MSMEs form the backbone of the economy, contributing over 40% to the country’s GDP. India is home to nearly 56 million MSME entrepreneurs and so the industry creates significant employment opportunities. MSMEs thus are considered to be engines of economic growth that promote equitable development. Yet, several of these enterprises are struggling to make ends meet on account of the outbreak of the global pandemic and facing a lack of liquidity. This has made it necessary to restructure the ways by which micro, small and medium-sized companies can more easily rebuild and relaunch their businesses. Digital transformation can play a defining role here.
Simultaneously, the introduction of digital accounting has remarkably changed accountancy. Digital accounting has brought in massive benefits for professionals and businesses performing accounting operations. It has also made chartered accountants more accountable to their customers. Moreover, accounting software helps consumers access their financial accounts anytime, anywhere and offer quick, error-free service. Adopting digital accounting can enable MSMEs to make their accounting functions more efficient by organising, planning strategically, and adequately channelising their financial processes.
Benefits of Digital Accounting for MSMEs
In the current times, adapting to digitisation has become inevitable, especially for those in the business world. Before Covid-19, small and medium businesses accorded secondary importance to digitisation. But the wave of global pandemic completely changed everything, forcing businesses to revisit and restructure their models. As an outcome, businesses have understood that to bounce back from the repercussions of the pandemic, they will have to go digital for not just delivering their products and services but even for keeping a record of all transactions and other business functions. For instance, adapting to accounting software is helping MSMEs automate their processes.
Advantages of E-invoicing
E-invoicing, which refers to electronically capturing invoices with the aid of digital accounting software, can feed data directly into a business account payable system without any room for error. This helps in making the business more productive as less time goes into correcting human errors. With E-invoicing, MSMEs are also able to process invoices faster, thus facilitating timely payments. This further helps improve the relationship with the suppliers.
A small or a medium-sized company owner has a lot on their plate. From tracking the employee time to managing payroll, they are overly occupied. By making the switch to accounting software, MSMEs can easily automate and streamline administrative work. This also helps these businesses save their time and money.
Electronic invoices can also help organise the accounting books of MSMEs, saving time and effort when it comes to keeping financial records in order. With e-invoicing and accounting software, MSMEs can save the details of their customers, invoice templates and product information all in one place. The software also auto-fills with just a few clicks, thus ensuring that the invoices are correct every time. Hence, electronic invoicing or e-invoicing is undoubtedly the future of electronic billing and is here to stay for long.
“The emerging digital technologies are making it easier and convenient for businesses to effectively manage their operations and service their customers more proactively. Adopting these technologies has become essential for extracting timely financial insights so that MSMEs can stay ahead of the competition. Going forward, in a post-Covid world, non-digitised ventures will become obsolete and to survive, stay afloat and overcome the adversaries, businesses will have to embrace digitisation,” Busy Infotech's Rajesh Gupta said.
Furthermore, for the majority of MSMEs, their account books are nothing but a heap of receipts languishing in the forsaken corners of their offices. But such a disorganised manner of storing things makes it a herculean task for the accountants to provide the company with high-quality, seamless, efficient and timely bookkeeping service. This is where digital accounting helps. The software makes it easy for the accountant to access all the receipts and other transactional records from a single cloud space. And from here, they can take on other work, including filing of ITR and computational work.