Written by: Justin Reinard and James Edington
Completing a tax system automation project is a significant milestone for any tax department. It marks the transition from traditional, manual processes to a more streamlined, technology-driven approach. However, the journey doesn’t end there.
Post-automation, tax departments face the critical task of ensuring the new system operates efficiently, maintains calculation accuracy, and continues to evolve with changing tax laws, business operations, and technology. And, with the added accuracy and efficiency, tax departments have the opportunity to become more strategic in their organization’s tax planning and compliance—which presents a whole new set of challenges.
Here’s a guide on how to navigate this uncharted landscape.
Continuous Training and Development
Business Training and Change Management
Automation doesn’t eliminate the need for skilled professionals; it shifts their focus. Tax professionals must now become proficient in using the new system, interpreting its outputs, and making informed decisions based on its analysis.
In addition, the success of deploying a tax system is heavily reliant upon the data entry of upstream business professionals. The majority of inaccuracies in an automated tax landscape occur due to master data selection and employees not understanding the downstream impact from a tax perspective.
Training and change management must include upstream considerations such as the exemption certificate issuance to vendors, tax estimation at the time of requisition, standard operating procedures for customer service representatives on certificate handling, and training AP professionals on the workflow for inaccurate vendor-charged tax. Ongoing training sessions, workshops, and seminars are essential to keep staff updated on the software and to ensure tax information is input correctly.
Develop a Tech-Savvy Workforce
In the age of automation, a tech-savvy workforce is a non-negotiable. Encouraging employees to enhance their digital literacy and offering opportunities to learn about emerging technologies like AI and data analytics can provide a significant edge.
SYSTEM MAINTENANCE AND UPGRADES
Regular Health Checks
Like any technology, an automated tax system requires regular maintenance. Schedule periodic audits to ensure all components are functioning optimally. This includes ensuring data integrity, auditing tax accuracy, and troubleshooting any inefficiencies.
Stay Ahead with Upgrades
Technology evolves rapidly. Keeping the system updated with the latest software versions enhances functionality and ensures compliance with new tax laws and regulations. To achieve a heightened level of efficiency, a comprehensive solution often includes the deployment of emerging technologies. Tax departments must also stay aware of the organization’s overall IT roadmap, as changes to other systems often have a downstream impact on tax.
DATA MANAGEMENT AND INTEGRITY
Ensure Accuracy
The accuracy of an automated system is only as good as the data it processes. Establishing strict protocols for data entry, along with regular quality checks, is crucial to maintain accuracy.
Secure Data Handling
With automation comes the increased risk of cyber threats. Implementing robust cybersecurity measures to protect sensitive tax data is vital. Regularly review and update these measures to guard against evolving cyber threats.
PERFORMANCE MONITORING AND ANALYTICS
Leverage Analytics
Use the system’s analytics capabilities or third-party analytics tools to monitor performance. Regular analysis can help identify trends, pinpoint inefficiencies, and suggest areas for improvement.
Feedback Loop
Create a feedback loop where employees can report issues, suggest improvements, and share insights about the system’s performance. This will aid in refining the automation process and aligning it more closely with department needs.
REGULATORY COMPLIANCE AND ADAPTATION
Keep Up with Tax Laws
Tax laws and regulations are constantly changing. The system must be adaptable to these changes. Stay informed about legislative developments and ensure the system is updated accordingly to maintain compliance.
Proactive Compliance Strategies
Automation projects are ultimately geared toward ensuring accurate calculation of tax. The overall solution must focus on end-to-end tax calculation and reporting, specifically ensuring the organization and data are in an audit-ready state. Develop strategies to not only react to tax law changes but also anticipate them. This proactive approach can safeguard the department against future compliance issues.
CONCLUSION: A JOURNEY OF CONTINUOUS IMPROVEMENT
Post-automation, the focus of a tax department shifts from implementing technology to leveraging it effectively. This period is characterized by continuous learning, regular system maintenance, diligent data management, and a proactive approach to regulatory changes. By embracing these practices, tax departments can ensure that their automation investment continues to yield dividends in efficiency, accuracy, and compliance.
Tax automation is not just a one-time project but rather a continual improvement process that adapts to tax-relevant triggers, whether they be governmental, business, or IT-related. Even after an automation project, the mantra for success in tax departments is clear: Adapt, Enhance, and Innovate.
