Read More
Case Studies
How we helped a Financial Intermediary build a reliable accounting system to achieve financial stability and regulatory compliance.
About
Our client, DCE is a financial intermediary involved in providing loans to individuals and businesses, while also managing interest income. As part of the financial services industry, our client raises funds from various sources, while overcoming compliance challenges to ensure a sustainable growth.
Quick glance at the challenges and solutions
Before we dive deep into the complete case study, let us take a quickly glance at how we helped our client overcome financial uncertainties and handle compliance challenges.
The Challenges
- Lack of structured accounting: The client focused on lending, but faced difficulties in maintaining accurate financial records, resulting in inconsistencies when tracking interest income and expenses.
- Unclear loan agreements: Loans were disbursed and received without formal contracts, complicating the tracking of transactions and ensuring financial accuracy.
- Bank transaction complications: The absence of a streamlined process made it tough to manage inflows and outflows, thus impacting the transparency and financial reporting.
- Compliance concerns: Given the regulatory requirements, the lack of proper documentation posed a risk for audits and tax compliance.
The Solutions
- Implemented a well-organised and structured accounting system that enabled the client to effectively monitor interest incomes and expenses, improving financial clarity.
- We recommended formalising loan agreements to bring transparency and structure to lending operations, to simplify the accounting process.
- Streamlined bank transaction tracking by setting up clear financial workflows, ensuring every transaction was properly recorded and reconciled.
- Provided compliance and tax advisory support to help the client meet regulatory requirements and avoid financial penalties.
- Advised on GST exemption applicability for financial income earners, ensuring the client remained compliant without unnecessary tax registrations.
A deeper look into the case study
Client Background & Early Challenges
DCE is a financial intermediary with their core business in lending activities, providing loans to individuals and businesses while earning interest as income. Since its incorporation in February 2022, the client's business focuses on financial intermediation, where they raise funds through borrowings and later disburse them as loans. However, with the core business operations in place, accounting, financial tracking and regulatory compliance were unstructured, creating challenges that resulted in financial discripancies and operational inefficiency.
With these challenges disrupting loan management, interest reconciliation and regulatory compliance, the client needed a structured financial framework tailored for financial intermediation. This is where MSA stepped in to establish a very precise accounting system, formalise lending agreements, implement transaction tracking mechanisms and ensure compliance with financial regulations, to bring stability and increase lender confidence.
Solutions That Delivered Results
To address the client's challenges, we developed a tailored financial framework designed for loan lending and financial intermediation. Here's how we helped:
1. Implementing a Loan-Centric Accounting System
We set up a customised accounting framework, for the accurate tracking of loan disbursements, repayments and interest income. All this, while maintaining compliance with lending regulations.
2. Formalising Loan Agreements and Documentation
Without formal agreements, tracking interest and repayments was becoming difficult. We structured legally sound loan agreements to provide clarity, mitigate risks and build credibility with lenders and borrowers.
3. Streamlining Bank Transaction Reconciliation
Unstructured financial transactions resulted in discrepancies. We introduced real-time tracking and reconciliation of bank inflows and outflows, for financial accuracy and reducing accounting errors.
4. Implementing Interest Reconciliation Mechanisms
Given the high transaction volume, interest calculations lacked clarity. We developed automated tracking models, eliminating errors and ensuring precise financial reporting.
5. Improving Regulatory Adherence and Audit Preparedness
To mitigate risks, we synchronised financial reporting with statutory requirements and audit benchmarks, facilitating effortless compliance and well-documented financial records.
6. Strengthening Financial Forecasting and Risk Mitigation
We designed advanced financial projection models to help the client anticipate cash flows, manage liquidity and reinforce stability in a fluctuating market.
7. Optimising Tax Compliance and GST Exemptions
Financial intermediaries often struggle with taxation complexities. We guided the client on proper GST exemptions, preventing unnecessary tax liabilities while ensuring adherence to financial laws.
8. Structuring Interest Expense and Borrowing Management
We optimised the borrowing strategy by structuring interest expenses efficiently, minimising unnecessary costs and ensuring sustainable financial management across multiple funding sources.
Final Thoughts
Our partnership with the client is beyond just fixing financial inconsistencies - it was about building a structured and sustainable financial framework that supports long-term growth. As we continue to work with the client, we will introduce automated loan performance analytics and refine risk assessment frameworks to support data-driven lending decisions.
Note:
As per the advisory issued by ICAI – The Institute of Chartered Accountants of India, we follow their Website Design Guidelines (given below). Hence, we are unable to disclose our clients' full names on our website and have instead used abbreviations. If you require detailed information about our clients, please contact us.
Case Studies
Real Challenges, Proven Solutions - Find out how our financial advisors helped businesses overcome their problems and achieve financial success.
Read More
Finance & Banking, Intermediary
How we helped a financial intermediary build a reliable accounting system to achieve financial stability..
Read More
Food Processing, Retail & Export
How we transformed poultry operations by strengthening financial controls for a 40% growth despite industry challenges..
Read More
Read More
Read More
Get In Touch
