When did the “busy season” for tax departments become 12 months long? We’re guessing the biggest tax code change in three decades had something to do with it.
Many tax departments face bigger-than-ever challenges today. We’re working from home. Time is lost corralling data and using manual processes that no longer function efficiently. Teams face more data governance and credible requests for analytics to help the business plan smarter and prevent unforeseen obligations. The push to shift from forms-based reviews to data-driven reviews just adds to the pressure.
With more tax volatility expected soon, and the remote workplace likely to continue, now is the time to get in front of it. The right tax technology lets you control and repurpose data. It closes process gaps and smoothly adapts to new tax laws and company changes. Tax teams stay connected, avoid outsourcing costs and hassles, accomplish more in less time, and become value-drivers in the process.
Read on to discover five reasons to assess your technology strategy today—and uncover steps to help you plan a project.
- Increasing pressure to manage data containing circular dependencies
As Tax grows more data-driven, we’re seeing the importance of controlling data to keep up with changing regulations. IRS requirements are getting more detailed, and dependencies across federal, state, and international obligations aren’t easily managed in spreadsheets. For example: how will you tackle new partnership forms that require transparency to data dependencies throughout ownership changes?
Excel was not designed to be a tax database, or a tool to store and manage data for the tax lifecycle. Workbooks have limitations, and you don’t have the full ability to do calculations. It can help with planning, but it’s not your system of record or your single source of the truth, which a true tax system gives you.
With the next wave of tax changes in the wings, data control and good data management will make the difference. It puts you in a position of strength and sets you up to take advantage of your data, so you can focus on reporting and not on where your data is.
- Tax is asked to provide more data to other departments and assist with business planning
For most companies, tax is a significant expense, and tax teams are expected to help the business manage it. By upgrading to the same technology standards Finance uses, Tax and Finance can better align and bring more value to the organization.
Driving value can mean many things that make a big difference to the company’s wellbeing:
- Reduced effective tax rate
- Optimal carrybacks and carryforwards
- Streamlined audit process
- Analytics visualized for Finance and the C-suite
- Higher-quality work achieved quickly with existing staff
Having technology and data in all the right places makes it much easier to interact with colleagues and collaborate remotely. Strategizing in real time with trusted data and steadily moving work forward all result from a good technology implementation.
- Empower a remote workforce, boost job satisfaction, and avoid employee burn-out
Technology makes work a much better place to be—wherever you happen to work. You have the ability to connect and collaborate with colleagues in real time, work on reporting concurrently, and seamlessly share data. Going digital allows tax teams to flourish, whether they work down the hall or around the world.
With additional tax changes expected, increased workloads, hours, risk, and stress are sure to follow. The right software streamlines work and lowers risk—so users get more time to focus on analytics and strategy and become value-drivers. They can feel good about themselves and be proud of their work. Who doesn’t want to say, “Look what I’m doing for my company, shareholders, and colleagues—and look what I’m doing for myself and my career”?
Another reality we’re facing today: many tax teams aren’t getting new headcount. Not just because companies aren’t making those investments, but because resources are tougher to find. So technology gives tax teams a way to do more with their existing talent—and deliver a stronger performance at the same time.
- There is a cost to postponing a technology upgrade or opting to outsource
Problems tax departments have today will only get harder and costlier to fix over time. If you haven’t addressed gaps in international compliance or data dependencies in state data—those gaps may appear in your return to provision. By putting off those issues, you may have to fix them all at once instead of adjusting as you go. Upgrading technology sooner allows you to avoid an unwieldy project that could have been done in bite-size pieces.
Tax departments may even turn to outsourcing, but outsourcing isn’t the answer. Third parties don’t know your company or industry. They don’t have the data accessibility you have, and they don’t understand your business drivers like you do. Issues arise when you don’t have access to the level of granularity you need for audits, planning, and other tax purposes. An in-house tax function that’s efficient, automated, and analytical is capable of benefiting the business much more than an outsourced one. Controlling your own data empowers you to improve planning and analyze your end results.
- Technology creates a continuous cycle of improvement
Technology’s benefits have a way of building upon themselves. Successes snowball. As your tax department demonstrates success with a project, you can get resources to do another one and create a continuous cycle of improvement.
The important thing is to revisit your current technology strategy or create one and act. There will never be a “perfect” time. If you fall too far behind, catching up will be painful. Once you start building a technology-based department, you constantly increase efficiency, reduce risk, and drive value—it never ends. That’s where you want to be.
Tax technology doesn’t have to be overwhelming—you can start small and add on at your own pace. And the great news—remote implementations are the new normal. So tax teams can take advantage of better ways to work, no matter where they do their jobs.