This blog is the first of a ten part series focused on the most important considerations for procurement-side sales and use tax automation. The blog series kicks-off with our topic, batch is better than real-time.
Batch versus real-time processing, for use tax accrual purposes, is a longstanding debate within the sales and use tax community. If you take the short pay issue off the table (since I believe there are a number of ways to overcome that issue with batch), I believe the myriad of benefits associated with batch far outweigh its one and only detriment – delayed budgetary reporting.
Other than the benefit of timely budgetary reporting (which could be inaccurate due to the issues below), I believe that real-time creates more problems that it solves. The following are just some of those problems:
- The need to utilize default tax logic (everything not configured is deemed taxable);
- The inability to treat different types of transactions in a certain manner (everything must take the same path);
- The inability to use advanced logic routines as needed (too many cause performance degradation); and
- The inability to run and review processing-level reporting prior to accruals being booked to the General Ledger (accruals get booked immediately).
There are many other less desirable attributes of real-time, but the aforementioned are top of mind as being the most problematic.
There’s no denying that either type of processing will obviously work. I would just prefer to develop a “budgetary” workaround to my batch accrual process, rather than developing a “taxability” workaround for my real-time accrual process. At the end of the day, batch will give you more information and time to get both situsing and taxability issues right the first time around and thus saving you thousands or millions of dollars under audit.