Realigning tax operations with business goals—a strategic boost

Tax teams at many multinational companies often take too much time manually reconciling data, trying to improve it to meet tax reporting needs. At the same time, the C-suite may be focused on specific product or business model changes that require a quicker time frame and extraordinary cash requirements. Data collection is often ad hoc. It may be coming from various sources managed by outside stakeholder groups, and it can become difficult to deliver real-time insights to the C-suite with proper confidence about data accuracy.

Many companies centralize their data approach by using a service center or center of excellence and rebuilding tax processes holistically. Your company, for instance, may be able to improve its capacity by integrating data from local controllerships.

By taking a centralized approach and a focused use of AI, your function can gain clearer, real-time views of your data and can process higher volumes of tax data with improved reliability and speed. Leveraging analytics and real-time scenario planning can help deliver data-driven insights on cash flows not just at the end of the year, but throughout. The C-suite can make more informed decisions and can do so within a quicker time frame.

Tax functions at many companies face new sources of financial risk. In addition to a complex global tax environment, companies should address an uptick in audits from tax authorities. Audit questions are increasingly in-depth because tax authorities can access an expanded array of shared information, and they expect quick responses.

Unexpected tax bills are another growing concern, as well as the cascading risks of “getting tax wrong” resulting in reputational damage and unfavorable status given by tax authorities for audits going forward. These issues are difficult to mitigate after the fact.

The broader finance function may be simultaneously embarking on a financial system/ERP digital upgrade to enhance that team’s capabilities. Many tax functions take advantage of this opportunity and work closely with the CFO and finance to embed tax needs resulting in better data, faster. Together, they can adopt new ways to help automate data flows and holistic processes that focus on audit preparedness.

The results can be game changing. The C-suite doesn’t want tax rate variability with respect to forecasts and wants to reduce risk. By leveraging the latest digital tools and approaches, you can create advanced processes and build a foundation for greater financial stability going forward.

Some global companies have built up their tax teams for many years, only to see key personnel retire. Succession planning can often be unsuccessful, which can leave skill gaps in both reporting obligations and planning assistance for significant business changes. Companies seek to hire talent with certain technical and industry know-how but cannot find the skills they need.

Tax teams should map out their strategic priorities and identify what tasks are higher value or important to manage risk. A close look at their talent often reveals that many people are spending too much time on low-risk and low-value compliance tasks, but insufficient time on the enterprise-wide agenda.

Many companies have embraced strategic outsourcing arrangements, such as tax managed services, for specific compliance and planning areas where the tax function lacks technical and industry know-how. With a broader breadth of resources, tax team members can concentrate on higher value work that can yield more measurable benefits.

This type of connected relationship can not only generate efficiencies and happier tax staff but often yields opportunities for deeper analysis into complex tax areas. There are many examples of this, such as team members identifying industry-specific credits and incentives that help the company pay for certain strategic investments, or even unexpected tax costs relating to supply chain shifts.