“In this world, nothing can be said to be certain, except death and taxes” and the burden of calculating, reporting and complying with these taxes falls to the Office of the CFO. These tax departments face challenges with compliance, governance and infrastructure, caused by complex tax codes, siloed data and manual processes.
More recently, the COVID-19 pandemic has placed the added constraint of remote working and for some organisations in the early stages of transformation, if at all, the inability to access expenses claims, tax records, and the like.
Laura Houldsworth, SVP and general manager at SAP Concur, says tax management involves financial analysis and decision making.
Why should the CFO care about tax management?
"Proper tax management can lead to lower effective tax rates, better business decision-making, and greater accuracy in financial reporting," according to Houldsworth.
She cautioned that while proactively controlling an organisation's tax position, CFOs need to make sure that their legal requirements are met.
How has COVID-19 impact tax management
Houldsworth noted that the recent 12 months has imposed new challenges on tax management from a compliance perspective. She cited that as a form of tax relief, many countries have had to introduce new or temporary changes to their value-added tax or VAT regulations that have been in place for many years.
She added that these multiple and frequent changes have been hard for APAC countries to track and comply with. And given that many organisations are still handling taxes manually, this has caused a lot of headaches for the CFO.
She warned that mishandling the issue can potentially lead to non-compliance, and perhaps result in hefty financial penalties to the organisation.
She cited as an example unclaimed VAT that leaves money on the table that otherwise could be used for business investments – something more relevant than ever right in the present.
“But many businesses still do not reclaim VAT on domestic or foreign spend. And while you can only reclaim a year back on foreign spend in some countries, VAT on domestic does give the ability to reclaim multiple years back. And as businesses think about increasing their cash flow, recovering lost VAT in past years, T&E spend can be a welcome cash boost for businesses, as long as they've got their historical data,” she elaborated.
Benefits of finance transformation
According to Houldsworth, done right, finance transformation can bring four things to the company: efficiency, visibility, greater work satisfaction and retention, and better management of cost and risks.
“Increased organisational efficiency can lead to greater competitiveness and higher business ROI. When you have greater finance visibility, it leads to better control. If you can meet employees’ needs, this can lead to higher work satisfaction and retention. And finally, a streamlined travel experience that will help organisations better manage costs and risks around business trips,” she elaborated.
Different but the same
She commented that transformation is often followed by workload modernisation and automation. She sees these two as similar and different at the same time.
“Automation and workflow modernisation save time for the finance team. It is often tackling strategic company-wide initiatives like business planning or driving growth while trying to deliver on the core financial functions for the business. They can't afford to waste time on manual paper, email spreadsheet-based processes for managing expenses travel or invoicing,” she explained.
As viewed from the perspective of employees, automation takes repetitive manual aspects out of routine finance and admin tasks, saving employees and managers time so they can focus on that meaningful work of driving the business forward.
Three considerations for modernising tax management
According to Houldsworth, the pandemic has altered customer and business behaviour. There is pressure to be more agile. Finance leaders need to digitize quickly and accelerate their journey to the cloud, not spending months and years trying to implement these solutions.
It is only by digitising, can they enjoy faster time-to-market, simplify innovation, easier scalability and reduce their risk. Cloud platforms can help deploy new digital customer experiences in days rather than months.
“These can support analytics that would be uneconomical or simply impossible with traditional technology platforms.”
Businesses need to review the gaps in their current infrastructure and identify where automation can improve those financial quotas. While a challenging task in and on itself, she sees enormous potential for APAC organisations to simplify processes and drive greater automation and integration.
“The third aspect is around the new way of working as businesses accept the reality that remote working is now routine. This will require shifting of budgets from previously expensive real estate costs (office rental) to the upgrading of IT infrastructure to facilitate work from anywhere,” said Houldsworth.
Looking for a solution
She offered one advice: companies need to think about what's the gap and focus on solutions that will give them the agility in a quick time to improve.
Click on the podchat player above to listen to the dialogue with Houldsworth.
- Before we get into our topic, perhaps you can tell us a bit about SAP Concur. And to make it challenging you’ve got 30-seconds beginning now.
- Our topic is “Tax Management Challenges in 2021.” To start off, please define tax management as viewed from the perspective of the CFO?
- How has the COVID-19 impacted how CFOs and Controller manage tax?
- For much of 2019-2020, FutureCFO dialogues with heads of finance reveal an interest in finance transformation. To what extent is digital impacting the way the finance team is able to better manage the company’s overall finance and tax position?
- Two topics associated with transformation: automation and workflow modernisation. How do these support the finance team’s mandate to do more with less?
- The COVID-19 resolution will likely take until 2022 to become a reality. In the interim how do you see the finance team moving with its finance modernisation (transformation)? [edit the audio]
- There are many solutions in the market to help finance teams undertake modernisation, what should the CFO and heads of finance look for or bear in mind when looking for the solution or solutions is right for them?