As businesses consider technology to support compliance, there are two primary types of solutions they can choose: point or scalable. In a recent infographic, we examined how point solutions (which are deployed locally and support a minimal number of regulations) stack up against scalable solutions (which are available globally or regionally for a variety of compliance measures). The primary factors to consider when evaluating these solutions include:
- Number of Solutions Required – Tax regulations can impact multiple operational and financial processes, including tax, compliance and IT, and each may require a separate solution in every country a business operates. Scalable options offer a single solution that integrates with existing ERP implementations for a single compliance access point.
- Visibility and Control – Corporate visibility into compliance is critical to minimizing risks. Point solutions often lack in this respect, since they offer only singular access into one system and house key data outside of a company’s ERP. Scalable solutions deliver clear visibility and control, as data is drawn from one centralized source.
- Global Availability – Multinational companies face significant challenges in communicating across geographic boundaries for VAT compliance and reporting. Point solutions often complicate matters for these companies, because they are deployed locally and support only one or very few jurisdictions. Scalable solutions, which can be deployed in the cloud, can deliver solutions for VAT compliance regulations around the globe.
- Adaptability to Changes in Rates/Rules – One of the most difficult aspects of VAT compliance is staying on top rate and rule changes and making the necessary updates to compliance systems to calculate taxes accurately. Point solutions may require significant upgrades or new implementation projects for every regulatory change. However, with scalable solutions, businesses can be proactive, having automatic updates instantly applied across all business units.
- Costs – The implementation challenges associated with new regulations and frequent VAT compliance and reporting changes require significant resources. For companies employing point solutions, this equates to volatile costs and constant fire drills. Scalable solutions offer more predictable pricing and minimize the effort involved in compliance updates. In fact, organizations with scalable solutions report spending 26 percent fewer hours per employee each month related to their tax obligations.
- Audits – Managing the audit process can be time-consuming and costly. Companies using point solutions often struggle because they have to manually collect information from disparate systems. A centralized, scalable solution can reduce the risk of audits by ensuring more accurate information from the start. Tax teams are then capable of quickly presenting the information required to defend against audits.
Download the infographic to learn more about how point solutions stack up against scale solutions and evaluate which approach is right for your business.
The post Point vs Scalable VAT Compliance and Reporting Solution Comparison appeared first on Sovos Compliance.
About the AuthorMore Content by Casper Winkelman