Accounting and Bookkeeping

Reconciliation is a process that verifies the accuracy of financial records by comparing them with external or internal data sources. It is essential for any business that wants to ensure its financial integrity and compliance. However, reconciliation can be time-consuming, tedious, and prone to human error, especially when done manually. That’s why more and more businesses are turning to automated reconciliations, which use technology to streamline and simplify the process. In this blog, we will explore what automated reconciliations are, how they work, and what benefits they offer.

What is Account Reconciliation?

Account reconciliation compares the transactions recorded by an organization’s accounting system with the information provided by banks, customers, suppliers, and other internal groups. The purpose of account reconciliation is to identify and resolve any discrepancies, errors, or frauds that may affect the accuracy and completeness of the financial statements. Account reconciliation can be performed for different accounts, such as bank accounts, accounts receivable, accounts payable, inventory, and fixed assets.

Benefits of Account Reconciliation

Account reconciliation has several benefits for businesses, such as:

1. Catching banking issues quickly: Account reconciliation can help detect and correct any banking errors, such as duplicate charges, incorrect fees, or unauthorized transactions, that may affect the cash flow and profitability of the business.
2. Making informed decisions: Account reconciliation can provide reliable and up-to-date financial data to help the business make better decisions and forecasts based on its actual performance and situation.
3. Protecting against fraud: Account reconciliation can help prevent and detect any fraudulent activities, such as embezzlement, theft, or money laundering, that may harm the reputation and assets of the business.
4. Freeing up time and resources: Account reconciliation can reduce the workload and stress of the accounting staff, who can spend less time on manual and repetitive tasks and more time on value-added and strategic activities.
5. Reducing human error: Account reconciliation can minimize the risk of mistakes, omissions, or inconsistencies when handling large volumes of data manually.
6. Maintaining consistency at scale: Account reconciliation can ensure that the quality and accuracy of the financial records are maintained regardless of the size and complexity of the business and its transactions.
7. Optimizing accounting processes: Account reconciliation can help identify and improve any bottlenecks or inefficiencies in the accounting system and procedures, leading to better performance and compliance.

Applications: Areas where Automated Reconciliations can be implemented

Automated reconciliations can be implemented in any area where reconciliation is required, such as:

1. Bank reconciliation: This is the most common form of reconciliation, which compares the transactions recorded by the accounting system with the information in the bank statements. Automated bank reconciliation can match and reconcile the transactions automatically, saving time and effort for the accounting staff.
2. Accounts receivable reconciliation: This is the process of verifying the payments received from customers against the invoices issued by the business. Automated accounts receivable reconciliation can track and reconcile the payments faster and more accurately, improving the business’s cash flow and customer satisfaction.
3. Accounts payable reconciliation: This is the process of verifying the payments made to suppliers against the bills received from them. Automated accounts payable reconciliation can ensure that the payments are made on time and in the correct amount, avoiding penalties, disputes, or overpayments.
4. Inventory reconciliation: This is the process of verifying the physical inventory of the business against the inventory records in the accounting system. Automated inventory reconciliation can help maintain the accuracy and availability of the inventory, reducing waste, theft, or loss.
5. Fixed assets reconciliation: This is the process of verifying the existence, condition, and value of the fixed assets of the business, such as machinery, equipment, or property, against the accounting records. Automated fixed assets reconciliation can help monitor and manage the depreciation, maintenance, and disposal of fixed assets, enhancing their efficiency and utilization.

Importance, Benefits and Value of Automated Reconciliations

Automated reconciliations are essential for businesses because they can provide several benefits and value, such as:

1. Saving time and money: Automated reconciliations can reduce the time and cost of reconciliation by eliminating the need for manual intervention and data entry.
2. Improving accuracy and quality: Automated reconciliations can improve the accuracy and quality of financial data by minimizing the errors and discrepancies that may arise from manual processes.
3. Enhancing security and compliance: Automated reconciliations can improve the security and compliance of financial records by providing audit trails, controls, and validations that can prevent and detect any unauthorized or fraudulent transactions.
4. Increasing productivity and efficiency: Automated reconciliations can increase the productivity and efficiency of the accounting staff by freeing them from tedious and repetitive tasks and allowing them to focus on more value-added and strategic activities.
5. Providing insights and analytics: Automated reconciliations can provide insights and analytics that can help the business better understand its financial performance and situation and make informed decisions and actions.

