The modern tax function needs to be progressive and agile. To work at the best of its ability, it needs a defined technology strategy, aligned with key stakeholders in the business. It can then integrate new technology or leverage existing technology with a clear road map for delivery. The tax function needs to consider making the most of the features and capabilities of existing systems, such as ERP optimisation. There may also be opportunities for automation of data extraction, transformation and manipulation as well as advanced analytics and visualisation.
While companies understand the value of using technology to improve processes, drive efficiency and manage risk, many have yet to make appropriate investments in their tax function. Investing in tax technology transforms the function into a strategic partner in the organisation.
For many businesses, existing tax processes have been stationary for a number of years. They may not be operating as effectively as technology might allow.
For example, a compliance process may require data to be pulled from various systems. Tax staff must log into the ERPs, run a report, download data, open a new spreadsheet, transform the worksheet, and then begin to manipulate the data. Self-service data management and ETL tools can automate the data extraction, clean-up and transformation process.
Reducing the time spent on existing processes can add resources back to the business. This would open up continuous improvement opportunities and enhanced operational efficiency, key considerations in a cost-focused environment.
The tax professional of the future will be highly proficient in data analysis, statistics, and technology, as well as process mapping and improvement and change management. Are there people within your organisation with untapped technology experience or skills? Are there members of the team who are ready to upskill and share their knowledge?
We are seeing a marked increase in tax functions employing dedicated taxologists, data and project management specialists. They can develop, champion, and execute tax technology and transformation strategies.
At the same time, the tax function is often challenged by resource limitations around reporting schedules. An effective tax technology strategy can help ease that pain by improving that work experience and empowering an innovative and agile team. In creative thinking and generating impact for the organisation, the automation agenda is transforming employees' perception of tax functions for the better.
When creating a robust tax technology strategy, your tax function should consider its maturity model. It is important to identify where you are now and where you want to be, and what investments need to be made. Is there scope or budget to obtain technology solutions that will benefit the business?
Any tax technology procurement evaluation should consider the current enterprise platforms in place. Organisations need to understand the scope and timing of ERP and other enterprise investments. Can existing software be modified? Does the business hold technology licences that could be used by the tax team?
One area which has seen a significant jump in activity is small automation. Integrating small automation is a practical approach driven by the end user, as compared to large scale enterprise-wide ERP or tax engine implementation projects. Cost reduction can be a strong reason to pursue small automation solutions.
If you are not thinking about some form of automation to support your tax function, you should be. Leading teams are embracing this trend, leveraging new tools to become more efficient and capable at pace. Finance functions are transforming enterprise systems and moving to cloud-based solutions. They are also looking for creative ways to reduce costs.
Look at how your tax function operates: Are there too many manual processes in use? Are there ways that small automation projects could address specific areas? Is there a set of repetitive tasks being performed on a recurring basis? Identify a shortlist of tasks that could yield high returns, with few barriers for success. Perform a process mapping exercise.
Small automation tools have put the power to solve problems and streamline tasks into the hands of tax professionals. The tools that are available can drive efficiency and increase control, creating room for more value added activities. These include extract, transform, and load (ETL) tools, robotic process automation (RPA) and analytics and data visualisation tools.
As part of defining and implementing any tax technology solutions , a governance framework is essential. To achieve returns over the long-term, optimised processes need to be supported and monitored. Establishing cross-functional teams can help establish a multi-stakeholder approach to process improvement. You also need to consider regulatory requirements, as well as how you will put in place documentation of new processes, IT security, and access controls.