Tax teams are seeing the benefit of the latest wave of technological advances, which have the potential to catapult tax to the front of the finance function investment agenda.
Tax teams can often find themselves at the back of the queue for technology investment, when compared to other parts of the finance function. In fact, in a recent PwC study where we spoke to over 300 senior decision-makers, fewer than half said they had invested in tax technology and systems in the last two years. In the same study - just a third said they planned to make investments in the coming 12 months.
This trend may be set to change, however, as a new generation of accessible, affordable and easy-to-implement tax process automation and analytical capabilities not only sharpens efficiencies, but also drives insight and value across businesses.
Not only is the technology functionality available to tax teams advancing, but it’s also more readily available. It can be built to order at a fraction of the previous time and cost. The necessary capabilities may even be in place and ready to use within the systems subscriptions of the wider enterprise.
So what changes are opening the way to this new art of the possible?
Game-changer one: The power of the cloud
The move to the cloud has boosted systems power and performance. It also does away with the need for a sweeping overhaul of systems. You can quickly implement plug-and-play capabilities to deal with specific pain points or new business demands. The cloud also allows you to create single global tax data hubs to transform reporting and drive insights.
We recently worked with a global logistics provider to automate the capital allowance evaluation and reporting on its multibillion-pound property portfolio. The new engine has not only quickened turnaround and reduced the demands on tax professionals’ time by an estimated 75%, it has also eliminated the risk of error caused by the manual rekeying of data. Further safeguards include red flags for anomalies and wrongly allocated entries. While such digital applications are pioneering now, they could soon be obligatory once the UK Government’s ‘making tax digital’ (MTD) programme is expanded to include direct, as well as indirect taxation.
The speed and versatility of cloud-based capabilities is also evident in the robotic process automation tool we developed to automate withholding tax returns for a global financial services organisation. Running around the clock, the ‘bot’ turns data feeds into completed forms and submits them to the tax authority. The solution saves more than a 100 days of tax professional time a year. For a skilled workforce, the elimination of thousands of repetitive manual entries not only cuts out errors, but can also improve staff morale and help attract talent. This initial solution has also provided a springboard for further developments including OCR tech (artificial intelligence to read docs and convert to digital format) to automatically collect, read and feed data into the system.
Game-changer two: ERP embraces tax
The latest ERP systems now include much greater tax functionality, allowing your team to automate processes and develop real-time reporting capabilities. Valuable new features range from profitability and performance management (PaPM) analysis to continuous tax data quality monitoring through the tax compliance (TC) application. Many ERP providers now offer capabilities that allow you to automatically extract data from multiple sources and report directly to tax authorities. This is paving the way for the ultimate data aim of a single ‘source of the truth’.
Game-changer three: Vendors step up to the mark
Not only are there an increasing number of tax solutions coming onto the market, they are also becoming easier to install, interface with existing systems and adapt to the specific demands of your business. Indeed, while many tax teams are looking to create their own applications, third-party tools may already be available. A case-in-point is statutory reporting. Among the solutions we’ve been implementing is a tax platform developed by Workiva, which automates the production of primary financial sections and disclosure notes. This tool has become our backbone for helping our clients to transform their end to end statutory, management and consolidated reporting.
Another key area of focus is tax workflow management. Ready-made solutions include our own Smart Suite. Along with a full workflow capability, Smart Suite comes with built-in risk and controls management to help you transform oversight and stay on top of changing regulatory requirements.
The influx of new applications also includes a range of indirect tax evaluation and reporting tools. Automation is now essential in the wake of the increasing complexity of VAT/GST arrangements worldwide, along with MTD requirements in many jurisdictions including the UK. We’ve seen how quickly functionality is improving from working with a range of e-invoicing and tax engine providers. We also offer our own one-stop solution, Edge. Edge automatically extracts, collates and configures data from group-wide sales and finance systems and then prepares local country filings and payments. The software also checks data quality, flags exceptions and generates key analysis for management.
Game-changer four: You don’t have to be a techie to use the new tools
The final game-changer is how easy the new tools are to use. You don’t need to be a specialist data analyst to get the most from applications such as Microsoft PowerQuery or Alteryx, for example. Such tools also now come with interactive interrogation and visualisation capabilities.
Harnessing the potential
How can your business make the most of this new art of the possible? Drawing on our work with clients, four priorities stand out:
- Know what’s out there
The tax technology landscape is changing before our eyes. Work with your IT team and advisers to find out what solutions are becoming available and how they could be deployed in your team. Like driving a car, you don’t need to know how the engine works, just where it can take you and how to get there. - Identify key pain points and upcoming demands
When determining the business case and drawing up your road map, a good place to start is with the processes that are time consuming, but add little value (these processes are often reviled by tax teams). Automating these processes can not only ensure a healthy return on investment, but also help you achieve buy-in from your team.
It is also important to consider what further advancements the future may bring, and begin building the necessary automation and analytical functionalities to accommodate these advancements now. This includes OECD Pillar II and the move to MTD for direct taxation. When assessing such new demands, it’s not only important to work out system needs, but also data points, sources and ownership. - Embrace new horizons
The giant leap forward isn’t just about automating what you already do. Through a combination of new analytical capabilities and freeing-up tax professionals’ time, it’s also an opportunity to deliver more of the insights the board needs to build tax into strategic decision-making. The results will further raise the status and influence of tax within your business. - Embrace new skills
Workforce skills are as critical as systems in making the most of new possibilities. Key priorities include upskilling your team. You can also assign ‘digital champions’ to help promote innovation and its benefits throughout your organisation.
Automation as liberation
The door to the transformation of tax is finally opening. Tax technology modernisation isn’t about replacing people with software, but rather liberating them from rote processes and boosting the value they can deliver. This harmonisation is generally known as intelligent automation, but we prefer to think of it as offering more of what you want to do, and less of what you don’t.
To discuss your tax technology journey (regardless of where you are on it!), please get in touch for a conversation.
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