Business Tax Service Automation: Successful Execution and Adaptation

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The pandemic has pushed corporate tax departments to increase their level of automation, thereby increasing their efficiency and effectiveness within their organizations

Automation has been cited as one of the innovations that has saved most business tax departments over the past two years. Unfortunately, most automations were unplanned, as they a necessary solution to have been able to work during the previous two years.

However, the shift to automation hasn’t just happened during the pandemic; according to Brookings Institute, automation has improved the way we work over the past 30 years, with companies adding more automation after each recession in anticipation of staff attrition. It is now hard to remember that the computer and the Internet have automated what tax professionals once did with a simple calculator.

Today, when companies and their workers have to get used to the new way of doing work again, companies are facing a renewed interest in processes and automation in order to rely on what has been started and to respond to Big shakeup. Additionally, the increased need for proper governance to comply with ever-changing national and international tax regulations. For example, updates to trade and transfer tax rules under the Organization for Economic Co-operation and Development (OECD) and the Superfund excise tax alone provide strong motivation for a increased technology and automation.

Business tax departments, such as most companies, have “a pretty good idea” of their business processes and desired outcomes. However, having an idea is not enough. Business processes should be carefully thought out with the idea of ​​how they should be customized for the department. A business process or workflow should include at least the following steps:

      • events and activities that occur in a workflow;
      • the owner or initiator of such events and activities;
      • decision points and different paths that workflows can take based on their results;
      • devices involved in the process;
      • timelines for the overall process and for each step in the process; and
      • success and failure rate of the process.

The tax department team can create the business process model before working with IT on the creation of the business process itself, which allows for more clarity and the ability to refine the technologies and systems to be used for automation. Having the business process as a roadmap to automation does not mean perfect is the immediate result. Being thoughtful and thorough takes honing to get to where the team needs to be, and so here are some considerations for department heads to think about when successfully automating their tax department.

1. Start with the basics, the beginning of the operational role of the tax function within the organization — According to a KPMG Global Tax Benchmarking Reportmost tax departments are tasked with tasks such as: I) tax reporting and compliance; ii) support and advice to business units; iii) transaction taxes; iv) accounting for income taxes; and v) transfert price. Further, the report highlights that “the most effective and valued tax departments are those that manage tax risk and compliance while identifying opportunities to add value through core tax management skills.” It may seem obvious, but clarifying and re-clarifying the role of the tax team in how it supports the overall organization is the foundation what the department should do. Focusing on this will help determine which areas can and should be automated; and this is especially true when leaders consider which tasks need to be automated so that resources can be freed up for other opportunities.

2. After identifying the areas where automation is needed, clearly state the expected results of implementing the automation — Again, this is a seemingly simple step that is often overlooked, but ignoring it could lead to an inability to adapt to the new process or early abandonment of a new innovation because people think that it doesn’t work. Many organizations are beginning their automation journey by defining a broad mission to drive productivity across the business, hoping it will lead to cost savings or other miracle savings, such as time or other resources. It is necessary, not essential, for those involved in automation decisions to state their expectations for what the automation will solve, and then set a timeline for that outcome.

3. Who will do what? Understand your team’s current skills and bandwidth — Another common mistake is believing that everyone on the team should be trained in the new technology. Unless it really affects or changes the work of everyone on the team, don’t do it. There is no point in training someone on something they may never or rarely use. Redirect the team’s attention to alignment with the intended outcome, and those working on the technology will be trained. And remember, it may not be a bad idea to ask workers if they are interested in this training or if they would like to work on another function that does not require the training – this too can help minimize adoption failure.

4. Now you’ve not only identified the technology and talent that goes with it, but you’ve also created a roadmap — The automation roadmap is essential for identify specific parameters and benchmarks for the process. This roadmap should include tight deadlines such as three to six months from its start over a given period. Because technology changes so quickly, using this approach helps measure whether the tools you have are still working. Of course, this doesn’t mean technologies need to be replaced, it can be as simple as making sure your team is working on the latest version of the software or technologies you have. The roadmap can also provide opportunities to review the skills and talents of those working on the technology and determine if they are still the right fit or if additional training or even new hires may be needed.

Eventually, tax teams will work with tax technologists or the corporate IT team, but tax department managers will need to drive the launch or expansion of automation in the tax department. As a business leader and advisor to the business, tax team leaders must ensure that the processes and automation undertaken enable the tax team to better manage risk and create value for the company.

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