The financial impact of manual tax management indeed extends far beyond the obvious time investment.
In a recent analysis by Anrok, it was found that digital businesses are accruing an average of 4.3% of total revenue in tax compliance liabilities and penalties.
For finance teams, this means there is a breaking point to manual tax management, a hidden cost of scale, and a clear sign towards automation.
This is backed by data, which was sourced from anonymised transaction and filing data from Anrok's customer base, showing clear inflection points where manual tax processes become unsustainable:
- At $5M-$10M: ~40 filings per year becomes unmanageable for most teams
- At $30M-$50M: ~80 filings per year requires dedicated tax resources
- At >$50M: 90-150+ filings per year demands automation or significant headcount
Further, it was also found that for a company with $10 million in revenue, this translates to over $400,000 in annual liability exposure, plus 25-30 hours per month in manual finance work that could be redirected to strategic initiatives.
Beyond the direct costs, Anrok says manual processes create compounding challenges across the organisation, as teams will not only spend countless engineering hours building custom tax solutions but with manual processes, errors continue to multiply across jurisdictions as complexity increases.
The opportunity cost becomes particularly acute as tax management consumes strategic finance time that should be focused on margin analysis, pricing optimisation, and growth planning.
Anrok enumerates key takeaways for finance teams based on their analysis:
- Tax complexity scales exponentially, not linearly—filings increase 47x from startup to enterprise
- Taxable revenue doubles with scale—from 20% to 47%+ of total revenue
- Geographic expansion multiplies obligations—every new market adds jurisdiction complexity
- Automation becomes essential, not optional—manual processes break at 40+ filings
- Early action prevents exponential costs—implementing automation before complexity explodes
