can now finally have a single source of truth. In the past, enterprises used different solutions for invoicing, TDS, GST, e-way bills, etc. They used consulting firms to obtain data insights for decision making. Gone are the days of multiple disconnected systems. Modern CFOs want a single source of truth. This data must be their business data. And what better way to obtain it than through a cloud-based solution that offers anywhere, anytime data insights, the highest levels of data security, and the least investment.