Automated reconciliations are a game-changer for accounting, as they can streamline and simplify the reconciliation process and provide several benefits and value for the business. By using technology to automate reconciliations, companies can save time and money, improve accuracy and quality, enhance security and compliance, increase productivity and efficiency, and provide insights and analytics. Automated reconciliations can help businesses achieve financial integrity, compliance, and excellence and gain a competitive edge in the market.

At Affiniax Partners, we can help you pull all that data you need, match transactions rapidly and only alert your employees when an exception or variance is present. To know more, please contact Mr. Nihar Kothari, Co-founder and Partner, at nihar@affiniax.com.

Payment process is a critical part of any business, but it can also be a time-consuming and error prone. By automating the payment process, businesses can save time and money, improve accuracy, and reduce fraud.

There are a few key steps involved in automating the payment processing process:

1. Choose a payment processing solution. There are many different payment processing solutions available, so it’s important to choose one that meets your specific needs. Some factors to consider include the types of payments you want to accept, the fees charged by the solution, and the level of security it offers. Alternatively, the entity can continue to have their banking channel as main mode of payments.

2. Integrate your payment processing solution with your accounting system. Once you’ve chosen a payment processing solution, you need to integrate it with your accounting system. This will allow you to track payments and reconcile your accounts. A solution can be created to reconcile your banking transactions too.

3. Create a workflow for payment processing. Once your payment processing solution and accounting system are integrated, you need to create a workflow for payment processing.

This workflow should include the following steps:

• Invoices are created and sent to customers.
• Customers pay invoices through the payment processing solution.
• Payments are automatically reconciled with the accounting system.
• Vendors are notified of payments.

4. Automate the payment approval process. If you need to get approval for payments before they’re sent, you can automate the approval process. This can be done by integrating your payment processing solution with your approval system.

By automating the process of payment processing, you can save time and money, improve accuracy, and reduce fraud. Here are some of the benefits of automating payment processing:

• Save time and money. Automate to save time and money on manual tasks.
• Improve accuracy. Automate to reduce errors and increase accuracy.
• Reduce fraud. Automate to make it harder for fraudsters to steal money.
• Improve customer satisfaction. Automate to make it easier for customers to pay.
• Increase compliance. Automate to help you stay in compliance with regulations.
• Gain insights. Automate to track payments and identify trends.

Overall, automating payment processing can offer several benefits for businesses.

For more information, please feel free to contact Nihar Kothari, Partner at Affiniax at nihar@affiniax.com.

We understand that managing employee expenses can be a tedious and error-prone process. That’s why we are excited to introduce our expense management solution, which can help streamline this process for you. Our solution automates the process of approving and reimbursing employee expenses by:

• Creating a workflow that captures and validates expenses
• Routing expenses to the appropriate approver
• Automatically updating the accounting system

Our expense management solution is:

1. Easy to use and fully customizable to fit the unique needs of your organization
2. Configurable to automatically validate expenses based on predefined rules, such as expense type, amount, and date
3. Provides visibility into your organization’s expenses, providing insights into spending patterns and areas where cost-saving measures can be implemented.
4. By implementing our expense management solution, your organization can expect:
5. Improved productivity and efficiency
6. Reduced errors
7. Better control over expenses

How can Affiniax Partners help?

We have a team of finance and technical experts who can understand your requirements in detail and recommend a workflow which will help in achieving the desired customised results. For more information, please get in touch with Mr. Nihar Kothari, Partner at nihar@affiniax.com.

Invoicing is an integral part of every business, and it involves the process of creating, sending, and receiving payment for goods or services. However, manual invoicing can be a tedious and error-prone process that takes up a lot of time and effort. Automation of invoices can make this process much more efficient and streamlined. In this blog, we will explore the benefits of automating the process of processing invoices.

1. Saves Time: Automating the invoicing process can save a considerable amount of time that would otherwise be spent on manual data entry, data validation, and invoice creation. Automation can be done by extracting data from excel sheets, invoicing platforms, or emails, and automatically creating or updating the corresponding records in your accounting system.

