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Top 4 Accounting Tools for Indian Tech Exporters

Top 4 Accounting Tools for Indian Tech Exporters
rohit
Rohit6 December 2023

Accounting and bookkeeping in the export tech service business can often resemble the puzzling twists and turns of a Rubik's Cube. Each face of the cube represents a different aspect of your financial operations - sales, expenses, taxes, and more. 

Balancing these facets is akin to aligning the cube's vibrant sides, ensuring that every financial move clicks into place. Only by carefully manoeuvring through the intricate complexities can you unlock the solution to your financial puzzle and achieve sustainable success. 

However, a report shows that 60% of small business owners feel they aren’t well-read about accounting and bookkeeping. Let's delve into the importance of accounting and bookkeeping, the associated bottlenecks, and how appropriate accounting tools can help you overcome them.

The Importance of Bookkeeping for Tech Exporters/Small Businesses

Accurate bookkeeping is vital as it ensures financial transparency, facilitates informed decision-making, aids in tax compliance, and enables efficient cash flow management. It helps further in the following ways.

  • Tracking Income, Expenses, and Profitability: By maintaining accurate financial records, you can gain insights into your revenue streams, identify cost-saving opportunities, and make informed decisions to enhance profitability.
  • Legal and Tax Compliance:  Maintaining organised and accurate financial records through accounting/bookkeeping proves useful during audits, tax filings, and regulatory inspections, avoiding penalties and legal complications.
  • Financial Insights for Informed Decision-Making: Bookkeeping provides valuable insights and, when analysed, provides financial data that helps make informed decisions regarding budgeting, pricing strategies, and investment opportunities. This helps optimise resource allocation and maximise profitability.
  • Risk Reduction and Transparency: Accurate bookkeeping reduces the risk of errors, fraud, and misappropriation of funds. Implementing internal controls and regular reconciliation processes ensures transparency and trust in their financial operations. This instils confidence in stakeholders, including investors, partners, and clients.
  • Cash Flow Monitoring and Future Planning: Bookkeeping also allows tech exporters to monitor their cash flow, plan for future expenses, and forecast revenue. This way, businesses can effectively manage working capital, plan for investments, and establish long-term sustainability and growth strategies.

Despite its numerous benefits, many companies face challenges while maintaining good accounting or bookkeeping practices. Here’s why.

The Challenge of Bookkeeping in Tech Exports

The challenges of bookkeeping in tech exports arise due to the unique characteristics of the technology industry. Here are some common bottlenecks tech exports often face with bookkeeping: 

Dealing with bank reconciliation manually 

Tech companies that operate globally face challenges when dealing with transactions and currency conversions across borders. This makes the bank reconciliation process more complicated. 

Verifying transactions and reconciling differences manually takes a lot of time and can lead to mistakes. This is especially challenging when dealing with multiple bank accounts and large transaction volumes, which can cause financial inaccuracies.

Managing cash flow

Various factors hinder a business’s cash flow. Fluctuating international sales creates uncertainty, as revenue streams may vary significantly from one period to another. Additionally, delayed client payments can disrupt cash flow, causing a strain on operational expenses and the ability to invest in growth. 

Currency exchange rate fluctuations further complicate matters, as they can impact the value of international transactions and affect the business's financial position. Moreover, effectively managing expenses is crucial, as unexpected costs or overspending can deplete cash reserves. 

Error-prone and time-consuming work 

Even as a small business, you need to deal with a large amount of financial data, such as invoices, receipts, and expense reports, which require high precision. Manual handling of such tasks is time-consuming and increases the risk of mistakes in data entry, classification, or calculations. This shortcoming goes back to the primary need for accurate bookkeeping mentioned in the section above.

Complying with regulations 

Exporting businesses must follow many rules, like export controls and tax laws. These rules can make bookkeeping more complicated. Non-compliance with the rules can lead to legal trouble, fines, and harm to the company's image.

You can overcome these challenges and streamline your bookkeeping procedures by embracing automation, which eliminates: 

  • Repetitive data entry 
  • Tedious handling of invoices, receipts, purchase orders, and expense reports
  • The need for extensive manual record-keeping and reconciliation
  • Human errors in data classification and calculations

With greater accuracy in your financial records through accounting tech tools, you gain real-time insights into your financial health. 

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