Compliance and accounting services in China are normally 2-4 times higher than that in those developed commonwealth countries such as U.K., Australia and Hong Kong. When being asked what factors are driving cost up, given the fact of lower labor costs in Mainland China, the accounting firms would normally attribute the expensive fees to complications in procedures and requirements posed by statutory regulations.
One of the most blamed evils is ‘fapiao’, the special tax invoice supervised by VAT controlling system administered by the regulator, China’s State Administration of Taxation (SAT). Printing fapiao for clients, collection and compilation of fapiao from suppliers, validation and deduction of input fapiao, book keeping in compliance with maximum quota in percentage of revenue by different categories of expenses are all adding to the complexity and workload of fapiao processing, which is the most time-absorbing part of compliance work.
For more on china VAT Fapiao’s, check out What You Need to Know About China’s VAT Fapiao’s (Part 1).
However, innovations in SAAS software driven by modern cloud technology are reducing or eliminating the timesheet hours by automating most work elements related to book keeping and tax filing activities. By taking advantage of MEGI, the cloud accounting software in China, we reengineered the way book keeping is performed, which brings us huge cost savings and enables us to cut significantly the price of this item on our service catalogue.
For major transaction categories of bank statements, client fapiao, supplier fapiao and expenses, data is dragged from relevant sources from the cloud and fed into the accounting system, where transactions are coded with journal entries generated automatically. Not only significant amount of labor hours is saved, but also errors caused by manual work are eliminated. Furthermore, the powerful reporting tools allows preparation of financial statements, customized management reports and conversions between China GAAP and IFRS, from real-time business data, as simple as clicking of a button.
Some prominent productivity features of MEGI SmartLedgers that we take advantage of to transform the way we perform compliance works are as follows:
- ‘Cash Coding’ allows journal entries to be automatically created when E-bank statements are fed into system that easily saves at least 50% of time that traditional accountants spend for cash coding. This also ensures the high accuracy of bookkeeping, reducing the corrective works in reconciling between paper statement lines and account transaction records in the system.
- ‘Fapiao Coding’, a core function that MEGI provides, retrieves the complete fapiao information channeled from TAX authority system, so that both revenue and costs can be auto-coded by eliciting the relevant data and picking out the accounts for journal entries, from pre-defined rules. Furthermore, for trading companies, cost of goods sold (COGS) can also be calculated automatically based on fapiao data, which liberates accountants from the laborious works of manual calculation.
- ‘Mobile Reimbursements’ are addon applications that make it easy for traveling staff to record and submit expenses claims, and managers to review and approve expenses on the go. As these mobile tools are integrated with MEGI over the cloud, expenses data can be synchronized into the accounting book in a seamless way, with journal entries created directly saving huge amounts of time for accountants from manual bookkeeping.
- ‘Auto Inspection’ is a functional tool that MEGI delivers to help accountants verify accounting records, and correct basic book-keeping errors. This feature provides automatic and thorough inspections to filter out those bookings which are logically wrong or abnormal and frees seniors and supervisors from arduous work of mechanical checking and correcting.
- ‘Excel Reporting’- Be it helping our clients create specific internal management reports, or customizing reports defined by their headquarters, the Excel plugin tool makes tailor-made reporting work a piece-of-cake. In designing reporting templates, all powerful functions that Excel provides can be utilized. By connecting to the cloud, the plugin tool synchronizes real time transaction data and fills them into templates to generate up-to-date financial reports.
- ‘Input Invoice Authentication of Value-Added Tax’, a function that is especially designed for improving efficiency in authentication of input fapiao, so that accountants no longer need to shift to the tax authority’s system to execute such work, which is a compulsory step before input TAX deduction.
As major components of compliance service works become robotized, your accounting firm should no longer ask for unreasonable prices for a job that is of the same nature of counting beans. Instead, they should upgrade to more value-added service, including structuring your business controlling procedures, implementing business applications, overseeing your cash-flow, or optimizing your tax planning etc.