During a period of rising interest rates and slowing growth, cash is king once again. As a result, many Chief Financial Officers and finance groups are striving to sharpen the accuracy of their cash flow forecasts while shoring up working capital.
These efforts are relevant to tax leaders and their teams for three reasons:
- Since most tax leaders report to their CFO, the finance group’s top priorities are important to monitor and, when possible, support;
- Tax groups have an opportunity to improve operational efficiency and optimize compliance processes in ways that can bolster organizational cost-reduction efforts; and
- When equipped with the right tools, tax teams can harvest actionable insights from their deep data sets to drive better business decisions related to profitability and risks.
I’ll get back to those technological capabilities in a moment. First, it’s helpful to keep in mind that data analytics fundamentally enable what a Deloitte article on cashflow forecasting describes as a “true picture of cash movement” and overall liquidity. The article shares that “Understanding the interplay among receivables, inventory, and payables down at the sub-ledger level is also an area where heightened visibility into working capital cycles can accelerate cash inflows.” Higher levels of granularity and transparency, the article points out, “provide greater visibility into cost structures across the business. With better insights into demand and spending, leaders can set their sights on improving organizational and operating models while taking out costs.”
This raises a pressing question for tax executives: How detailed is our view of tax performance? A sufficiently granular view of tax performance equips tax leaders with a clear, data-driven picture of the tax impacts of business activity, indirect tax trends and variances, state-by-state economic nexus status updates, audit risks, and more. These snapshots can be delivered via dashboards with a summary view and drill-down capabilities.
Vertex Indirect Tax Intelligence is a tool that delivers these types of actionable insights that can increase efficiency, reduce audit risks, and contribute to the finance group’s drive to reduce costs by removing complexity and uncovering “hidden opportunities” throughout the organization. Tax functions use some of the largest, most detailed, and diverse data sets in the company. Forward-looking tax leaders are starting to leverage tax data intelligence to improve the tax group’s overall performance, risk profile, and cost structure.
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.