Accounting Services for 100 Crore + Businesses: What Should Be Included?

If a business is small, accounting can appear simple.

You earn income.

You pay your vendors.

You account for expenses.

You do your taxes.

You reconcile accounts.

You send invoices.

Maybe you have an accountant doing your books at the end of every month.

But growth makes it all different.

More customers mean more accounting transactions. More employees mean more payroll. More vendors mean more invoices. Multiple sales channels require more reconciliation. And if you are selling through online marketplaces, using payment gateways, maintaining inventories across warehouses, or operating in multiple states, your accounting becomes more complicated.

At a certain point, “we have an accountant” doesn’t necessarily equal “we have financial visibility.”

An expanding business needs to know more than if their books are done. It needs to know how much money it makes, where it spends, which customers, products, or sales channels make it money, what it owes, what is owed to it, what taxes are due, and how much cash flow it has.

This is where professional accounting services come into play.

What Are The Accounting Services For a Growing Business?

Accounting services involve all the procedures associated with recording, structuring, reconciling, reporting, and analyzing the financial data of a business organization.

According to the type of business, these services may include:

• Bookkeeping

• Bank reconciliation

• Accounts payable

• Accounts receivable

• Invoicing and revenue accounting

• GST accounting and compliance

• TDS accounting and reconciliation

• Payroll accounting

• Expense management

• Financial statements

• Cash flow reporting

• Inventory accounting

• Marketplace reconciliation

• Multi-system reconciliation

• Management reporting

• Financial analysis

• Budgeting and forecasting

Not every business needs all of these services. A consulting firm with a small workforce will have fairly simple accounting needs.

An e-commerce business that sells its products through its website, Amazon, Flipkart, and quick commerce websites will have a complicated accounting landscape.

A B2B business will have few customers but significantly larger invoices, credit periods, and longer receivable cycles.

And a business that operates in multiple states will have multiple GST registrations, warehouses, stock transfers, and accounting requirements by state.

Thus, the right accounting department is contingent upon the nature of the business, not only its size.

Accounting vs Bookkeeping: What's the difference?

This is a crucial concept to know.

Bookkeeping

Bookkeeping is more to do with documentation of financial transactions.

Examples include:

Recording sales

Recording purchases

Recording expenses

Recording invoices

Recording payments

Categorizing transactions Ledger management

Bank statement reconciliation

The fundamental question answered by bookkeeping is: “What is going on financially?”

Accounting

Accounting builds upon the information recorded. It entails organizing, analyzing and reporting financial information to help managers make sense of the information and what to do next.

It may involve:

• Financial statements

• Profitability analysis

• Cash flow analysis

• Tax accounting

• Financial reporting

• Budgeting

• Forecasting

• Managerial reporting

The larger question answered by accounting is: “What does this information mean and what action should be taken?”

Both bookkeeping and accounting are essential. Proper accounting relies on proper records.

Accounting Services that a 100 Crore+ Business Should Have

There is no accounting software suite that fits all businesses. Nevertheless, a good accounting function will usually include the following services.

1. Bookkeeping and Proper Recording of Transactions

Bookkeeping is the basis of the accounting process.

Any business requires a mechanism that will allow proper:

• Recording of sales

• Recording of purchases

• Recording of expenses

• Recording of vendor payments

• Recording of customer payments

• Recording of banking transactions

• Recording of loans

• Recording of assets

• Recording of liabilities

• Recording of tax transactions

Proper recording of transactions allows generating financial statements based on accurate figures.

Poor bookkeeping leads to further difficulties in the accounting process.

Improper recording of an expense will misstate the profitability of the business. Wrong linking of customer payments to particular invoices will create problems with accounts receivable.

Incorrect reconciliation of marketplace transactions will lead to discrepancies between revenue and money received from clients.

This is why bookkeeping is more than entering data.

2. Bank Reconciliation

In reconciling the bank statement, one compares transactions that are done in the accounting system to those done in the bank statement.

It can help us find out about:

• Transactions missed in recording

• Duplicated entries

• Bank charges

• Wrong entries

• Unrecorded transactions

• Unreconciled transactions

• Time differences

For a business that uses one bank account and has few transactions, the reconciliation process will be easy. However, as the business grows and uses more than one bank account, many other payment methods and more transactions, the process will be critical.

It is important for the accounting system to find out why the two balances are different.

3. Accounts Payable

Accounts payable is any money owed by a business to its suppliers and vendors.

Accounting assistance may include the following:

• Vendor invoices

• Outstanding invoices

• Pay schedules

• Vendor balances

• Pre-payments

• Credit notes

• Payment history

• Vendor reconciliations

This increases the awareness of the business about future liabilities.

It also prevents cases where the business seems to be doing well but faces cash flow problems due to payments from several vendors falling in the same period.

4. Accounts Receivable

Accounts receivable represents money owed by the customers to the business.

It is essential for a well-organised accounting system to give insight into the following:

• Billing of customers

• Money received

• Balance outstanding

• Overdue accounts

• Credit notes

• Advance payments by customers

• Ageing of receivables

This is especially relevant for businesses dealing with sales on credit terms. It could happen that a business may make a profit but suffer from cash flow problems due to delayed payments by customers.

That is because: Profit does not mean cash flow.

5. Accounting for B2B Enterprises

There are different challenges involved in B2B accounting. Whereas there could be fewer customers for a B2B business compared to a D2C enterprise, each one could contribute more revenue-wise.

There could also be:

• Negotiated payment terms

• Purchase orders

• Longer payment cycles

• Custom pricing

• Advanced payments

• Credit notes

• Debit notes

• Milestone-based invoicing

• Outstanding payments

This implies that accounts receivable become critical here.

Among others, B2B accounting should assist in finding out:

• What was our income per client?

• How much do we owe in receivables?

• What are the overdue invoices?

• What is the average payment cycle?

• How much do we expect from our clients?

• Who owes us the biggest outstanding balance?

• What are the profits made from the major client?

