5 Reasons to Integrate Tax Technology and Procurement Systems

  • 08 January 2021

In a previous post, I suggested that businesses could realise significant benefits by adding a third-party transactional tax engine to their procurement systems. In this post, I’ll explore five of those benefits in more depth. 
This tax-procurement systems integration enables you to: 

  1. Ensure correct product mapping: The rules governing the assignment of a tax category to a product or service are complex; incorrect or manual mapping in the procurement platform can lead to overpayment or underpayment. Tax engines can ensure the correct tax determination across multiple jurisdictions. In addition, digital purchase catalogues can help procurement improve master data control by ensuring that the most frequently purchased items are correctly described and the proper attributes assigned to support the mapping process. 
  2. Eliminate in-house transactional tax research: ERP and e-commerce systems don’t provide deep enough content to keep up with constantly changing rules. Tax platforms are continually updated by the provider, removing the research burden from the tax department’s shoulders. 
  3. Ensure a reliable, repeatable accounts payable (A/P) process: The tax engine replaces human decisions with reliable, rules-based automation, improving accuracy and reducing risk. You don’t have to spend so much time answering tax questions from A/P. 
  4. Simplify exemption certificate management: Tax jurisdictions often require exemption documents to be produced at the time of sale and stored for audit purposes by the vendor to substantiate the exemption. Tax platforms can integrate with your certificate management system to ensure that you produced these documents accurately. 
  5. Enable scalability: A tax engine can easily expand as your business grows. For example, as you add new procurement systems or product lines, you can usually connect them to the tax platform with minimal customising. If you install a new ERP system, you won’t have to start coding from scratch. 

I take a deeper look at these advantages in a Tax Executive article. The article also considers how pairing up tax technology and procurement systems can help you achieve greater accuracy, reduce audit assessments and improve tax governance.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

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