Clear, in association with Mint recently conducted a special presentation on ‘How technology can help navigate financial decisions for the manufacturing sector,' where Industry Leaders came together to give their valuable insights.
Listen to this article
The emergence of technology-driven business models and working apparatuses along with the rapid digitization of economic activities due to the COVID-19 pandemic has triggered multiple teething problems. Unsurprisingly, the adaptation processes that businesses have had to embrace, coupled with the rise of the informed, tech-savvy customer has had a trickle-down effect on the gamut of tax compliance.
One such sector where technology can make a significant difference in terms of streamlining the tax compliance processes is manufacturing. What with the ever-evolving business processes and tax regulations, manufacturers often find themselves faced with challenges that hinder efficient filing, remitting and reporting on taxable transactions. Maintaining compliance with tariffs and taxability rules across different jurisdictions and managing exemptions for audits while sustaining growth in the bottom line has also become trickier for players in the manufacturing sector.
Clear, in association with Mint recently conducted a special presentation on ‘How technology can help navigate financial decisions for the manufacturing sector'. Archit Gupta, founder and CEO Clear, Naresh Kumar Pathak CIO Andritz Hydro Private Ltd, Altaf Jiwani CFO Welspun Steel Limited, Ghanshyam Gujrati, CFO Bansal Wire Industries Pvt Ltd and Arnab Roy CFO Schneider Electric Systems India Private Ltd joined host Gautam Srinivasan in this panel discussion to share their insights.
Mr. Gupta kicked off the session by throwing light on the various areas where technology can be a game-changer for a manufacturing company, “From a manufacturing perspective, what we have observed is multiple areas in which technology is widely being adopted with COVID-19 having transformed the way in which businesses think about technology. CFOs and CIOs across the board have started deploying technology, especially in the manufacturing sector. Few things where we are observing massive changes are data insights and visualizations on inventory, demand planning, forecasting, supply planning – these are now being done via digital tools. Technological tools are being increasingly used for informed decision-making and some of the other things that we have noticed are digitization of the Accounts Receivable (AR) and Accounts Payable (AP) cycles given that in-person visits may be less common: for instance, there may be a complete order-to-cash cycle happening digitally. In many manufacturing businesses, the interaction has now moved from physically meeting say the distributor or the supplier to the entire ordering process being digital."
However, as is customary with any tectonic shift in an industry, the initial phases of the journey can have many roadblocks. Pathak says, “It has not been easy in this industry because of long-term projects. When we deliver the project then you are going to get the money. In terms of compliance, digitization has facilitated quicker decision-making. When you talk about the overall technology landscape, the situation is drastically different from what it was some time ago and the pandemic has taught us a lot. For instance, in my organization the raw material plays an important part in the projects. Automating requests and approvals for purchases has not only benefitted us internally but the suppliers and e-invoicing has also been integrated with the GST processes."
Gujrati spoke about the various issues that have cropped up with regards to the colossal switch to technological mediums for business processes as well as compliance exercises. “It will take a while for the mindset of the people to change and for them to adapt to these new processes – ensuring the trickle-down effect at the management level, middle level and the junior level has been difficult. Data security is also a burgeoning concern and keeping everything running in a systematic way is based on the availability of real time data." Real time management of data that is easy to use so that everyone in the ecosystem can utilize it efficiently can be the way ahead in dealing with the pain point in this transition, he advised.
The dependence on technological channels and its interlinked systems can also provide a fertile germinating ground for manufacturing companies to remove the chinks in different spheres of the manufacturing gamut. “The fundamental shift which has happened – earlier most of the deployment of technology would be limited to an organization but this time it is an entire ecosystem which is being leveraged by all organizations and that is what is bringing in the efficiency in the organization. To give you an example, just before the pandemic we had started our shared service center and we had deployed our business continuity programme through that. So fortunately, we were well-prepared and had ensured that the finance processes were operating seamlessly. Through technology deployment you can manage risks, ensure growth and achieve efficiency because with the elimination of manual intervention, the risk of errors also comes down significantly," says Jiwani.
According to Roy maintaining simplicity in processes can be crucial to eradicating hiccups in the large-scale deployment of technological tools for financial decision-making processes. He also explained a high degree of interlinking between different players in the ecosystem including regulators can help in the simplification process. “I think the secret has been to keep it simple. For us the journey was marked by a fair bit of teething problems but it has been rewarding. I would say we are now quite evolved in terms of automation and digitization and we have been pushed to use digital tools due to COVID-19, for example, the usage of bots for tax compliance which has enhanced efficiency significantly. In terms of what can be done better in this arena, I feel that now we have an interlinked supply chain ecosystem – the suppliers, customers and companies talk to each other. In terms of government compliance, there are different government departments that are still not talking to each other. I think that is the next level of simplification we can hope for because if that happens the cost of compliance will further come down," he says.