Sales and use tax errors are costing most companies an exponential amount of money every year. As such, it’s critical to maintain a defined and repeatable process to get things right.  This includes regularly auditing the source data going to your engine, as well as regularly auditing the results coming back from your engine. 

For those somewhat new to sales tax automation and/or thinking about leveraging it going forward, there are many other topics you should consider before adopting your ultimate solution.  Below are a few that come to mind, along with how our solution can help with each.

1. Implementation: When working in various systems, the setup can often take months or even years to complete. Long implementation processes can be frustrating and hinder performance. With TaxView Pro, our implementation process is efficient and timely. Most clients are up and running in just two months.

2. Configuration: Tax rules, regulations, and rates are constantly changing. When configuring and customizing rules, it is important to build rules that fit for your business, are simple to understand, and yield an accurate result.  With TaxView, the rules are easily configurable and can change with your business and associated tax laws.

3. Visibility: Your automation must contain robust reporting to ensure accuracy.  Additionally, it’s good to adopt and adhere to reviewing your source data and results on a monthly cadence. Often, looking at data can be complex and take long periods of time. Using TaxView provides granular visibility into all transactions and gives the ability to review them quickly. Gone are the days where data is too complex to comprehend or too difficult to organize.

4. Accuracy and Efficiency: Inaccurate and/or omitted data is the number one cause of sales and use tax errors. Not to mention, it makes the process completely inefficient. With TaxView Pro, we have various ways to identify and fix all associated tax errors in a simple and efficient manner.  Furthermore, we guarantee all of our results with our Zero Fee Guarantee.

How much are sales and use tax errors costing you? For most companies the answer is shocking. Tax over and under payments for non-compliance can easily cost companies hundreds of thousands to millions of dollars each year. Ideal for complicated tax requirements, TaxView Pro brings clarity and huge savings to your sales and use tax function. Our turnkey solution is configured at a granular level with all applicable tax rules for your business to calculate the most accurate tax possible. To see more benefits, click the link below.

Thank you for joining us on our blog series! The tenth and final best practice for procurement-side tax automation is develop multidimensional reporting.

Automation without proper reporting is like cooking a meal you never taste - there’s no way to tell if it’s any good. If you truly want to be successful with your tax automation efforts, you must develop and regularly utilize good, multidimensional reporting.   

Reporting should be the backbone of all automation. Not just so you can ensure your intended results are being captured, but also to allow you to examine, digest, and react to any nuances that may become visible in the data. Before developing your reporting, it’s extremely important to audit, understand, and question all source data. Doing so will help you better understand what types of reports can be generated, as well as what data elements are available to drive your intended result.

For example, when we develop new reports for our applications, we always work backwards. That is, we start our analysis asking the question of what we hope to achieve by the report. Once determined, we then question what data elements would be required to substantiate our findings.  From there, we ensure those data elements exist within the source data. If not, we work to change the source data to include the necessary information and/or assess if other existing data elements could work as a viable substitute.

Once comfortable the data exists to generate our report, we then move on to the “action” of running the report. This deals with the applicable report parameters a user may want to utilize in running the report (e.g., date ranges, company codes, general ledger accounts, etc.), essentially any way the user may want to customize the report for their particular audience.

Next, we focus on the design and layout, both for on screen and extract purposes. If your report generates a substantial amount of tedious detail, it’s usually best to make only the main data values visible on the screen. This often helps the user quickly digest the information and determine if an extract, with more data values, should be generated.

The last step of our process usually deals with the need for drill capabilities, essentially asking the question if the existing report should drive another report. Drill reports, as we like to call them, are a great way to help the user digest complex, multidimensional information. Rather than trying to compile and display a bunch of detail into just one report, a drill report can allow you to provide summary information that “drills” into a separate detailed report based upon a key characteristic within the summary report.

As you can see, many steps are often involved to ensure your reporting needs are met for your automation. Failure to take the time to methodically go through each step may only be slightly better than having no reports whatsoever. However, when done correctly, reporting can typically bring to light many aspects within the data that were previously unknown or even represent a potential liability to the organization. That’s why we believe it should be the backbone of your automation efforts.

Our blog series is winding down. Tip number 9, Scan Source Documents, is this weeks topic. Stayed tuned for next week when tell you our tenth and final best practice. 

Checking your tax accrual process for accuracy is something that every company needs to make a habit and that is why blog number 7 is crucial for your success.

Performing periodic vendor reviews is a great way for tax departments to mitigate audit surprises and increase their value within the organization. The frequency for these reviews can vary, based on the size of the organization, the complexity of the industry, the integrity of the procurement data, and the number of vendors regularly used for purchases. However, they should generally be performed at least once or twice a year.

Our last blog showcased line detail over invoice summary and how that line detail information can really save the day. This blog talks about the importance of providing flexibility for different transactions like situsing and allocations. 

This week, our blog series features tips and tricks on segregating tax, freight and discount so you can add accuracy and value to your procurement-side tax automation. 

Understanding your data is extremely important, especially when it comes to your sales and use tax. Below are questions to ask yourself to get the ball rolling:

• What ERP do we use?
• What are the different modules within the ERP?
• What fields are stored in each module?
• What information does each field provide about the purchase?
• What information is stored in detail or summary?
• What fields will link the summary information with the detail?
• What information is required verses optional?
• What information is manually generated or inherited from a different module?
• Are there subsystems that interface with the ERP?
• What fields will link the information between the subsystems and ERP?
• Does AP segregate and store vendor tax?
• Is segregated and stored vendor tax at the line or summary level?
• Does AP segregate and store vendor discounts?
• Is segregated and stored vendor discounts at the line or summary level?
• Does AP segregate and store freight charges?
• Is segregated and stored freight charges at the line or summary level?

