What is limiting the growth of MSMEs?

power of technology

 

There are many factors that limits the growth of MSMEs. One of the most important factors is Information Technology(IT).

We see all around filled with Information Technology (IT). We also been seeing the growth of IT within every organisation and government entities. We also must have observed that the IT is covering every nook and corner of the establishments.

In true sense, in the present world, unless an organsiation has end-to-end conntects IT, they will not be able to respond both internally and externally. Also the enterrpise will not be able to take right decisions as a result they will lose cost, opportunity and their competetive advantage. These will lead to sickness of the enterprise.

Accounting Software:

For a very long-time the MSMEs were depending upon Accounting packages. Since the primary focus of accounting package is Accounting and Statutory Compliance, it does not provide 360 degree view of the enterprise transactions also it does not provide the real-time data. Due to this gap many (none) of the CEOs and Management teams does not access their accounting software.
This gap is further widened after the GST. As GST is insisting for the data calrity right at the starting stage of Transcation. The data has to be clear at the Purchase Order and Sale order stage itself. Failing which, the data can not be made right at Invoice or the Purchase bill stage. As wel all know, the GST rules are going to get stringent from 01/04/2018. More over the GST returns are on a monthly basis. Many of us are slowly getting use to this. The next surpirse will be after the “Way Bill” is mandatory. At this time, each transaction has to be accurate on a daily basis.

Till last year, MSMEs use to conduct their audits 6 months after the completion of the financial year. But after GST, the auditors are asking the MSMEs to close their books on a daily basis. Not only that, but the transactions are to be as per GST rules.

GST demands daily closing of books instead of the present practise of 18 months. This is huge challenge for the MSMEs.

Every challenge is an Opportunity:

Taking this as an opportunity, MSMEs can go for an end-to-end GST compliant ERP system to automate all their business transactions. The distinct advantage are as folllows:

1. Closing of books on a daily basis
2. All transactions are GST compliant.
3. Access to real-time data
4. Audit friendly data for GST returns and Auditing.
5. Eliminate inter-departmental data mismatch and confusions.
6. Much better decision making based on accurate data and save cost.

Right-fit ERP is a great way for the MSMEs to mitigate their growth barrier. MSMEs need to upgrade to the ERP system to stay competitive and achieve growth.

Vital role of Auditors:

With the above facts and current challenges, Auditors need to advice and help the MSMEs to upgrade for the ERP system. MSMEs can also generate real-time data for their banks and financial institutions. If the day-to-day transactions are recorded electronically, that also would make the Auditors job easy. Many auditors are struggling for filing even 3b returns, since the data provided m the MSMEs are incorrect as per GST norms. With GSTR 1 & 2 and the “waybill” round the corner, it is going to get tougher with out proper GST compliant IT solution.

Auditors can become extended user of the ERP system in filing the returns and carrying the audits.

Partner & Freelancer enquiries solicited.