The company is one of the leading MNC FMCG companies in retail e-commerce. Their wide product range meant dealing with many vendors across the Indian market.
Current situation:
Under GST, GSTR-2B reconciliation with books is essential to prepare GSTR-3B returns. It is critical to ensure that the ITC claimed by the taxpayer in GSTR-3B matches the ITC available in the books of accounts. If there is a mismatch, it can lead to penalties and interest and if on the other hand the vendor has not reported the GST in their returns it leads to loss of input credit and thus an additional cost to the company.
The finance team was under pressure month-on-month to reconcile GSTR2B with Books and to follow-up with vendors who have not yet reported invoices on GST portal. GSTR 2B gets generated around mid of every month and 3B must be filed within 7 days of receipt and hence the finance team must complete the reconciliation between said dates.
The accounts team had a couple of people who were dedicated only for the reconciliation and vendor follow-up on month-on-month basis. The team used to take around 2 days to create the ITC as per books report and another 3-4 days to do the reconciliation between GSTR2B and Books report. The exercise was completely manual and the limited time to complete meant that there was no time for elaborate checks and balances. The exercise was thus error-prone resulting in penalties. Vendor follow-up was done for the rest of the month by sending email reminders manually.
Problem to Solve:
To eliminate the manual process of GSTR2B vs Books reconciliation and sending email reminders to the vendors who have not yet reported their invoices on GST portal.
BiCXO Solution:
The solution was to automate the entire process of reconciliation such that the reconciliation reports were generated with a click of a button. The email reminders also had to be automated to avoid loss of input credit.
The company provided raw reports from their ERP system and GSTR2B report from the GST portal. The data was understood by the BiCXO’s functional consultants, and the following steps were devised, to ensure seamless automation process,
- Created methodology based on GST number and Invoice number to automate the entire process of reconciliation of GSTR2B vs Books and vice-a-versa.
- Invoices were categorised as “Perfectly Matched”, “Matched with differences”, “Available in 2B but not in Books” and “Available in Books but not in 2B” along with the short summary based on these categories.
- BiCXO also highlighted parties with wrong GSTIN numbers as per books so that company can rectify the same in their ERP system.
- Email reminders were automated based on “Available in Books but not in 2B” category of remark.
- BiCXO automated sending customized reminders on monthly basis.
- Outcome tracker chart was prepared to list the vendors and invoices to whom reminders have been sent thrice and who have still not reported invoice on GST portal.
Outcome:
In conclusion, the adoption of BiCXO accelerated the company’s journey towards digital transformation and operational excellence. By harnessing the power of automation via BiCXO, the accounting team could navigate the complexities of tax compliance with efficiency and accuracy. Finance team is assured of compliance with GST laws thus avoiding potential penalties
By automated reports of vendor communications and flagging discrepancies proactively, BiCXO mitigates the risk of penalties and interest, improving the company’s financial health and reputation in the process.