India is home to one of the world's largest MSME ecosystems, yet many small businesses still struggle with bookkeeping, tax compliance, and financial visibility. Most depend on external chartered accountants, making it difficult to access financial information quickly or make informed business decisions. As artificial intelligence continues to reshape industries, virtual accounting is emerging as a smarter and more accessible alternative.
In this episode of the Analytics Insight Podcast, Pei-Fu Hsieh, Co-founder and CEO of AiAccountant, discusses how AI-powered virtual accounting is transforming financial management for startups and MSMEs. He shares his entrepreneurial journey, explains why founders often lack real-time financial visibility, highlights the opportunities in India's MSME sector, and compares the financial capabilities of enterprises and smaller businesses.
Ans: We actually started this company seven years ago, in 2019, in India. Initially, we were a fintech player, basically issuing corporate credit cards to startups. Prior to that, I was a VC investor for about 10 years, investing in different countries in India, in Indonesia, in Brazil, and other countries. I have held positions at various startups in the region.
Over the years, even before AI came about, we were constantly working with clients and companies to figure out how to handle accounting better. The moment that AI emerged, say the chat you team moments, then we really realized that there's a great opportunity here to transform accounting for the vast number of MSMEs and startups here in India.
Ans: So virtual accounting is essentially end-to-end bookkeeping and tax filing. This is mostly for companies that don't have an in-house finance team. So companies at this stage typically hire CA firms for the bookkeeping and the tax filing. Because most CA firms rely largely on articles and young interns to do the bookkeeping, initially the service and the quality could be quite good, quite fine. CA firms also grow, and as they grow and have a larger customer base, when it comes to audit time, audit season, reporting, or tax filing season, they inevitably prioritize larger clients over smaller ones because larger clients pay more.
Ans: I would say that as a founder myself, in the tech space, at the cutting edge of technology, I myself am not able to have access to real-time visibility, and I think that's owing to two main reasons, not necessarily for myself, but in general, there are two reasons why most founders do not have access to real-time visibility of their finances. First and foremost, it is about understanding what the CAs and these accountants are hired to do.
Ans: So India has the largest number of MSMEs in the world, and within this universe, most of them are very small teams and naturally do not have a finance team. Therefore, most of these MSMEs actually have to outsource their finance and accounting to somebody, usually a CA or CFR. This really makes all these companies quite the ideal user for virtual accounting. Because for the longest time, all these MSMEs can now have access to their finances and compliance.
It seems quite even compliances, meaning that their CA has filed their taxes, has done such and such audits, or kept their books. All this information is currently with the CA, and a lot of times we hear founders telling us that they've been chasing their CA for the past three months, and they simply have not been able to get a hold of the CA.
Ans: Enterprises have the capital to spend millions of dollars in ERP systems that can track and link everything together with a beautiful dashboard for the management that tells them minute-by-minute changes in everything that they want to see, be it revenue, cost, profit, margin, cost center, suppliers, SKUs, everything. They have that at their fingertips, but they spend millions of dollars, and they hire dozens of people to make sure that system runs accordingly and is set up properly.
That's always been a privilege of the enterprises, although it comes at a cost, which they do have the money for. That is simply not something that any MSC really has thought about.
To know more, listen to the full podcast.