Question 1

What is FDE (forward-deployed engineering)?

Accepted Answer

FDE (Forward Deployment Engineer) is a way of delivering on site: people who understand the business work inside the client, find the work worth improving, turn it into a process, lock that process into AI software, and stay on to run and refine it. What FDE delivers is not "software go-live" but "a business that actually works better". The four-step method: problem mapping → process architecture → resource matching → AI embedding and run-in. At Yidao, FDE engineers bring finance, tax, manufacturing and process expertise, and the clients are manufacturers.

Question 2

How is FDE different from a traditional software implementation?

Accepted Answer

A traditional implementation starts from the product and hands over a configured system, accepted at go-live. FDE starts from the business, finds problems on site, delivers a working process and tool, and counts success by real improvement in the client's own business metrics. Where requirements come from: traditionally the client states them; in FDE they are found on site and judged by expertise. What is delivered: traditionally a live system; in FDE a process plus a tool, with a measurement basis that can be recomputed. The relationship: traditionally a project that ends at go-live; in FDE go-live is where the work starts.

Question 3

Is the FDE model a good fit for manufacturers?

Accepted Answer

Yes, especially for plants with revenue of RMB 50 million to 500 million that make their own products and hold inventory: most of the data already exists but has never been joined up, so the reports give totals but no conclusions. Typical signs: the owner cannot see which orders lose money; power and depreciation are spread by volume; related companies supply each other with no pricing evidence; a process everyone wants to change never changes. The best moments to start: a relocation or new production line, a fresh tax inquiry, a financing or qualification application, or a new head of finance. Below that revenue range, start with a tax risk check-up and decide once you see how big the issues are.

Question 4

What does a company keep after an FDE project ends?

Accepted Answer

Five things: a problem list, a target process, an embedded tool, a measurement basis, and the ability to keep improving. The hand-over test is that the client's own staff can run the tool and reproduce the key results. The problem list is often the first systematic view a company gets of the waste in its own work. The measurement basis answers "how much time and cost did this save" in a way that can be recomputed and traced. Yidao does not do pure code outsourcing and does not make business decisions for the client; decisions stay with the client.

Question 5

What should a manufacturer look for in an FDE provider?

Accepted Answer

Five things: whether they know your industry, whether they really work on site, what stays behind when they leave, whether every conclusion traces back to source documents, and who signs off and takes responsibility for professional judgments. Industry: at the first meeting, can they name the specific problems your plant is worried about, rather than a script? Discipline: are there clear stage gates, such as not starting on site until key records are in, and keeping any figure without an evidence index out of the report? Data: does raw data stay on the client's own machines, and is the scope of any authorisation written into the contract? Yidao, as an example: on-site projects run through seven stage gates with 109 standard work units on the finance side, and policy judgments, solution design and report sign-off are carried by Yidao's experts.

Question 6

What records must be kept for the R&D super-deduction?

Accepted Answer

Under State Taxation Administration Announcement No. 23 of 2018, the super-deduction is claimed on a "self-assess, claim, keep records on file" basis, with seven main records on file, chiefly the project approval decisions, the list of R&D staff, the R&D auxiliary ledger and the cost allocation notes. They stay with the company and are not filed with the return. The seven records: project plans and approval decisions; the structure and staff list of the R&D unit or team; commissioned or joint R&D contracts registered with the science authorities; allocation notes, with usage records, for R&D staff (including external staff), equipment and intangibles; final accounts, allocation schedules and benefit-sharing ratios for centralised R&D; the R&D auxiliary ledger and summary; and any appraisal opinion issued by a science authority at prefecture level or above. Commissioned overseas R&D has its own list. The records are kept for ten years from the day after the annual filing period of the year the benefit is claimed. Qualifying companies deduct an additional 100% of actual R&D spending before tax (MOF and STA Announcement No. 7 of 2023). How R&D Steward handles it: it collects the seven cost categories, tests each limit, generates the auxiliary ledger and the filing form, then runs 24 risk checks and lists the records on file and anything missing.

Question 7

What are the most common risks in a High and New Technology Enterprise review?