It is not only a matter of asking: “How much did we sell?”

It is also about asking: “How much have we collected, how much do we owe, and when do we expect the rest?”

For B2B enterprises, the accounting process must tie together revenue, receivables, collections, profitability, and cash flow.

6. Invoicing and Revenue Accounting

There should be a process for creating and documenting invoices for businesses.

Supporting the accounting process involves:

• Invoicing

• Sales

• Accounts of the customers

• Credit notes

• Debit notes

• Revenue accounting

• Linking payments to the respective sales

Revenue accounting is made difficult by the presence of several platforms used by the business to conduct its operations.

This means that the customer orders something on one platform but pays via another, and the company ends up receiving the net amount.

7. GST Accounting & Compliance

For GST-registered entities, it is essential that accounting facilitates proper reporting of GST.

This includes:

• Classification of GST

• Output GST accounting

• Input tax credit

• Purchase reconciliation

• Sales reconciliation

• Reporting of GSTR

• GST reconciliation

• Accounting for credit notes

• Multi-state GST accounting

GST is not just about filing returns on a month-to-month basis. Your accounting, invoices, purchases, settlements, and GST must talk to each other.

8. Multi-State GST: Why Does Accounting Become More Complex?

Operating across multiple states can also become another challenge of accounting and reconciliation.

A company will need to deal with:

• Multiple GST registrations

• Multiple GSTINs

• State-wise accounting

• Inter- and intra-state transactions

• Stocks in various states

• Stock movement

• ITC between registrations

• GST reporting on a state basis

• Marketplace FBO

• Reconciliation across GST registrations

For e-commerce businesses, there is even more complexity involved where there is stock stored in FBO across different states. This means that accounting cannot look at every single GST registration in isolation.

It needs to stay connected to the transactions, stocks, invoices, settlements and tax records. For companies that operate across multiple GST registrations, Lighthaus helps with state-wise accounting, GSTIN transfer, ITC and GST filing across registrations.

Multi-state GST, hence, becomes not only a compliance challenge but also an accounting and reconciliation challenge.

9. Accounting and Reconciliation for TDS

TDS could add another level of complexity to accounting.

For instance:

Invoice Amount: ₹1,00,000

TDS deduction: ₹10,000

Bank Deposit: ₹90,000

The accounting entry should still take into account the total transaction amount and not just ₹90,000 as the invoice amount.

Accounting assistance may involve managing:

• TDS Deductions

• TDS Receivables

• TDS Certificates

• Information about Form 26AS

• TDS Reconciliation

• Discrepancies between the accounts and tax records

This becomes crucial especially when there are many clients and high TDS deductions.

10. Payroll Accounting

Payroll is yet another accounting activity that will arise when the team expands.

Payroll accounting consists of the following:

• Salary ledger

• Payroll journals

• Employee reimbursement

• Statutory deduction

• Payroll liabilities

• Salary payments

• Payroll reconciliation

The small team might do well with an informal process. But payroll accounting will become more systematic as employee numbers grow.

11. Expense Control

There are various types of expenses that businesses have, which may become hard to monitor.

These can include:

• Travel expenses

• Subscriptions to software packages

• Advertising costs

• Stationery

• Consulting fees

• Freight charges

• Maintenance expenses

• Reimbursement of employees

The accounting system must ensure proper recording and classification of expenses.

The purpose of this process is not just to determine how much the business has spent.

The purpose must also be to know the following: Where is the business spending its money?

12. Financial Statements

Financial statements provide management with a structured overview of the performance and financial situation of the business.

Three main financial statements are:

Statement of Profit and Loss

Revenue - Expenses = Profit/Loss

The profit and loss statement enables us to assess business performance for a certain period of time.

Balance Sheet

The balance sheet contains:

• Assets

• Liabilities

• Equity

Statement of Cash Flows

The cash flows statement describes the inflow and outflow of cash in the business.

It is important to understand this point because:

Profit and cash are different things.

A business can have a profit but little cash at its disposal. It is vital for a growing business to know all three statements.

13. Monthly Financial Reporting

Accounting should not be restricted only to tax compliance.

A growing firm requires financial information on a regular basis.

Items included in monthly report may include:

• Sales

• Gross profit

• Operating expenses

• Net profit

• Cash balance

• Accounts receivable

• Accounts payable

• Inventory

• Ratios

But the monthly report should not merely be a tabulation of data.

A monthly report should help management to determine:

• What has happened?

• Why has it happened?

• Is the change a good thing or a bad one?

• Where should management concentrate next?

This is where accounting transcends its role as a compliance function to become a decision-making function.

14. Cash Flow Management

Cash flow will determine how easily a company navigates its next phase of growth.

The accounting system must give insight into:

• Available cash

• Collections from customers

• Payments to suppliers

• Payroll obligations

• Taxes

• Loans

• Inventory

• Future expenses

The purpose is to recognise potential problems related to cash flow before there are any.

A company should not find out that it doesn’t have enough cash just when the bill comes due.

15. Inventory Accounting

In product-driven companies, inventory may prove to be one of the most crucial factors from a financial point of view.

Examples of inventory accounting may include:

• Purchases

• Stock valuation

• Cost of goods sold

• Inventory corrections

• Damaged inventories

• Returns

• Inventories in warehouse

• Closing inventories

In the case of D2C, inventories may be located in:

• Owned warehouses

• 3PL partners

• Amazon fulfilment centres

• Flipkart fulfilment centres

• Quick commerce warehouses

• Retail distributors

The ideal case scenario is that inventory movement is synchronized with accounting.

16. Accounting of D2C Brands

Accounting gets complicated in D2C because it is possible that a brand uses multiple selling channels at the same time.