Are you struggling to answer these questions and dig deeper into your data? Now more than ever, it is critical to know the intricacies of your data so you can set your company up for success. Read more to learn about the next two steps you should take after understanding your data. 

Contact us to learn more!

STEP 1: KNOW YOUR DATA
Gone are the days of hoping your data will suffice under audit. Hope is not a strategy, but education is. A great way to educate yourself is by identifying, contacting, and meeting with those people in your organization who live and breathe the data on a daily basis. Valuable information can be gained from any of your organization’s functional groups, but Accounts Payable, Procurement, Accounting, Operations, and IT should definitely top your list. Try to schedule an hour meeting with a key member of each these groups, and you’ll be amazed by how much useful information you’ll learn about your data. While meeting with them, don’t be afraid to get specific, as the devil usually lives in the details.

STEP 2: CAPTURE YOUR DATA
Once down the path of learning more about your data, your next step is properly capturing it. Here you should be thinking about two separate things. First, does the organization have all of the information needed to successfully defend tax positions under audit (e.g., segregated sales tax, line detail, etc.)? If not, it’s good to perform a high-level analysis to determine the potential financial impact the missing data may
have on the organization. If your analysis demonstrates a clear business case, you should jointly meet with Finance and IT to present your findings and push for the data change. Next, you need to consider how the data is going to be pulled. Are you going to be self-reliant, or do you plan to leverage IT to push the data on demand? If you plan to leverage IT, it’s always good to mock up some sample reports to better convey the exact deliverable(s) you need from them. Make sure your samples includes all pertinent fields, examples of how certain information may need to be rolled up, and descriptions for any codes that may be included in the report (such as GL account descriptions, cost center descriptions, commodity code descriptions, etc.). If you’re going to be self-reliant on capturing the data, you need to determine if you have the proper tools that will allow you to be successful. For example, do you have access to the necessary queries, databases, and/or tables needed to extract the data out of the system? If so, do you also have access to the proper tools to potentially manipulate the data upon request? Even though MS Excel has done a great job overcoming their historical volume limitations, you might find that it’s still not ideal for manipulating the larger data sets that are usually required during audits. Most self-reliant tax practitioners tend to leverage more robust data analysis programs for this type of work, such as MS Access, ACT, or ACL.

STEP 3: REVIEW YOUR DATA
Once you have the ability to pull the data, it’s vital to review it on a regular basis. The frequency of your reviews will obviously vary based upon the size, complexity, and the overall needs of the organization, but you should plan to review it at least once a quarter. In reviewing your data, you should be looking for data anomalies, coding errors, omissions, and any other trends that could cause the organization to quickly fall out of good compliance with a taxing jurisdiction. The purpose of the review is not only to stay abreast of how the data will change over time and by user, but also to promote internal training and/or external vendor awareness before any errors get out of hand. In this day and age, it pays to become a student of your data. The more you can learn about how it originated, how to pull it, and how it changes, the better.

Being aware of your data is one of the most important things in an emerging digital landscape. Without data, it’s impossible to gain a deeper understanding into the processes needed to help your business run. Not only do potential problems go unnoticed, until they bubble over into serious issues, it’s harder to protect your company against business risks when you’re unaware of the specific details in your data.  This is especially true within the corporate tax department.  When tax practitioners don’t understand the specifics of their data, the company’s risk of non-compliance with federal, international, and state and local tax codes can skyrocket.

Not all costs associated with data unawareness can be measured from a monetary standpoint, as there are also reputational risks at stake.  If your business is regularly found to be non-compliant, due to your inability to access and/or understand your data, your company’s credibility may diminish within your industry. People associate data awareness with success and best practices, so not having control in that area of your business can be a serious problem.

When one can’t capture data accurately or efficiently, the ability to perform a good risk-related trend analysis can be lost. You are also unable to gain a deeper understanding of the overall landscape your company may face to be at the forefront of your industry, especially when you consider that good data awareness has the potential to generate up to 70% more revenue for your company.  When it comes to business growth and stability, a deep awareness of data and its meaning is extremely vital.

According to IBM, both inaccurate data and inefficient data methods costs businesses $3.5 trillion a year.  The problematic data comes in the form of duplicate entries, inaccurate entries, typos and omissions in key fields. The inefficiencies generally come from workers spending up to 50% of their time just trying to find and correct problematic data.  Within the United States, the lost productivity costs alone are estimated to be $60B a year. Freeing up that amount of time and money can allow your business to utilize those resources and invest them in other areas of the company to promote growth.

If you can’t accurately capture and analyze your company’s data, you’re bound to fall behind the pack when it comes to business growth and stability. You risk losing opportunities for new customers and/or product development, which has found to be as much as 12% of a company’s total revenue.

There is no downside to effective data management, but there are serious risks when it comes to ignoring one of the biggest tools available to your business. In the current digital landscape, data management can make or break a company – don’t be left behind.

Accuracy, simplicity and affordability are the cornerstones of good tax automation.  Although many companies devote resources to calculate sales and use tax, they often struggle to do so within an acceptable error rate.  The implicit details surrounding each individual transaction, along with the volume of changes by the various legislative bodies and the lack of critical information at the time of purchase, are just a few main reasons why so many have serious problems in this area.