Accepted Answer

Most often a hard threshold is missed or the numbers do not reconcile: the R&D spending ratio over the last three fiscal years, high-tech product income (at least 60%), science and technology staff (at least 10%), and a mismatch between R&D costs as collected for the qualification and as claimed for the super-deduction. The R&D ratio depends on sales: at least 5% below RMB 50 million, 4% from 50 to 200 million, and 3% above 200 million with domestic R&D at least 60% of all R&D spending (Administrative Measures for the Recognition of High and New Technology Enterprises, Guokefahuo [2016] No. 32). If a later review finds the conditions are not met, the status is revoked and the tax benefits enjoyed since the non-compliant year are recovered. R&D costs have to hold up under both the qualification and the super-deduction rules, and the two scopes are not identical.

Question 8

How should pricing evidence be prepared when related-party transactions are large?

Accepted Answer

The point is to show the price is arm's length: where third-party comparables exist, compare unit prices for the same specification and period line by line; where they do not, explain the pricing through the buy-sell spread and processing-cost coverage, and keep the working papers and pricing approvals. Related-party purchases or sales above 30% amount to significant dependence; it is the first question Yidao asks when scoping. Companies with related-party transactions file the annual related-party transaction report, and above the set thresholds they also prepare contemporaneous documentation (STA Announcement No. 42 of 2016). What M02 delivers: a completeness list of related parties, concentration and share analysis, price fairness working papers, and a target cost-plus margin with repricing proposals.

Question 9

How should power and depreciation be allocated to product cost?

Accepted Answer

Set up cost objects first, then split costs into the part that moves with volume and the part that does not: allocate energy to work orders by metering or by equipment power times hours, and depreciation by the products each machine actually serves, rather than spreading everything by volume. The cost of spreading everything by volume: large orders carry too much cost, small orders all look profitable, and pricing follows the error. Yidao's own measurement: in twelve months of daily data at an electroplating plant in Jiangsu, 50.9% of costs did not move with volume; when output rose 4.6 times, electricity per unit fell 51%. The data usually exists already: the accounting ledgers plus work orders, hours, output and energy records, with no new sensors.

Question 10

What are the risks of leaving construction in progress unconverted to fixed assets?

Accepted Answer

Three common risks: buildings and equipment already in use are under-depreciated, so profit is misstated; property tax on buildings may go unpaid; and without conversion and asset cards, the records needed for one-off deduction or accelerated depreciation are missing. In accounting terms, an asset that is ready for its intended use but not yet through final settlement is transferred to fixed assets at estimated cost and depreciated (Application Guide to ASBE No. 4, Fixed Assets). Property tax: self-built buildings are taxable from the month after completion; buildings built by a contractor from the month after acceptance ((86) Caishuidizi No. 8). Equipment and tools newly purchased between 1 January 2024 and 31 December 2027 with a unit value of RMB 5 million or less can be expensed in full in the year of purchase (MOF and STA Announcement No. 37 of 2023), provided the contract, invoice and acceptance record match.

Question 11

What happens if scrap sales are left off the books?

Accepted Answer

Scrap sales are taxable income, so leaving them off underpays both VAT and corporate income tax. Once found, the tax is due with a late-payment surcharge of 0.05% per day, and a penalty of 50% to five times the unpaid tax may apply. It is common in electroplating, hardware, machining and injection moulding: income from offcuts, spent solutions and old moulds goes unrecorded year after year. Typical signs: regular dealings with a scrap buyer but no matching income; raw material usage and finished goods that do not reconcile. The fix: keep a scrap register and invoice or declare every disposal as it happens.

Question 12

What should a factory watch for in the tax treatment of a relocation?

Accepted Answer

First decide whether it is a policy relocation: a government-led move in the public interest, backed by supporting documents, is accounted for separately under STA Announcement No. 40 of 2012; income and costs during the move stay out of current taxable income and the relocation gain is settled in the year the move is completed. If it cannot be accounted for separately, it is treated as a non-policy relocation and does not qualify. Keep compensation income, relocation costs, disposals and replacement spending separate, with an unbroken chain of evidence from the government document and compensation agreement to the replacement invoices. A relocation is also the best moment to rebuild equipment asset cards and recompute the cost structure. Yidao has built a relocation ledger and an equipment asset system for an electrical appliance maker in Jiangsu.

Question 13

What is the difference between cross-border e-commerce codes 9610, 9710, 9810 and 1210?

