4 Big Benefits of Tax-Aware ERP Systems

The Truth about Legacy ERP Systems

At many businesses, enterprise resource planning (ERP) systems have been in place for a decade or more – a decade in which we’ve seen the rise of cloud, mobility, artificial intelligence and a host of other disruptive technologies. A recent Vertex and Oracle whitepaper explains how legacy ERP systems are at risk of falling behind the pace of digital transformation and lays out a compelling rationale for investing in a modern platform: Digital Transformation Demands a New Approach to ERP. My colleague Marc Duclos also dives deeper into this whitepaper in a previous blog.

The report also explains why tax awareness is an indispensable component of any future-ready ERP software: “Given the broad impact that ERP has on organizations, it’s easy to overlook the importance of tax compliance, but the cost and risk of adopting a solution that doesn’t adapt to changes in tax laws can throttle the agility of the entire company.”

Tax-aware ERP systems enable businesses to:

1. Accommodate frequent tax code changes. Compliance demands are in constant flux – consider, for example, the changes resulting from the Supreme Court’s South Dakota v Wayfair decision and the 2017 Tax Reform Act in the United States. Companies doing business in multiple countries or states must track and comply with a myriad of regulations, deadlines and reporting requirements. Modern ERP systems that incorporate information on changing tax laws can reduce the cost of doing business and improve decision-making.
2. Adapt smoothly to business changes. New business models, such as a shift to online sales, bring additional tax complexity; the same is true of structural changes such as M&A and divestitures. Tax-aware ERP can help businesses cut through the complexity.
3. Enhance organizational agility. Modern ERP systems can support tax analytics, enabling users to model the impact of tax changes on local operations and take advantage of changes in local tax codes, potentially yielding millions of dollars in savings.
4. Tap into the cloud. In traditional implementations, ERP involved significant up-front investments in hardware and the resources to support it, lengthy installations and complex data migrations. The cloud changes all that. It enables companies to scale quickly as their needs change, while reducing maintenance, overhead costs and migration headaches. ERP’s tax capabilities are perfectly at home in the cloud. Vertex, for example, has been an Oracle co-development partner for more than 25 years; our tax solutions tightly integrate with Oracle ERP in the cloud, as well as on-prem environments.

These advantages are too big to ignore, the report concludes. Tax-aware ERP can “eliminate much of the pain of tax compliance, providing customers with end-to-end tax management while lowering the cost of ownership and reducing audit risk.”

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..