This summary of our Sovos Tax Tuesday webinar addresses the challenges that IT managers face, and solutions to managing sales and use tax compliance. On March 28, I was joined by Chuck Maniace and Mark Christenson to present a webinar on challenges to IT managers in supporting sales and use tax compliance. We took a look at the challenges facing IT teams, and the ways a cloud-based compliance platform can save time, reduce risk and save organizations money. We invite you to watch the webinar, and view the slides. Here is a summary of the points we covered.
Technology DisruptionThe disruptive nature of innovations in technology are creating challenges for IT departments in every industry, and even more so for manufacturers. According to the National Association of Manufacturers’ Outlook Survey:
- 49% of manufacturers will invest 6% of revenue in R&D in the next 2 years.
- 55% have a defined goal to reduce product development cycle time (32% with target of >11%).
Growth and ExpansionGrowth in product offerings, geographies and sales channels, plus the increase in mergers and acquisitions as growth strategies has put pressure on IT. The emphasis on growth means that new systems and processes must be implemented and kept current. Meanwhile, Tax and Finance teams are increasing their reliance on IT to help manage the automation of the compliance process, including the transactional data that needs to be aggregated and reconciled for accurate filing. Here’s a look at what our webinar audience had to say about supporting sales and tax compliance: When managing compliance in-house, IT teams must keep up with rate and rule changes, overall determination, and helping to manage information to enable an effective audit defense. IT is also tasked with requests to extract and aggregate the data needed to meet increasing complex regulatory obligations. Agility is essential to addressing these challenges and is a major reason IT departments are moving to cloud-based solutions for tax and regulatory compliance, especially in the manufacturing industry.
Operational / Process ImprovementAt the same time that IT managers are under pressure to reduce operational costs, legacy technologies are becoming harder to improve and support. Decentralization of processes can quickly lead to workflows becoming outdated and redundant, resulting in slower response times when regulations change or the auditor comes calling. These pressures on IT are concurrent with increased reliance on IT from business partners such as Tax and Finance who need valuable technical support and expertise in order to maintain tax compliance. Our webinar attendees agreed – as you can see from the following chart where more than 60% of the attendees indicated that over the past 2-3 years they have been asked to devote more time and effort to supporting the sales and use tax process.
Regulatory ComplexityDid you know that the second most common business problem for large organizations is an unfavorable regulatory climate and three of the top ten market challenges for manufacturers relate to regulation? As your company grows, its expanded footprint leads to more obligations, rates and rules to support. Here’s a look at our webinar attendees’ confidence level in their ability to produce accurate tax determination: With nearly 45% of attendees indicating they were not confident or only marginally confident in their current tax process it’s easy to see the gap that currently exists between current and optimal processes. As the regulatory environment continues to evolve in complexity and change more rapidly – proactive IT leaders are moving from a reactive to a more proactive approach to compliance.
Taking the Intelligent Compliance ApproachStrategic IT leaders in manufacturing are seeing the value of implementing cloud systems that provide the agility needed to manage the pace of regulatory change and provide the capabilities that Tax and Finance need to reduce risk in the organization. By selecting a cloud based sales and use tax platform, IT no longer needs to maintain tax rate tables and updates to regulatory information, while enabling business partners to manage time consuming tasks like reporting, data analysis and audit defense on their own. This helps IT:
- Improve their response rate to other requests.
- Focus on the business.
- Reduce the overall operational cost of compliance.
- Respond to new tax and reporting obligations you don’t yet see coming.
- Operate with confidence that your business is running with the most complete and accurate regulatory analysis.
- Be in control of the data you need across a patchwork of systems
- Adapt quickly with the compliance capabilities you need on a reliable, stable and secure global platform.
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