Example:

Website + Amazon + Flipkart + Quick Commerce + Offline Retail = One Business

However, each channel will have its own:

• Commission structure

• Settlements

• Returns/Refunds

• Discounts

• Shipping charges

• Advertising cost

• Penalty

• TDS/TCS

Thus, D2C brands require accounting of not just the total revenue figure but also:

• Revenue per channel

• Margin per SKU

• Profitability per channel

• Marketplace fees

• Returns/refunds

• Marketing cost

• Inventory position

• Difference in settlements

• Cash flow

It is very much possible that a product becomes a bestseller but unprofitable.

In the same way, it is possible that a particular channel earns a lot of money but makes the contribution margin lower. Thus, D2C accounting requires accounting of Sales, Settlements, Inventory, and Profitability together.

17. Marketplace and Settlement Reconciliation

This is especially relevant for D2C and e-commerce enterprises.

Suppose your enterprise has gross sales of ₹10 lakh through a marketplace.

You would think ₹10 lakh will get credited into your bank account.

However, settlement might have deductions such as:

• Marketplace fee

• Freight charges

• Returns

• Refunds

• Deductions

• Ad costs

• TDS

• TCS

• Other adjustments

That is, Gross sales income ≠ Marketplace settlement.

A good accounting system needs to reconcile marketplace settlements against orders and bank credits. At Lighthaus, marketplace settlement reconciliation is one of the core components of our accounting process that covers Amazon, Flipkart and quick-commerce payments.

In the case of high-volume businesses, doing this manually becomes tough.

18. Reconciliation Involving Multiple Financial Systems

Most modern organizations don’t conduct their businesses using a single financial system.

Based on the organization, the ecosystem can consist of:

• Shopify

• Amazon

• Flipkart

• Razorpay

• Unicommerce

• Tally

• Zoho

• Banking systems

• Payroll systems

• Inventory systems

The issue is not just gathering data from all these systems.

The issue is ensuring that the data aligns.

A good accounting system would ensure reconciliation of:

Sales ↔ Settlements ↔ Charges ↔ Banking ↔ Accounts

And where applicable:

Purchase ↔ Supplier Billing ↔ GST Data ↔ Payments ↔ Accounts

19. Financial Analysis and Business Understanding

Here, accounting can go beyond just reporting.

The accountant might say to you: “Income increased by 25%.”

Better accounting will help you find out:

• What products led to the increase?

• What channel contributed to the increase?

• Was there any improvement in the gross margin?

• Have marketing expenses increased more rapidly than income?

• Are the returns increasing?

• Is the marketplace commission eating into your margins?

• What products aren’t making money?

• How much money are you tying up in inventories?

This is particularly useful for D2C companies, where looking at margins per SKU and per channel, not just one overall P&L number, gives you a much better perspective.

What Are Outsourced Accounting Services?

Outsourcing accounting services means outsourcing some or all accounting processes of a company to an external accounting service provider.

Rather than setting up a complete accounting department within a business organization, it may outsource the following activities:

• Bookkeeping

• Reconciliation

• Accounts Payable

• Accounts Receivable

• GST Services

• TDS Reconciliation

• Payroll Accounting

• Financial Reporting

• Marketplace Reconciliation

• Management Reporting

Customization is possible depending on requirements. It is unlike appointing an external accountant to file your taxes annually. The contemporary outsourced accounting service model can be like an extension of the accounting department within your company.

Why Do 100 Crore+ Businesses Outsource Their Accounting?

There is no simple reason why any particular business chooses to outsource accounting.

For growing businesses, it comes down to leveraging the right combination of expertise, process, technology and financial insight without the need to develop capabilities within the business.

1. Access to More Finance Capabilities

A growing business will typically have a range of accounting needs, including bookkeeping, GST, reconciliation, payroll, reporting, accounts receivable, accounts payable and analysis. An outsourced accounting partner provides the ability to access multiple areas of expertise rather than having to rely on one person who does everything.

2. Specialist Knowledge

Each business will have different accounting needs depending on its business model.

An e-commerce business may require marketplace and settlement reconciliation.

A software business may require accounting for subscription revenues.

A manufacturing business may require inventory and cost accounting.

The accountant should have an understanding of the financial model of the business that it serves.

3. More Time for Business Owners and Managers

In the course of business growth, the owners and management may get stuck doing:

• Accounting for transactions

• Invoicing of clients

• Collection of accounts receivable

• Review of spreadsheets

• Preparation of documents for tax purposes

It is possible that through outsourcing, some of these routine accounting functions can be transferred.

4. Improved Financial Visibility

Outsourcing is not just a transfer of the accounting function.

Rather, outsourcing should aim at:

Improved accounting → improved reporting → improved visibility → better decision-making.

When Does a 100 Crore+ Need to Outsource Their Accounting?

There is no specific figure that a company reaches at which the need for outsourcing accounting emerges. On the contrary, consider the complexity of your business and whether the existing accounting process is sufficient.

1. Accounting falls behind

If you get last month's report several weeks after it ends, you might have outdated financial information.

At Lighthaus, we work on delivering the latest financial positions through nightly book closure.

2. Everything is managed manually by the founder or bookkeeper

It can mean that the accounting process has become too personal.

3. You have several ways to sell your products

Each of these ways increases settlements, fees, returns and reconciliations.

4. You don't understand profitability

Having knowledge about income doesn't mean that you understand the profitability of products, customers or sales channels.

5. GST became complicated

Several states, GST registrations, warehouses and marketplaces can make your accounting more complicated.

6. Reporting is always outdated

If your accounting process is always in "cleanup" mode, your business may require a solution that will provide timely financial data rather than another spreadsheet.

Comparison between Traditional Accounting and Contemporary Outsourced Accounting

A traditional accounting system is usually structured as follows:

Transactions → Accountant → Month-end accounts → Profit & Loss Statement → Business owner

Information comes when the period is over.

A contemporary accounting system should provide:

Business tools → Automation of information collection → Reconciliation → Accountant’s assessment → Up-to-date information

It is not only about technology. It is all about timing.

If you get information about the company's performance several weeks after the decision-making, even if this information is absolutely correct, it will be useless.

