Tax Technology to Procurement: Let’s Get Together

  • November 20, 2020

Tax technologies and procurement systems would make a great couple. But they’ve never really spent much, if any, quality time together – and that needs to change.

Companies put a lot of time and effort into understanding the tax implications of their sales environments as sellers and ensuring tax accuracy, in part because they want to create as little transactional friction as possible for their customers. But they don’t always put the same effort into their activities as buyers.

Procurement systems range from sophisticated enterprise resource planning (ERP) platforms to home-grown systems, and they generally include varying levels of built-in or custom tax functionality. However, given that factors like inventory control and speed of order fulfillment are crucial procurement priorities, tax calculations may take a back seat. Tax rules may not be frequently updated, yet the systems’ outputs are treated as “good enough,” even though they might fail to identify incorrect tax calculations by the vendor. When tax is improperly calculated on purchases, the tax department is left scrambling to fix it by researching the correct tax – or dealing with use tax audits.

The best way to tackle these challenges is through a third-party tax engine. By integrating a tax platform with procurement systems, companies can:

  • Enable tax to control the tax calculation within the procure-to-pay process;
  • Ensure proper rating of transactions and produce exception reports when transactions are improperly rated;
  • Eliminate manual tax updates to the ERP or procurement system; and
  • Reduce costs and mitigate the risk of audits.

In an article for Tax Executive, I take a more detailed look at the reasons why tax technology is the perfect partner for procurement systems – and I will cover some of those advantages in a follow-up post.


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.

 

Blog Author

Michael J. Bernard, Chief Tax Officer – Transaction Tax at Vertex Inc. Vertex's Chief Tax Office (CTO) provides insight regarding the impact of tax regulations, policy, enforcement, and emerging technology trends on global tax department operations.

Michael J. Bernard

Chief Tax Officer, Transaction Tax

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Michael Bernard is the Chief Tax Officer of Transaction Tax. In his role, he provides insight and thought leadership around tax department operations, U.S. indirect tax, tax risk management, and tax policy, as well as emerging tax trends. He is an executive-level tax attorney with a diverse portfolio of experience in corporate tax, administration, and finance, including a substantive knowledge of U.S. and international tax laws.

Prior to joining Vertex, Michael was in various tax leadership roles at Microsoft Corporation for 28 years, the most recent being Senior Director – Tax Counsel. Michael led teams in the following functional areas: direct and indirect tax controversy, sales and use, business license, property, tax IT, SOX, and telecommunications. He also co-led a corporate taxpayer advocacy group with the Washington Department of Revenue and was a Director on the Board of the Washington Research Council. Michael has also testified before administrative and lawmakers at both the federal and state level.

Michael earned both a J.D. and a Bachelor of Science in Business Administration from Creighton University. He is a part-time lecturer of Law in the LLM program at the University of Washington School of Law. Michael also served on the board of directors, executive committee, and chaired committees for The Tax Executives Institute (TEI) for nearly 25 years.

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