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Financial Advisories

Vaishnavi Reddy

February 28, 2021

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Financial research, analysis, and planning are almost indispensable to every organization today to guide important business decisions in any industry. It is a role that requires constant access to information from Business Intelligence, Sales & Marketing, ERP, Operations, and others of their clients to report financial figures to support high-quality business decisions quickly. The financial advisory firms offer services such as corporate finance and restructuring, due diligence, valuation, modelling, M&A transaction services, management accounting and reporting, tax services, forensic services, litigation and arbitration, and many more. They are required to make dynamic and accurate forecasts and plan future investments with every changing day. And companies leveraging both internal and external data with reserves dating back to years gravely call for a robust analytical mechanism that can cater to intelligent data management and retrieval.

As mentioned above, a financial advisor holds a myriad of responsibilities and has to balance all of them while successfully catering to client expectations on time. Corporate restructuring demands always managing consensus amongst conflicting stakeholders for equitable balancing of financial interests. Lack of upfront planning and evaluation of tax and regulatory laws greatly diminish the momentum of restructuring. Lengthy legal procedures are an unavoidable part of downsizing, shifting resources, M&A, LBOs, divestitures, etc. as mentioned in foreclosure and bankruptcy laws. Site visits, credit negotiations, court appearances utilize and create large amounts of information that aren’t always at the advisor’s disposal. Additionally, they are often swamped with multiple information requests and queries about changing business strategies and realignment measures to ensure renewed viability. Corporate restructuring is a collaborative process that involves varied personnel conducting an intensive study of leases, vendor agreements, loans, contracts, restructuring transactions, etc. Hence, it requires a unified form of data despite originating from multiple sources and in different styles.

Due diligence is a fundamental activity in any of the above practices and is commonly performed by financial advisors. Identifying potential risks, understanding the performance and key value drivers of the partner company, adjusting draft prices of M&A, warranty and indemnity clauses and performing post-acquisition/merger audit, managing potential litigations, and guiding the negotiation process demands hefty checklists by both parties. The checklists contain outsourcing agreements, press releases, insurance claims, government filings, license history, customer and product information, revenue streams, financial information, intellectual property, real estate, and physical assets. Lack of proper due diligence directly implies elevated risk, and hence it is of utmost importance to standardize all the information coming from each of the parties. Differences in their practices and norms regularly result in delays and long meetings, causing communication conflicts amongst the companies’ representatives. And even a simple internal valuation of the company’s assets and performance reports to employ a systematic approach and test the sensitivity and accuracy of business models employs a similar process.

Many large-scale institutions also employ external advisors to review and support management accounting and tax reporting. The advisors usually follow a wide range of procedures to extract and report the company’s financial information via its information systems. And they require the business to operate under specific constraints like budgets, petty cash accounts, authorized purchased orders, etc. which, when not custom-built according to the company’s targets, can decrease its ability to maximize profits. The said extensive document reviews and research to adjust the financial constraints accordingly can take up to several months and interdepartmental collaboration. Furthermore, management accountants might create inaccurate cost allocations that can shoot up the prices of products and services the company produces, which leads to higher buying prices and lower sales. This happens when they don’t take into account the present and future economic situations and competitor analysis and create sales and production forecasting models with inadequate access to dynamic data. Making inferences and business decisions from such models can cause severe backlash for growth and profitability.

Similarly, tax reporting is a tedious process where the advisors and staff have to continually keep up with the government’s changing tax reforms and make sure that the particulars aren’t mismatched in any of its entries. The primary goal is to avoid risk and litigation and improve tax savings by complying with domestic and international tax regulations. A study by Bloomberg Tax & Accounting states that 57% of tax executives believe that the most significant tax challenge is to stay up to date on the changes associated with government reforms. And 63% feel tax departments should support company-wide efforts to manage risk, with only 36 per cent reporting they are doing so today. Almost half of them are challenged by a lack of tools to automate tax provisions and access to timely data, hence forcing the executives to rely on manual processes. Having a unified information system can guarantee improved ability to address tax audits, reduced risk of errors in financial statements and tax filings, a more robust tax control framework, decreased risk of compliance costs and regulatory entanglements and innovative analytical capabilities which enable the company to plan, forecast and collaborate on new opportunities.

SubtlAI can be pivotal in understanding diverse document types within a short span of time, which can bridge the gap of access to dynamic data. As financial institutions are very time-sensitive and require strategic partnerships on a day to day basis, having an information grid where every user can swiftly access data can be a game-changer. This will potentially eliminate data redundancy and call for institutionalizing partners’ documentation. Adding external documents that relate to economic, governmental, technological and other sectors to analyze the company’s performance, forecast or plan future actions is much more convenient and accurate when directly benchmarked with internal intelligence under one platform. Conflicts and other discussions amongst parties can also be abridged and solved efficiently by using SubtlAI that can give out custom responses to every user instantly, in turn making these financial processes seamless.

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Vaishnavi Reddy

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