Lighthaus defines their accounting system as one that connects business tools and sales channels, with artificial intelligence doing routine accounting tasks, with accountants’ review afterwards.

Can AI replace accountants?

It’s become an issue that more and more small companies are facing when they consider using AI in their accounting processes. And the real question is: What areas of accounting can be automated through the use of AI, and what cannot?

The areas where AI can help include the following:

• Data extraction

• Transaction classification

• Transactions matching

• Reconciliation

• Anomaly detection

• Reporting

• Pattern recognition

However, accounting requires judgement.

Somebody needs to investigate transactions that don’t look typical.

Somebody needs to evaluate exceptions.

Somebody needs to have the context of the business.

Somebody needs to ensure that the data makes sense.

This is what Lighthaus does - their AI takes care of repetitive tasks in accounting, whereas their accountants analyze the results.

It’s more realistic than trying to teach software to comprehend every financial situation on its own.

Criteria for Choosing Professional Accounting Services

Accounting services go beyond cost comparison.

Here’s what to ask.

Do they understand your business?

The way accounts are handled for a D2C brand differs from that of a consulting business.

Knowledge of industry and business models is important. What does the service include?

Here's a list of areas to cover with the provider:

• Bookkeeping

• Reconciliation

• GST

• TDS

• Payroll

• Accounts Payable

• Accounts Receivable

• Financial Statements

• Cash Flow

• Inventory

• Marketplace Settlements

• Management Reporting

Don't take anything for granted. Clarify the scope of services.

How often do the books close? Is it monthly? Weekly? Daily?

If you have many transactions, more frequent closure may be helpful.

Whose work will be reviewed?

Automation allows you to process transactions. However, human review is necessary.

Whose responsibility is it to investigate exceptions and approve the books?

Can the service integrate with existing tools?

Integration is increasingly critical when you use many systems within your business.

Will you get insights along with reports? The report shows what happened. You need not only that but also an understanding of the reason why it happened.

How Expensive Are Accounting Services?

Accounting services don't have a set price.

The price depends on:

• Number of transactions

• Number of bank accounts

• Number of employees

• Number of GST accounts

• Number of sales channels

• Complexity of inventory management

• Activity in marketplaces

• Report requirements

• Extent of outsourcing

• Financial analysis requirements

But the more pressing question is not just: “How expensive is accounting?”

It's also: “What is the cost to your business of bad accounting?”

Which can be:

• Missed tax write-offs

• Leakage of revenue

• Margin mistakes

• Unexpected cash flow issues

• Bad business decisions

• Non-compliance

Management time wasted solving accounting problems

Cheap accounting doesn't necessarily mean cheap accounting.

Typical Mistakes That Companies Make in Accounting

1. Viewing Accounting as End-of-Year Work

Accounting is supposed to facilitate decision-making throughout the entire period.

2. Concentrating on Revenue Only

An increase in revenue does not imply profit growth.

3. Neglecting Cash Flow

Profitability and cash position are two separate concepts.

4. Failing to Reconcile Market Payments

The gross sales figure may differ significantly from the net settlement.

5. Applying Only Consolidated P&L

Consolidated P&L might obscure the differences between different products or sales channels.

6. Dependent Only on Spreadsheets

Spreadsheets work great at lower volumes but will become problematic with increasing transaction volume.

7. Hiring an Accountant Only by Its Cost

An accounting error might cost much more than the fee itself.

8. Failing to Ask for On-Time Books

Timely information might be equally useless commercially.

The Future of Small Business Accounting

Small business accounting is transitioning from an otherwise manual and periodic process to a more integrated process powered by technology.

Where:

Data collection → Spreadsheet updates → Reconciliation → Report preparation

Businesses can transition towards:

Systems integration → Automation of repetitive tasks → Continuous reconciliation → Exceptions analysis → QuickBooks closing → Performance analysis

Technology isn't all there is to the process.

The real value lies in the combination of:

Automation + Accounting skillset + Financial data on time.

According to Lighthaus, this combination involves integration of tools, sales and payment systems, automation of repetitive tasks through AI and accountants backing up the process.

This kind of business model works well for companies whose level of financial complexity exceeds that of their internal finance teams.

Conclusion

As the business becomes more complex, the need for accounting becomes more critical.

For B2B business, that could be more visibility into receivables, collection cycles, profitability by customers and cash flow.

For D2C business, that could be linking the marketplace settlement, inventory, SKU margins, returns and channel profitability. For multi-state businesses, it could be managing the GST registration, state-level accounting, movement of inventory, ITC and reconciliations.

And for all growing businesses in general, it could be moving beyond just asking: Are the books up to date?

The right questions to ask would be:

• How profitable are we?

• Where is the cash?

• Who owes us?

• What do we owe?

• Which products/customers/channels are profitable?

• Are GST and tax records matching our books?

• Does management have the necessary information on time?

And that is where accounting shifts from compliance to business function.

Accurate books. Timely information. Better decision-making.

FAQs

1. What are accounting services for an emerging business?

Some accounting services can include bookkeeping, bank reconciliation, accounts payables/receivables, GST, TDS, payroll, financial statements, cash flow, inventory, marketplace reconciliation, and financial analysis. It will be dependent upon the type of business and its level of complexity.

2. Are bookkeeping and accounting the same?

Not necessarily. While bookkeeping deals with capturing and categorization of financial transactions, accounting is the process of analyzing, interpreting, and reporting the information.Accounting Services for 100 Crore + Businesses: What Should Be Included?

If a business is small, accounting can appear simple.

You earn income.

You pay your vendors.

You account for expenses.

You do your taxes.

You reconcile accounts.

You send invoices.

Maybe you have an accountant doing your books at the end of every month.

But growth makes it all different.

More customers mean more accounting transactions. More employees mean more payroll. More vendors mean more invoices. Multiple sales channels require more reconciliation. And if you are selling through online marketplaces, using payment gateways, maintaining inventories across warehouses, or operating in multiple states, your accounting becomes more complicated.

