Whether your business operates on R12 or Cloud, you can be assured of access to powerful, robust and wide-reaching native functionality within your Oracle seeded tax engine.
Indeed, any Oracle ERPEnterprise resource planning (ERP) is a type of software that organisations use to manage main business processes. boasts the capability of automating all your global tax processes – simply through expertly-optimised configuration of its standard functionality.
With Oracle, there’s no need to buy external solutions. Nor do you need to connect with third-party products. Everything you require is ready and waiting to be deployed within your tax engine.
As the trend of moving from R12 to Cloud continues, those facts remain. Rapid, reliable and efficient tax determination and application has always been and will remain achievable in both versions of Oracle.
However, the way you get there may differ depending on whether you remain on R12 or make the leap to Cloud. We’ll explore the key differences between the two in this article.
Underpinning tax automation in Oracle
Firstly, let’s consider the similarities between R12 and Cloud. The good news is undoubtedly that behind the scenes of each, the Oracle tax engine works in broadly the same way.
Many of the fundamentals required for the automation of tax – including regime to rate flow, core tax rules and the setup of operating units and legal entities – are present in both R12 and Cloud. These are among the key drivers of automation and empower businesses using Oracle for tax to enjoy seamless compliance with even the most complex, multi-jurisdictional regulations.
While that might give the impression that managing tax in R12 and Cloud is a similar proposition, there are actually a number of subtle differences and nuances it’s imperative to understand.
What sets R12 apart?
Oracle R12 possesses a secret weapon that can be leveraged by any enterprising tax team.
Tax Extensibility, or TEX for short, is a remarkable feature that can have a transformative effect on the results you’re able to achieve.
TEX is a supported Oracle customisation that allows you to take data from part of your Oracle ERP that the tax engine is typically unable to reach and often cannot even see. We’ve utilised it on multiple configurations over the years and while it is not necessarily the first choice route to take, it serves as a valuable guarantees of customisation if and when required.
TEX – or something similar – isn’t available in Cloud, which typically doesn’t allow users to customise their approach to data flows.
You should also be aware of the reporting capabilities of R12, which enable bespoke, customisable and optimised reports to be produced more easily than in Cloud.
And what are the strengths of Cloud?
If you’re thinking of moving to Cloud, there are several operational advantages of the system to consider – and, depending on your current configuration, start to get excited about.
1) Superior seeded tax box reporting setups. Tax box reporting can be configured by mapping outputs to produce reports directly from Oracle with all the required tax data in the correct boxes. This means it’s ready to send to the tax authority.
2) Cloud has a full digital link, making it the perfect platform to allow you to comply with regulations such as Making Tax Digital in the UK.
3) If your business is project-based, you’ll likely be used to relying on the Project Billing module in your ERP for the tax calculation on invoices. In years gone by, limited connectivity between R12 and this module restricted the opportunities for automating this process. However, the modern Cloud tax engine enjoys a smooth and seamless link with Projects Billing, allowing you more options than ever before for automating tax determination.
4) Cloud is capable of calculating withholding taxes within the tax setup, making it fast, simple and failproof for users dealing with these duties. This functionality exists in R12, but it sits within the Accounts Payable module. What’s more, in R12, you’ll also likely need to deploy the Latin Tax Engine to calculate withholding taxes in Accounts Receivable (AR), with almost all withholding taxes in AR found in the region.
5) Sub-ledger accounting rules can be setup and maintained in Cloud easier than ever before.
While many of the features detailed above are also available in R12, they can be prone to bugs and are difficult to setup.
Let’s talk about country-specific localisations
There are certain countries in which businesses must prepare and file specific reports in order to comply with local requirements.
This is achievable within both R12 and Cloud thanks to localisations; patches released by Oracle to meet a particular requirement that is not covered by its standard setup.
We know such scenarios apply to many Oracle users, so it’s worth noting that in R12 you’ll need to rely solely on localisations when the standard functionality isn’t able to meet a specific requirement. However, Oracle has brought the output of many localisations into the standard functionality of Cloud, making life easier for users.
External factors affecting your move to Cloud
Whether your business is using R12 or Cloud, to get the very best from the technology it’s imperative that it is expertly configured and maintained.
That’s why so many leading businesses opt to have a specialist implementation partner on hand to design and implement their bespoke configuration.
Even if the following factors won’t directly fall under the remit of your team, they will help to ensure a successful transition to Cloud:
- With Cloud, there is no need for database administrators to load setup. Instead, your partner’s Functional Consultants will load setup from the front end.
- It is faster and easier to load setup and configure Cloud than it is in R12.
- Cloud boasts a modern and intuitive user interface.
- Cloud offers implementation and configuration workbooks, allowing for the download and upload of setup. This makes it much easier to migrate setup between pods than it is in R12, for which no in-built tool exists. At Innovate, we’ve created our own tool to support R12 users, but this is only available to our clients.
- In Cloud, the liability and recovery accounts can be separated on the rates.
- There is no Java anywhere to be seen in Cloud – Functional Consultants can breathe a sigh of relief!
All of this combines to make the delivery of Cloud a quicker, smoother and simpler process.
The million dollar question – R12 or Cloud?
There’s no getting away from the fact that both R12 and Cloud are incredibly powerful tools.
And most importantly, both incorporate the functionality required to help any global business meet its tax requirements across the world.
There’s no right or wrong answer and it’s almost impossible to state one is better than the other.
On one hand, by using TEX in R12 you’ll have more flexibility and scope to customise data flows to achieve the precise outcomes you need, as well as greater ability to create bespoke reports than you will find in Cloud.
But on the other hand, Oracle Cloud offers increased connectivity with other Oracle modules and these integrations can be leveraged to drive optimum tax determination and calculation. Cloud also offers enhanced functionality around localisation reporting.
Ultimately, we accept that the specifications and performance differentials between the tax engines in R12 and Cloud aren’t going to be the pivotal factor in any decision by your company leadership when it comes to investing in a multi-million dollar ERP.
No matter how well listened to your tax team is, you’re unlikely to have that kind of influence!
But by setting out the key differences in terms of functionality and expected outputs between the two systems, I hope you are more prepared to adapt and adjust to the specific features of your ERP when your business makes the decision to stick or twist.