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5 reasons every modern finance function needs tax data analytics

“We need you to work more efficiently.”

“Can you tell me if we’re compliant with the new regulations in Countries A, B and C?”

“Have we successfully integrated with the latest digital systems for filing tax returns?”

Do you ever get tired of receiving these requests from your bosses, knowing that you’re working as best you can with the tools at your disposal?

We understand the pressures placed on tax departments in recent years have grown enormously as businesses are faced with greater responsibilities, requirements and regulations than ever before.

In many cases, despite the increased workload and additional red tape, budgets have been cut; making it even harder for tax professionals to meet their personal and team targets.

That’s why the only answer is to work smarter. Automation, integrated solutions and real-time data have all aided the advancement of tax management.

And over the last few years, we’ve increasingly recognised analytics as a similarly crucial ingredient of a lean, fully compliant and high-performing tax setup.

More so now than at any time in history, tax professionals are presented with a golden opportunity to deliver real change and unprecedented value by embracing new technologies designed for enhanced data management.

It’s therefore surprising that tax teams have generally been slow to take up analytics, unlike a variety of other departments where the technology is now commonplace. But the signs are there that it is now becoming a must-have for top tax teams.

The rise of analytics

While we typically focus on matching analytics with the needs of our clients, it is interesting to note that the origin of the rise of analytics for tax can be traced not to businesses, but to tax authorities.

With revenue pressures and shrinking headcounts biting, tax authorities around the world are increasingly relying on digital methods to capture taxpayer data, administer their systems and enforce the consequences of non-compliance.

Many countries have invested in new data-gathering platforms that allow them to utilise data to maximise tax collections. As a result, more data than ever is being shared between governments and businesses.

Tax authorities have a more complete picture of tax scenarios, both for individual entities and across jurisdictions. This allows them to crackdown on those guilty of non-compliance and incentivise best practice for others.

But what’s the relevance of this for tax professionals? In short, everything!

With authorities using enhanced analytics themselves, businesses must refine their approach to tax data to ensure they achieve perfection; something that is becoming almost impossible without an advanced analytics platform of your own.

The modern tax professional must be able to locate, analyse and justify tax data at a moment’s notice. That’s why real-time analytics with complete visualisation is a must.

Why tax data analytics are now essential

A tax data analytics platform combines vast data sets and technical knowledge with new functionality such as 360-degree visualisation to generate deeper insights and greater understanding.

We believe every modern business must invest in tax data analytics if they are to achieve tax perfection – and here are five reasons why:

1) Complete visualisation of your data. Need to know where your business-wide red flags are? Want to investigate a particular purchase? Worried you haven’t paid enough VAT? An analytics platform means every tax transaction – as well as your overall performance – is at your fingertips.

2) Real-time decisions. With analytics, there’s no more waiting for month-end before producing a report and scrutinising the data manually.

3) Respond to tax authorities with authority. In the increasingly digital world of tax, authorities expect you to know your stuff. If they request information, you’ll be in a position to respond with certainty.

4) Manage risk. Any concerns about a particular customer, supplier, country, jurisdiction or good/service can be the focus of your data and

5) Be audit-ready at all times. A leading analytics platform will not only help to keep you compliant, it’ll maintain records of all your transactions and validations that can be shared with tax authorities if required.

What should you do next?

We rarely speak to tax professionals who don’t think analytics would transform the tax landscape for their business. But, as I mentioned earlier, we do speak to those who believe it could be more hassle than it’s worth.

That’s why I’d advise following a simple three-step plan that will help you plot a clear path to a successful future with analytics:

1) Step back and review your current processes. What are you doing well? Where could you make efficiency gains?

2) Select three processes that, if you had the time and the budget, you would choose to fix. Any more than three and it’ll muddy the waters.

3) Speak with an analytics specialist to implement a platform. You’ll soon be achieving more than ever with fewer burdens on your resources than before.

As a collaborative partner of data analytics giant Alteryx, we have extensive experience of working with clients to implement the Alteryx platform and shine a light on their tax data – and we’d love to help you too!