At a certain point, “we have an accountant” doesn’t necessarily equal “we have financial visibility.”

An expanding business needs to know more than if their books are done. It needs to know how much money it makes, where it spends, which customers, products, or sales channels make it money, what it owes, what is owed to it, what taxes are due, and how much cash flow it has.

This is where professional accounting services come into play.

What Are The Accounting Services For a Growing Business?

Accounting services involve all the procedures associated with recording, structuring, reconciling, reporting, and analyzing the financial data of a business organization.

According to the type of business, these services may include:

• Bookkeeping

• Bank reconciliation

• Accounts payable

• Accounts receivable

• Invoicing and revenue accounting

• GST accounting and compliance

• TDS accounting and reconciliation

• Payroll accounting

• Expense management

• Financial statements

• Cash flow reporting

• Inventory accounting

• Marketplace reconciliation

• Multi-system reconciliation

• Management reporting

• Financial analysis

• Budgeting and forecasting

Not every business needs all of these services. A consulting firm with a small workforce will have fairly simple accounting needs.

An e-commerce business that sells its products through its website, Amazon, Flipkart, and quick commerce websites will have a complicated accounting landscape.

A B2B business will have few customers but significantly larger invoices, credit periods, and longer receivable cycles.

And a business that operates in multiple states will have multiple GST registrations, warehouses, stock transfers, and accounting requirements by state.

Thus, the right accounting department is contingent upon the nature of the business, not only its size.

Accounting vs Bookkeeping: What's the difference?

This is a crucial concept to know.

Bookkeeping

Bookkeeping is more to do with documentation of financial transactions.

Examples include:

Recording sales

Recording purchases

Recording expenses

Recording invoices

Recording payments

Categorizing transactions Ledger management

Bank statement reconciliation

The fundamental question answered by bookkeeping is: “What is going on financially?”

Accounting

Accounting builds upon the information recorded. It entails organizing, analyzing and reporting financial information to help managers make sense of the information and what to do next.

It may involve:

• Financial statements

• Profitability analysis

• Cash flow analysis

• Tax accounting

• Financial reporting

• Budgeting

• Forecasting

• Managerial reporting

The larger question answered by accounting is: “What does this information mean and what action should be taken?”

Both bookkeeping and accounting are essential. Proper accounting relies on proper records.

Accounting Services that a 100 Crore+ Business Should Have

There is no accounting software suite that fits all businesses. Nevertheless, a good accounting function will usually include the following services.

1. Bookkeeping and Proper Recording of Transactions

Bookkeeping is the basis of the accounting process.

Any business requires a mechanism that will allow proper:

• Recording of sales

• Recording of purchases

• Recording of expenses

• Recording of vendor payments

• Recording of customer payments

• Recording of banking transactions

• Recording of loans

• Recording of assets

• Recording of liabilities

• Recording of tax transactions

Proper recording of transactions allows generating financial statements based on accurate figures.

Poor bookkeeping leads to further difficulties in the accounting process.

Improper recording of an expense will misstate the profitability of the business. Wrong linking of customer payments to particular invoices will create problems with accounts receivable.

Incorrect reconciliation of marketplace transactions will lead to discrepancies between revenue and money received from clients.

This is why bookkeeping is more than entering data.

2. Bank Reconciliation

In reconciling the bank statement, one compares transactions that are done in the accounting system to those done in the bank statement.

It can help us find out about:

• Transactions missed in recording

• Duplicated entries

• Bank charges

• Wrong entries

• Unrecorded transactions

• Unreconciled transactions

• Time differences

For a business that uses one bank account and has few transactions, the reconciliation process will be easy. However, as the business grows and uses more than one bank account, many other payment methods and more transactions, the process will be critical.

It is important for the accounting system to find out why the two balances are different.

3. Accounts Payable

Accounts payable is any money owed by a business to its suppliers and vendors.

Accounting assistance may include the following:

• Vendor invoices

• Outstanding invoices

• Pay schedules

• Vendor balances

• Pre-payments

• Credit notes

• Payment history

• Vendor reconciliations

This increases the awareness of the business about future liabilities.

It also prevents cases where the business seems to be doing well but faces cash flow problems due to payments from several vendors falling in the same period.

4. Accounts Receivable

Accounts receivable represents money owed by the customers to the business.

It is essential for a well-organised accounting system to give insight into the following:

• Billing of customers

• Money received

• Balance outstanding

• Overdue accounts

• Credit notes

• Advance payments by customers

• Ageing of receivables

This is especially relevant for businesses dealing with sales on credit terms. It could happen that a business may make a profit but suffer from cash flow problems due to delayed payments by customers.

That is because: Profit does not mean cash flow.

5. Accounting for B2B Enterprises

There are different challenges involved in B2B accounting. Whereas there could be fewer customers for a B2B business compared to a D2C enterprise, each one could contribute more revenue-wise.

There could also be:

• Negotiated payment terms

• Purchase orders

• Longer payment cycles

• Custom pricing

• Advanced payments

• Credit notes

• Debit notes

• Milestone-based invoicing

• Outstanding payments

This implies that accounts receivable become critical here.

Among others, B2B accounting should assist in finding out:

• What was our income per client?

• How much do we owe in receivables?

• What are the overdue invoices?

• What is the average payment cycle?

• How much do we expect from our clients?

• Who owes us the biggest outstanding balance?

• What are the profits made from the major client?

It is not only a matter of asking: “How much did we sell?”

It is also about asking: “How much have we collected, how much do we owe, and when do we expect the rest?”

For B2B enterprises, the accounting process must tie together revenue, receivables, collections, profitability, and cash flow.

6. Invoicing and Revenue Accounting

There should be a process for creating and documenting invoices for businesses.

Supporting the accounting process involves:

• Invoicing

• Sales

• Accounts of the customers

• Credit notes

• Debit notes

• Revenue accounting

• Linking payments to the respective sales

Revenue accounting is made difficult by the presence of several platforms used by the business to conduct its operations.