Accepted Answer

All four are customs supervision codes for cross-border e-commerce: 9610 is retail (B2C) import and export, 9710 is direct B2B export, 9810 is export to overseas warehouses, and 1210 is bonded cross-border e-commerce. Each mode needs a different chain of records for customs, foreign exchange, VAT refunds and income tax; the wrong mode or mismatched records is a common reason refunds get stuck. Cross-border Steward links customs declarations, export invoices, orders, logistics and receipts into one record per shipment and checks them before filing. The Cross-border Steward site includes a 61-item self-check list for customs, tax and finance compliance.

Question 14

How can you tell which orders are losing money?

Accepted Answer

Look at the margin on each order rather than the monthly totals: match sales lines, costs and expenses to every order, rank profit by product and by customer, and the orders sold below cost surface. The data needed: trial balance, sales detail, invoice detail, inventory and the journal, which most companies can export. Jingying Tongbao runs on the company's own computer so data never leaves it, and produces product and customer profit rankings, receivables ageing against credit limits, and a rolling three-month cash forecast. Common findings: the biggest customer is not always the most profitable; nobody watches receivables above the credit limit.

Question 15

What is the risk of other payables that stay open for years?

Accepted Answer

Payables that are long outstanding and genuinely cannot be paid must be taken into income for corporate income tax; if the balance hides off-book money flows, the use of funds will also be traced. Article 22 of the Implementation Regulations of the Corporate Income Tax Law lists "payables that genuinely cannot be paid" as other income. Typical signs: the balance only grows, the counterparty is unclear, and there are frequent flows with shareholders' personal accounts. M03 transaction substance and use of funds reviews open balances and maps where the money went.

Question 16

How should a manufacturer choose an outsourced internal audit provider?

Accepted Answer

Check three things: whether every figure in the conclusions traces back to a source document, whether on-site verification is done by auditors in person, and who signs the report and takes responsibility. An internal audit that only runs software and never goes on site will not find the real problems. Stock counts, confirmations, site visits and interviews are the strongest evidence, must be done in person, and usually take more than half of the project effort. Look for stage gates: no site work until key records are in; every finding closed as confirmed, excluded or insufficient evidence, with nothing left open. Yidao's full internal audit runs all seven stages and delivers working papers, the audit report, draft internal controls and a remediation tracker.

Question 17

What does a tax risk check-up examine?

Accepted Answer

It examines 36 months of filings and invoice data: risk points in VAT, corporate income tax, individual income tax and social insurance and other taxes, plus the genuineness and compliance of invoices, and ends with a high, medium and low risk list and remediation advice. Anxinshui pulls the data automatically once the company authorises it, scans it with 264 risk models, and examines invoices across ten dimensions. Tax data interfaces are open in 31 provinces. A check-up produces leads and remediation directions; whether a problem really exists depends on verification.

Question 18

How are on-site finance and tax consulting projects usually priced?

Accepted Answer

On-site projects are usually priced by person-days and role, with travel charged at cost; AI software modules are priced by usage and implementation scope. The two are priced separately, and the project quotation governs. Scope sets the person-days: Yidao publishes the standard delivery days for each product module, for example about 13 days for a tax risk scan and about 66.5 days for a full internal audit. Roles fall into three bands, data staff, project manager and partner or expert, with rates set out in the quotation. We suggest starting with a risk check-up so the issues are sized before choosing modules.

Question 19

Why does enterprise AI so often stall at the pilot stage?

Accepted Answer

Usually because it starts from the tool instead of the business: nobody first found the steps worth changing on site, nobody stays on site to handle exceptions after go-live, and nobody agreed in advance how results would be measured. FDE works in order: map, design, match, then embed; the tool comes last. Reuse before building: take stock of existing system interfaces, data and software, and get it running at the lowest added cost. Results are accepted against the company's own business metrics, such as hours per role, error rate or cost per transaction, with no promised percentages.

Question 20

How can bookkeeping firms and tax advisers move into higher-value work?

Accepted Answer

One way is to become the front end of a professional delivery network: you find and qualify clients and keep the relationship, while diagnosis, solution design, delivery and sign-off are carried by experts in the back office, and fees are shared by depth of involvement. Yidao's Industrial Partner Programme has three roles, referral, delivery and regional partner, with no joining fee and no deposit. Opening tools: a short tax risk report and ten questions for judging whether a plant is worth pursuing. Client ownership is bound when the case is opened and locked at signing; the client's contact is always the partner.

Twenty questions we are often asked about FDE and manufacturing finance

What FDE is, and whether it fits you