How to Strengthen Tax’s Involvement with Finance Transformation

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Cloud technology can help indirect tax groups respond quickly to major business model changes, facilitate smoother ecommerce transactions, better customer experiences and respond effectively and efficiently to constantly changing tax compliance requirements.

This makes it important for tax teams to ensure that tax technology cloud migrations are built into larger ERP cloud migrations and overall finance transformation. The question that gets asked frequently is what resources the tax and IT teams need to bring to the table to help start the ERP/tax engine integration process? Well, with companies moving to the cloud, they are moving from capital expenditures (CapEx) to operating expenditures (OpEx).

Although IT won’t be managing the hardware/software in a SaaS environment, there is still the need to connect itself to the requirements of the business, including finance. Data lives across the enterprise and the customer, product, sales, inventory, etc. is needed for the end-to-end finance process. This in turn requires tax’s early inclusion on a well- represented finance/ERP transformation project team. After all, the tax group qualifies as an important, and unique, “consumer” of ERP data. Making accurate tax determinations and calculations requires large volumes of detailed transactional information related to address, ZIP codes (including Zip+4) and latitudinal and longitudinal data along with other sales, accounting and distribution data.

In many situations, however, tax leaders find that they need to advocate for the inclusion of a tax professional on the project teams leading finance transformations and ERP cloud migrations. Making the following points can help bolster this argument:

  1. Large transformations come with tax risks; it’s wiser to get ahead of those risks from the start: Any ERP implementation can create risk to downstream tax processes. An incremental up-front investment in tax helps mitigate those risks.
  2. Including tax can help increase the ROI and cash savings that helps fund the project: Organizations can drastically reduce their tax operations costs by leveraging a tax engine as part of their ERP migration to streamline indirect tax operations.
  3. Tax is one of the largest, and most demanding, consumers of ERP data: Tax functions are highly dependent upon accurate, timely data from the ERP system. As such, finance transformations and ERP migrations to the cloud should position their tax teams so they can get the right data, in the right format, with the right connectivity within a new system.
  4. Getting tax “right the first time” is more cost-effective and efficient than doing so after the fact: Excluding tax from finance transformations often results in the creation of additional manual processes to develop automated workflows that layer on to the overall ERP to remediate functionality gaps. These workarounds can be costly and time-consuming to execute on an ongoing basis.

Tax’s early and active involvement in ERP transformation initiatives offers other benefits: upfront participation gives tax professionals an opportunity to nurture more collaborative relationships with their finance, accounting, procurement and sales colleagues. These interactions can help colleagues understand what tax-relevant data should be captured when onboarding new customers, creating a purchase order, accepting an invoice or paying a bill.

Blog Author

Marc Duclos, Director, Oracle & NetSuite Global Partnership, Vertex Inc. The Vertex Industry Influencers provide insights regarding the impact of tax regulations, policy, enforcement and emerging technology trends on global businesses.

Marc Duclos

Senior Director, Global Partnerships

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Marc Duclos is the Oracle/NetSuite Partnership Director at Vertex. Marc has 20 years of product marketing and channel management experience developing and managing national partnerships and driving partner account activity. He also has experience in utilizing completely integrated marketing campaigns to directly influence revenue pipeline and overall regional goals. Marc is a graduate of the Rochester Institute of Technology.

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