Clear’s AI-Based Solution Closes Leaks to Improve Cash Flow


The introduction of the GST heralded a wave of changes in the ITC provisions and one of the major changes was that the availability of the ITC is dependent on vendor compliance – i.e. filing declaration and payment of taxes – under article 16 of the CGST Law. 2017. Several changes were made to section 16 to kickstart this restriction in the ITC provision.

In February 2021, during the Union budget, article 16 was amended with the addition of a new sub-clause stipulating that the ITC on invoice or debit note can only be used when the details of that – these have been provided by the supplier in the statement of outgoing deliveries and these details have been communicated to the recipient of the invoice or debit note.

However, non-compliant vendors and ineffective data reconciliations caused ITC leaks which in turn impacted cash flow. When the GST was first reported, many businesses added indemnification clauses to their sales contracts that provided that any default on the sellers’ side that could result in liability for the business should be borne by the seller. Despite these measures, supplier compliance and ITC availability remain an issue for businesses.

A recent survey by ClearTax found that nearly 83% of the more than 1,200 companies surveyed were unable to optimize ITC requests in 2020-2021 and many had to withhold payments from clients. non-compliant suppliers for this reason. That this turns out to be a major headache for businesses can be inferred from the fact that almost a third of those surveyed said that small vendors did not fill out invoices was a major reason for the inefficiency of the procurement process. ‘ITC optimization while 10% of total eligible ITC requests blocked due to a delay in filing by vendors. Suboptimal input tax credit management can affect profitability by up to 8%, according to the survey.

To put it in context, the investigation found that a multinational company had suffered a total loss of ??850 crore due to mismanagement of ITC demand as a lifestyle business suffered losses of around ??200 crore due to poor ITC management, ??30 crore of undeposited ITCs and ??170 crore loss of interest on deposit delayed by suppliers.

The problem of non-compliance can be solved by harnessing the power of technological advancements and Clear Tax has developed India’s first end-to-end solution to maximize ITC for businesses.

Clear Max ITC from Clear is the first of its kind in India, and it is created to maximize ITC while improving working capital and profitability for businesses. The software includes unique features that fully automate the ITC claim process. Automation provides 100% accurate ITC returns, a feat virtually all Indian tax teams struggle with.

What is the mechanism behind this?

Links to your accounting system directly

The system allows a two-way connection to a company’s accounting system. This makes it easier to schedule automatic reconciliations of GST data and synchronize supplier payment decisions.

It is 100% accurate in data matching

The solution ensures that automatic reconciliations are running in the background at all times. If missing data or invoices are discovered, an automated communication is immediately sent to the relevant supplier.

It saves on taxes and unlocks working capital

AI-based technology gives businesses a double tax saving benefit and helps unlock working capital with smart data matching, vendor communication, and smart reporting.

Exclusive features

The Clear MAX ITC platform leverages vendor gamification to improve vendor behavior. One-click deposits and reconciliations are now a reality thanks to its unique features.

– Management of supplier payments

Clear MAX ITC automatically manages supplier payments using intelligent supplier risk categorization. Get the payment terms defined for the suppliers based on their ITC behavior and ask the tool to dynamically synchronize this decision with your ERP.

– Supplier communication

Supplier communication features simplify interactions between suppliers through one-click communication. Send reminders to multiple providers at once through messaging or messaging platforms like WhatsApp.

– Real-time ERP synchronization

Two-way flow with ERP helps schedule automatic reconciliations to run in the background, which as mentioned above helps to send automated message to supplier in case of missing data / invoices.

– Inter-team collaboration

The automated solution also enables transparent collaborations between the teams responsible for indirect taxes, purchasing and accounts payable.

– AI-based correspondence

AI-based configurable PAN-level matching helps organizations easily track claimed and unclaimed ITCs. Match 60,000 invoices in one minute on GSTIN or PAN.

– Smart reports

Smart reports provide smart suggestions that will help decision makers avoid reviews, interest, and penalties.

Advanced Clear Reconciliation Tool and ITC Optimization Calculator Helping Businesses Save ??9,000 crores last year. With Clear Max ITC, improving cash flow and thus increasing working capital and profitability is an easily achievable goal. Clear’s AI-based tools and one-click solutions have been praised by industry giants and customers like Marico, Wildcraft, and Epson.

Click here to learn more about Clear MAX ITC and how to integrate it into your business.

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