This means that the customer orders something on one platform but pays via another, and the company ends up receiving the net amount.

7. GST Accounting & Compliance

For GST-registered entities, it is essential that accounting facilitates proper reporting of GST.

This includes:

• Classification of GST

• Output GST accounting

• Input tax credit

• Purchase reconciliation

• Sales reconciliation

• Reporting of GSTR

• GST reconciliation

• Accounting for credit notes

• Multi-state GST accounting

GST is not just about filing returns on a month-to-month basis. Your accounting, invoices, purchases, settlements, and GST must talk to each other.

8. Multi-State GST: Why Does Accounting Become More Complex?

Operating across multiple states can also become another challenge of accounting and reconciliation.

A company will need to deal with:

• Multiple GST registrations

• Multiple GSTINs

• State-wise accounting

• Inter- and intra-state transactions

• Stocks in various states

• Stock movement

• ITC between registrations

• GST reporting on a state basis

• Marketplace FBO

• Reconciliation across GST registrations

For e-commerce businesses, there is even more complexity involved where there is stock stored in FBO across different states. This means that accounting cannot look at every single GST registration in isolation.

It needs to stay connected to the transactions, stocks, invoices, settlements and tax records. For companies that operate across multiple GST registrations, Lighthaus helps with state-wise accounting, GSTIN transfer, ITC and GST filing across registrations.

Multi-state GST, hence, becomes not only a compliance challenge but also an accounting and reconciliation challenge.

9. Accounting and Reconciliation for TDS

TDS could add another level of complexity to accounting.

For instance:

Invoice Amount: ₹1,00,000

TDS deduction: ₹10,000

Bank Deposit: ₹90,000

The accounting entry should still take into account the total transaction amount and not just ₹90,000 as the invoice amount.

Accounting assistance may involve managing:

• TDS Deductions

• TDS Receivables

• TDS Certificates

• Information about Form 26AS

• TDS Reconciliation

• Discrepancies between the accounts and tax records

This becomes crucial especially when there are many clients and high TDS deductions.

10. Payroll Accounting

Payroll is yet another accounting activity that will arise when the team expands.

Payroll accounting consists of the following:

• Salary ledger

• Payroll journals

• Employee reimbursement

• Statutory deduction

• Payroll liabilities

• Salary payments

• Payroll reconciliation

The small team might do well with an informal process. But payroll accounting will become more systematic as employee numbers grow.

11. Expense Control

There are various types of expenses that businesses have, which may become hard to monitor.

These can include:

• Travel expenses

• Subscriptions to software packages

• Advertising costs

• Stationery

• Consulting fees

• Freight charges

• Maintenance expenses

• Reimbursement of employees

The accounting system must ensure proper recording and classification of expenses.

The purpose of this process is not just to determine how much the business has spent.

The purpose must also be to know the following: Where is the business spending its money?

12. Financial Statements

Financial statements provide management with a structured overview of the performance and financial situation of the business.

Three main financial statements are:

Statement of Profit and Loss

Revenue - Expenses = Profit/Loss

The profit and loss statement enables us to assess business performance for a certain period of time.

Balance Sheet

The balance sheet contains:

• Assets

• Liabilities

• Equity

Statement of Cash Flows

The cash flows statement describes the inflow and outflow of cash in the business.

It is important to understand this point because:

Profit and cash are different things.

A business can have a profit but little cash at its disposal. It is vital for a growing business to know all three statements.

13. Monthly Financial Reporting

Accounting should not be restricted only to tax compliance.

A growing firm requires financial information on a regular basis.

Items included in monthly report may include:

• Sales

• Gross profit

• Operating expenses

• Net profit

• Cash balance

• Accounts receivable

• Accounts payable

• Inventory

• Ratios

But the monthly report should not merely be a tabulation of data.

A monthly report should help management to determine:

• What has happened?

• Why has it happened?

• Is the change a good thing or a bad one?

• Where should management concentrate next?

This is where accounting transcends its role as a compliance function to become a decision-making function.

14. Cash Flow Management

Cash flow will determine how easily a company navigates its next phase of growth.

The accounting system must give insight into:

• Available cash

• Collections from customers

• Payments to suppliers

• Payroll obligations

• Taxes

• Loans

• Inventory

• Future expenses

The purpose is to recognise potential problems related to cash flow before there are any.

A company should not find out that it doesn’t have enough cash just when the bill comes due.

15. Inventory Accounting

In product-driven companies, inventory may prove to be one of the most crucial factors from a financial point of view.

Examples of inventory accounting may include:

• Purchases

• Stock valuation

• Cost of goods sold

• Inventory corrections

• Damaged inventories

• Returns

• Inventories in warehouse

• Closing inventories

In the case of D2C, inventories may be located in:

• Owned warehouses

• 3PL partners

• Amazon fulfilment centres

• Flipkart fulfilment centres

• Quick commerce warehouses

• Retail distributors

The ideal case scenario is that inventory movement is synchronized with accounting.

16. Accounting of D2C Brands

Accounting gets complicated in D2C because it is possible that a brand uses multiple selling channels at the same time.

Example:

Website + Amazon + Flipkart + Quick Commerce + Offline Retail = One Business

However, each channel will have its own:

• Commission structure

• Settlements

• Returns/Refunds

• Discounts

• Shipping charges

• Advertising cost

• Penalty

• TDS/TCS

Thus, D2C brands require accounting of not just the total revenue figure but also:

• Revenue per channel

• Margin per SKU

• Profitability per channel

• Marketplace fees

• Returns/refunds

• Marketing cost

• Inventory position

• Difference in settlements

• Cash flow

It is very much possible that a product becomes a bestseller but unprofitable.

In the same way, it is possible that a particular channel earns a lot of money but makes the contribution margin lower. Thus, D2C accounting requires accounting of Sales, Settlements, Inventory, and Profitability together.

