A blueprint for CFOs: How to achieve maximum ROI from tax solution rebuilds

You wouldn’t rebuild the Leaning Tower of Pisa in the same spot without correcting the foundations so why would you recreate the same bad tax solution when you have the chance to rebuild it?

We recently invested a lot of time with a potential client that was implementing a new ERP solution and its Tax Director saw this as a great opportunity to get us in to help, having received a recommendation to us from a fellow Tax Director at a different firm.

The existing tax configuration was basic, manual and badly designed and obviously the cause of many of the compliance issues this company was battling on a daily basis.

We provided an extremely competitive proposal that provided configuration of the tax engine as well as our expert guidance in all tax technology areas to ensure, as we always do, that all areas of risk could be identified and mitigated around the process.

Both Tax and IT were keen to get us involved and so it went to the CFO. Unfortunately, he was of the opinion that the business already had a tax solution that worked so why could his team not use the same logic for the new ERP?

He would only sign off 60 hours to implement five countries for full automation, reporting, process reengineering and everything else that needed to be done!

Needless to say, we were not interested in being responsible for delivering something we knew would fail just to make a quick buck, so we wished him good luck and moved on.

The irony was that the CFO hired the new Tax Director to resolve the mess they had encountered around tax and the Tax Director immediately brought us into the conversations as the leading experts in this area.

We outlined many of the risks early on, repeatedly explained that the time was not in the actual configuration of the tax (as that is something we can do in our sleep) but how their ERP was designed and their existing processes that may have needed to change to be compliant. When it came down to it the CFO was only prepared to spend a maximum of $15,000 to resolve the company’s tax struggles.

…and this is a billion dollar organisation!

This is one of the more extreme cases we have seen over the last decade, but it highlights the fact that many CFOs place very little importance on the determination, automation and compliance of tax and do not see the cost savings to be had when it comes to investing in a comprehensive, efficient tax solution – regardless of the fact that by law you have an obligation to be compliant.

My advice to all tax professionals, is when the opportunity to fully automate your tax arises, don’t use the same people to implement the same rubbish that you had before. Instead, listen to those who have the experience and knowledge that your team most likely does not and build a business case for the CFO so they can see that tax automation is not just about hours needed to add a few rates and rules.

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