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How to streamline your automated tax solution function
Companies that have installed "bolt-on" sales and use tax solutions with the goal of automating their transactional tax compliance function need to consider this question: Is the solution performing at the anticipated optimum level? Taxand USA discusses how corporates can up their game with tax technology.
Beginning Well - Pre-Implementation
Initially, most of the tax department's time and energy is focused on selecting the proper sales and use tax software package. Once that selection is made, most implementation teams will concentrate their efforts on how the product will be installed and on how to bridge the connection with the enterprise resource planning (ERP) package. Many times, companies fail to evaluate whether or not they truly have a need for an external tax engine, or whether or not their current system even contains the proper tax drivers necessary to achieve precise results.
Unless you are performing a first-time install of a "bolt-on" tax engine, begin by analysing the processes in place. Will those processes be relevant considering the direction and business requirements of the company? Is the company going through a new implementation or upgrade of an ERP package that will impact the tax department in an unanticipated manner? Are some of the procedures truly inefficient or redundant and therefore need to be completely revised (or eliminated)?
While it is critical to have a clear understanding of the current transactional tax processes, it is vitally important to recognise where improvements can be made to reduce inefficiencies and enhance production. Of course, the true motivation for embarking on such a project is to become more efficient, eliminate duplication of efforts, and reduce problematic or meaningless reports.
Finishing Well - Post-Installation
The tax department and the implementation team must work together to develop testing scenarios that analyze the accuracy of the tax determination, the effect of a cancelled invoice or deleted line, the impact of freight, price variances, and other situations that occur in regular day-to-day operations. Ideally, the ERP environment should be stable and the tests should be generated using the same methods that will be in place after "go live."
Testing is complete, and you have survived "go live" - the end is near, but work still needs to be done. Once the implementation process is complete, there needs to be a period of monitoring and assessment of the functionality, ie, How is the solution working? Who is using it well? Who is experiencing problems? Is additional training necessary? This needs to be done so that the investment is not wasted and the system is thoroughly effective.
Implementing or even upgrading a transactional tax automation solution that meets all a company's needs is the optimum goal. However, it takes a focused effort in the beginning of the project by a unified team to make this goal a reality.
A tax technology team should adopt an approach that combines tax technical experience and in-depth knowledge of business systems and operations along with systems expertise to bridge the knowledge gap of system integrators, IT and tax departments. Proper planning and focused requirements-gathering in the beginning will certainly result in a tax solution that provides improved efficiencies and enhanced proficiency in a systematic process and, more importantly, mitigates the compliance risk of the company.