It is essential that the tax function has an excellent relationships with the business, senior management, finance and IT as a mutual understanding of the impact of the company's tax challenges and the potential solutions should exist to realize that investment budgets are actually made available.
A good way to estimate the potential value of a project/solution is to imagine how much you could save if the problem was completely eliminated (e.g. removal of software (license/ support fees), salary or consultancy costs). How long does this process take within your organization and what will be the amount of annual saving (i.e. Return on Investment period) after implementation of the solution at hand?
A roadmap for transformation
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Solution |
Examples of area of investigation |
Hard Savings (EUR) |
Soft Savings (EUR) |
Potential Saving (EUR) |
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Software solution X |
Real time access to improved quality tax data for stakeholders (e.g. planning and monitoring) |
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Less resources needed for processing |
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No longer time lost on rework/hidden factory |
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Lower external advisory costs |
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Improved working trade capital |
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Lower financial risks during a tax audit |
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Avoid disruption of business |
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Quicker response time to audits |
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Improved internal controls |
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Enhance knowledge sharing |
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Increase data analytics |
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Lower training and/or maintenance costs |
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Avoid reputational risks (vendors, customers, etc) |
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Avoid financial risks (vendors, customers, etc) |
Be operationally efficient
Hidden factory or hidden operation
Unnecessary rework The rework and cover ups, the hours and days of wasted time in a company of people who constantly correct mistakes.
The objective is to make the hidden factory visible (measure/calculate ROI) and as result returns precious time and money to the business. It is about extra man-hours, additional costs due to rework (credit/debit notes) and retrospective corrections and/or disclosures.
Example: how much rework is required before numbers received from finance systems can be used?
During assessment of any solution determine the amount of increase of workforce efficiency, how much rework is avoided, risk exposures are decreased but as well how visibility and awareness are improved by which the tax function is able to set better priorities.
For example eliminate duplicate work and provide better information to tax and checks and balances that require only a double-check of a small handful of invoices.
See chapters Spreadsheets and VAT Compliance and ERP systems and tax engines
How to make that change
Written by Richard Cornelisse
Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.
He started his career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently he is a senior managing director of Key Group.
Richard has over 20 years’ experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. Richard is also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact him.