17. Marketplace and Settlement Reconciliation

This is especially relevant for D2C and e-commerce enterprises.

Suppose your enterprise has gross sales of ₹10 lakh through a marketplace.

You would think ₹10 lakh will get credited into your bank account.

However, settlement might have deductions such as:

• Marketplace fee

• Freight charges

• Returns

• Refunds

• Deductions

• Ad costs

• TDS

• TCS

• Other adjustments

That is, Gross sales income ≠ Marketplace settlement.

A good accounting system needs to reconcile marketplace settlements against orders and bank credits. At Lighthaus, marketplace settlement reconciliation is one of the core components of our accounting process that covers Amazon, Flipkart and quick-commerce payments.

In the case of high-volume businesses, doing this manually becomes tough.

18. Reconciliation Involving Multiple Financial Systems

Most modern organizations don’t conduct their businesses using a single financial system.

Based on the organization, the ecosystem can consist of:

• Shopify

• Amazon

• Flipkart

• Razorpay

• Unicommerce

• Tally

• Zoho

• Banking systems

• Payroll systems

• Inventory systems

The issue is not just gathering data from all these systems.

The issue is ensuring that the data aligns.

A good accounting system would ensure reconciliation of:

Sales ↔ Settlements ↔ Charges ↔ Banking ↔ Accounts

And where applicable:

Purchase ↔ Supplier Billing ↔ GST Data ↔ Payments ↔ Accounts

19. Financial Analysis and Business Understanding

Here, accounting can go beyond just reporting.

The accountant might say to you: “Income increased by 25%.”

Better accounting will help you find out:

• What products led to the increase?

• What channel contributed to the increase?

• Was there any improvement in the gross margin?

• Have marketing expenses increased more rapidly than income?

• Are the returns increasing?

• Is the marketplace commission eating into your margins?

• What products aren’t making money?

• How much money are you tying up in inventories?

This is particularly useful for D2C companies, where looking at margins per SKU and per channel, not just one overall P&L number, gives you a much better perspective.

What Are Outsourced Accounting Services?

Outsourcing accounting services means outsourcing some or all accounting processes of a company to an external accounting service provider.

Rather than setting up a complete accounting department within a business organization, it may outsource the following activities:

• Bookkeeping

• Reconciliation

• Accounts Payable

• Accounts Receivable

• GST Services

• TDS Reconciliation

• Payroll Accounting

• Financial Reporting

• Marketplace Reconciliation

• Management Reporting

Customization is possible depending on requirements. It is unlike appointing an external accountant to file your taxes annually. The contemporary outsourced accounting service model can be like an extension of the accounting department within your company.

Why Do 100 Crore+ Businesses Outsource Their Accounting?

There is no simple reason why any particular business chooses to outsource accounting.

For growing businesses, it comes down to leveraging the right combination of expertise, process, technology and financial insight without the need to develop capabilities within the business.

1. Access to More Finance Capabilities

A growing business will typically have a range of accounting needs, including bookkeeping, GST, reconciliation, payroll, reporting, accounts receivable, accounts payable and analysis. An outsourced accounting partner provides the ability to access multiple areas of expertise rather than having to rely on one person who does everything.

2. Specialist Knowledge

Each business will have different accounting needs depending on its business model.

An e-commerce business may require marketplace and settlement reconciliation.

A software business may require accounting for subscription revenues.

A manufacturing business may require inventory and cost accounting.

The accountant should have an understanding of the financial model of the business that it serves.

3. More Time for Business Owners and Managers

In the course of business growth, the owners and management may get stuck doing:

• Accounting for transactions

• Invoicing of clients

• Collection of accounts receivable

• Review of spreadsheets

• Preparation of documents for tax purposes

It is possible that through outsourcing, some of these routine accounting functions can be transferred.

4. Improved Financial Visibility

Outsourcing is not just a transfer of the accounting function.

Rather, outsourcing should aim at:

Improved accounting → improved reporting → improved visibility → better decision-making.

When Does a 100 Crore+ Need to Outsource Their Accounting?

There is no specific figure that a company reaches at which the need for outsourcing accounting emerges. On the contrary, consider the complexity of your business and whether the existing accounting process is sufficient.

1. Accounting falls behind

If you get last month's report several weeks after it ends, you might have outdated financial information.

At Lighthaus, we work on delivering the latest financial positions through nightly book closure.

2. Everything is managed manually by the founder or bookkeeper

It can mean that the accounting process has become too personal.

3. You have several ways to sell your products

Each of these ways increases settlements, fees, returns and reconciliations.

4. You don't understand profitability

Having knowledge about income doesn't mean that you understand the profitability of products, customers or sales channels.

5. GST became complicated

Several states, GST registrations, warehouses and marketplaces can make your accounting more complicated.

6. Reporting is always outdated

If your accounting process is always in "cleanup" mode, your business may require a solution that will provide timely financial data rather than another spreadsheet.

Comparison between Traditional Accounting and Contemporary Outsourced Accounting

A traditional accounting system is usually structured as follows:

Transactions → Accountant → Month-end accounts → Profit & Loss Statement → Business owner

Information comes when the period is over.

A contemporary accounting system should provide:

Business tools → Automation of information collection → Reconciliation → Accountant’s assessment → Up-to-date information

It is not only about technology. It is all about timing.

If you get information about the company's performance several weeks after the decision-making, even if this information is absolutely correct, it will be useless.

Lighthaus defines their accounting system as one that connects business tools and sales channels, with artificial intelligence doing routine accounting tasks, with accountants’ review afterwards.

Can AI replace accountants?

It’s become an issue that more and more small companies are facing when they consider using AI in their accounting processes. And the real question is: What areas of accounting can be automated through the use of AI, and what cannot?

The areas where AI can help include the following:

• Data extraction

• Transaction classification

• Transactions matching

• Reconciliation

• Anomaly detection

• Reporting

• Pattern recognition

However, accounting requires judgement.

Somebody needs to investigate transactions that don’t look typical.