2. Reduces Errors: Manual invoicing can be prone to errors, such as incorrect data entry, misplaced documents, or delayed payments. Automating the process reduces the chances of errors and provides a more accurate and efficient system. This also helps to avoid the need for manual correction, which can be time-consuming.

3. Improves Cash Flow: Automated invoicing can improve cash flow by reducing the time taken to send invoices and receive payments. By automating the process of invoicing, you can send invoices quickly, and your customers can make payments easily and promptly. This ensures that your business always has a steady flow of cash.

4. Increases Productivity: Automating the invoicing process can free up time for your employees, allowing them to focus on other critical tasks. This can increase productivity and allow your business to operate more efficiently.

5. Enhances Customer Experience: Automated invoicing can also improve the customer experience. By sending invoices promptly, you can ensure that your customers have enough time to make their payments, reducing the chances of late payments or missed deadlines. This creates a positive impression of your business and can lead to increased customer satisfaction. In conclusion, automation of invoices can bring many benefits to businesses, such as increased efficiency, reduced errors, improved cash flow, increased productivity, and enhanced customer experience. By automating the invoicing process, businesses can save time and money, increase accuracy, and improve customer relationships. With the right tools and software, businesses can streamline their invoicing process and enjoy the benefits of automation.

How can Affiniax Partners help?
We have a team of finance and technical experts who can understand your requirements in detail and recommend a workflow which will help in achieving the desired customized results. For more information, please get in touch with Mr. Nihar Kothari, Partner at nihar@affiniax.com.

While UAE VAT legislation is about complete its 5^th year since its implementation back in 2018, the Ministry of Finance introduced a major revision to the original VAT legislation (by issuance of Federal Decree-Law No. 18 of 2022). The proposed changes are effective 1 January 2023. The revised legislation have minor amends to various articles among further additions of articles. Some of the major updates in the legislation are as under:

1. 100% Exporters (eligible to avail VAT registration exceptions)

The current provisions of the VAT legislation did allow an exception from VAT registration and compliance where the supplies are only subject to the zero-rated. Under the new amendment the same benefit has been extended to the business e who registered previously for VAT and were unaware of such benefit. Effective from 1 January 2023 the registered business will also be eligible to apply for the exception and avail of this benefit.

2. Statute of Limitation

Generally, the FTA can conduct a Tax Audit or issue a Tax Assessment within 5 years timeframe from the end of the relevant Tax Period (monthly/quarterly)., Under the amended  legislation the condition of 5 years  have been overruled and the FTA can conduct a tax audit or issue a Tax Assessment even after 5 years from the end of the relevant tax period subject to the taxpayer has been notified before the expiration of the 5-year period and the such audit shall be concluded within 4 years from the date of the notification.

3. Limitation to filing Voluntary Disclosure

The legislation now restricts a Taxable Person to file for Voluntary Disclosure after the lapse of 5 years from the end of the relevant Tax Period.

4. Extension to Statue of Limitation attached to Voluntary Disclosure

Upon the submission of Voluntary Disclosure by Taxable Person in the 5th year (from the end of the relevant Tax Period) the timeframe to conduct a tax audit will be extended to an additional 1 year.

5. Tax Evasion / non-registration

The authority may conduct Tax Audit and/or issue Tax assessments within 15 years from the end of the Tax Period in which the tax evasion occurred or if the person failed to complete VAT registration (as required in the legislation).

6. Tax Invoice and Tax Credit Note Issuance timeline

The legislation now mandates that the Registrant must issue a Tax invoice (continues or non-continuous supplies) and Tax Credit Note within 14 days from the date of supply or required.

Previously the 14 days rule was appliable only for non-continuous supplies (Article 25 of the Decree-Law)

7. Additional compliance for input credit on import of service

Many businesses pay for services to overseas service providers on the basis of agreements without requiring the service providers to issue an invoice. As per the recent changes in the VAT laws, for import of services, input credit could only be recovered if the taxpayer receives and retains invoices in accordance with the VAT laws.

Further to learn how the amendment in legislation affects your VAT compliance reach us as: taxation@affiniax.com

Written by Jilal Ahmed