Somebody needs to evaluate exceptions.

Somebody needs to have the context of the business.

Somebody needs to ensure that the data makes sense.

This is what Lighthaus does - their AI takes care of repetitive tasks in accounting, whereas their accountants analyze the results.

It’s more realistic than trying to teach software to comprehend every financial situation on its own.

Criteria for Choosing Professional Accounting Services

Accounting services go beyond cost comparison.

Here’s what to ask.

Do they understand your business?

The way accounts are handled for a D2C brand differs from that of a consulting business.

Knowledge of industry and business models is important. What does the service include?

Here's a list of areas to cover with the provider:

• Bookkeeping

• Reconciliation

• GST

• TDS

• Payroll

• Accounts Payable

• Accounts Receivable

• Financial Statements

• Cash Flow

• Inventory

• Marketplace Settlements

• Management Reporting

Don't take anything for granted. Clarify the scope of services.

How often do the books close? Is it monthly? Weekly? Daily?

If you have many transactions, more frequent closure may be helpful.

Whose work will be reviewed?

Automation allows you to process transactions. However, human review is necessary.

Whose responsibility is it to investigate exceptions and approve the books?

Can the service integrate with existing tools?

Integration is increasingly critical when you use many systems within your business.

Will you get insights along with reports? The report shows what happened. You need not only that but also an understanding of the reason why it happened.

How Expensive Are Accounting Services?

Accounting services don't have a set price.

The price depends on:

• Number of transactions

• Number of bank accounts

• Number of employees

• Number of GST accounts

• Number of sales channels

• Complexity of inventory management

• Activity in marketplaces

• Report requirements

• Extent of outsourcing

• Financial analysis requirements

But the more pressing question is not just: “How expensive is accounting?”

It's also: “What is the cost to your business of bad accounting?”

Which can be:

• Missed tax write-offs

• Leakage of revenue

• Margin mistakes

• Unexpected cash flow issues

• Bad business decisions

• Non-compliance

Management time wasted solving accounting problems

Cheap accounting doesn't necessarily mean cheap accounting.

Typical Mistakes That Companies Make in Accounting

1. Viewing Accounting as End-of-Year Work

Accounting is supposed to facilitate decision-making throughout the entire period.

2. Concentrating on Revenue Only

An increase in revenue does not imply profit growth.

3. Neglecting Cash Flow

Profitability and cash position are two separate concepts.

4. Failing to Reconcile Market Payments

The gross sales figure may differ significantly from the net settlement.

5. Applying Only Consolidated P&L

Consolidated P&L might obscure the differences between different products or sales channels.

6. Dependent Only on Spreadsheets

Spreadsheets work great at lower volumes but will become problematic with increasing transaction volume.

7. Hiring an Accountant Only by Its Cost

An accounting error might cost much more than the fee itself.

8. Failing to Ask for On-Time Books

Timely information might be equally useless commercially.

The Future of Small Business Accounting

Small business accounting is transitioning from an otherwise manual and periodic process to a more integrated process powered by technology.

Where:

Data collection → Spreadsheet updates → Reconciliation → Report preparation

Businesses can transition towards:

Systems integration → Automation of repetitive tasks → Continuous reconciliation → Exceptions analysis → QuickBooks closing → Performance analysis

Technology isn't all there is to the process.

The real value lies in the combination of:

Automation + Accounting skillset + Financial data on time.

According to Lighthaus, this combination involves integration of tools, sales and payment systems, automation of repetitive tasks through AI and accountants backing up the process.

This kind of business model works well for companies whose level of financial complexity exceeds that of their internal finance teams.

Conclusion

As the business becomes more complex, the need for accounting becomes more critical.

For B2B business, that could be more visibility into receivables, collection cycles, profitability by customers and cash flow.

For D2C business, that could be linking the marketplace settlement, inventory, SKU margins, returns and channel profitability. For multi-state businesses, it could be managing the GST registration, state-level accounting, movement of inventory, ITC and reconciliations.

And for all growing businesses in general, it could be moving beyond just asking: Are the books up to date?

The right questions to ask would be:

• How profitable are we?

• Where is the cash?

• Who owes us?

• What do we owe?

• Which products/customers/channels are profitable?

• Are GST and tax records matching our books?

• Does management have the necessary information on time?

And that is where accounting shifts from compliance to business function.

Accurate books. Timely information. Better decision-making.

FAQs

1. What are accounting services for an emerging business?

Some accounting services can include bookkeeping, bank reconciliation, accounts payables/receivables, GST, TDS, payroll, financial statements, cash flow, inventory, marketplace reconciliation, and financial analysis. It will be dependent upon the type of business and its level of complexity.

2. Are bookkeeping and accounting the same?

Not necessarily. While bookkeeping deals with capturing and categorization of financial transactions, accounting is the process of analyzing, interpreting, and reporting the information.

3. Are all businesses required to have the same accounting services?

No, a consultancy firm, B2B firm, D2C brand and multi-state businesses will have very different needs in terms of accounting services.

4. Why is accounting more complicated for D2C brands?

This is because D2C brands usually have many different channels through which they sell, each with its own unique characteristics of different commissions, settlements, returns/refunds, shipping and other expenses.

5. Why is accounting for multi-state GST more complicated?

Having multi-state GST will involve more complexities, including GSTIN-wise accounting, state-wise transactions, inventories, ITC, fulfilment centres, and GST reporting.

3. Are all businesses required to have the same accounting services?

No, a consultancy firm, B2B firm, D2C brand and multi-state businesses will have very different needs in terms of accounting services.

4. Why is accounting more complicated for D2C brands?

This is because D2C brands usually have many different channels through which they sell, each with its own unique characteristics of different commissions, settlements, returns/refunds, shipping and other expenses.

5. Why is accounting for multi-state GST more complicated?

Having multi-state GST will involve more complexities, including GSTIN-wise accounting, state-wise transactions, inventories, ITC, fulfilment centres, and GST reporting.