When New York first passed its law defining what constitutes a “vendor” subject to collecting sales tax in the 1980’s, the idea of online shopping sounded like science fiction. In retrospect, NY may have effectively enacted the first “economic nexus” law when they drafted their definition of “vendor” to include a person who regularly or […]
The Top Three SAP Challenges Impacting Manufacturers
The acceleration of regulatory complexity is causing unnecessary strain on IT departments within manufacturing companies, negatively impacting growth. In fact, 31% of companies report that keeping up with the volume and complexity of regulations is their number one compliance challenge, and 45% say increasing costs of compliance is their number one barrier to growth.
The changing regulations are not slowing down anytime soon. In fact, real-time business-to-government reporting has now spread to more than 60 countries, and regulations can change multiple times per year. As tax authorities adopt even more initiatives and regulations for eInvoicing, eAccounting and eLedger, these compliance challenges will only continue to grow.
As regulations continue to change, many manufacturers – especially those operating in multiple countries – are realizing SAP is not equipped to support their unique needs from country to country. Here’s why:
- SAP’s compliance solutions are limited in scope and country specific, requiring resource knowledge in several systems. For example, the systems and processes that may be in place in Mexico are not the same as in Brazil, requiring different implementation processes and separate trainings to use.
- SAP delivers solutions as “support packs” that essentially require users to constantly monitor the changing requirements and software releases to meet compliance deadlines. This leaves manufacturing companies vulnerable to eInvoicing and reporting discrepancies that can ultimately result in fines and penalties.
- Leveraging SAP for compliance requires significant internal management, taking valuable time away from core business initiatives, such as growth and innovation.
The inevitable move to HANA compounds these issues even more. Since this move requires major changes to ERP infrastructure, SAP users with global operations need to proactively plan for the migration – which is required by 2025. Manufacturers must create a migration strategy to ensure seamless implementation and to future-proof their solutions to keep up with constant changes in tax regulations.
Despite these SAP challenges, it’s crucial for manufacturers to identify and implement an intelligent compliance solution that works within the company’s preexisting ERP, since it serves as a central source of truth for transactions. Solutions housing data outside the ERP are more prone to errors or manipulation. An ERP-integrated compliance solution, however, will provide the flexibility needed to adapt to the frequent change of pace and ensure compliance with local government requirements.
By integrating tax compliance and reporting into a company’s SAP, IT teams will eliminate the inefficiencies and inadequacies of SAP’s built-in solutions while also managing mandated eInvoicing and real-time reporting. This means no more back and forth will be needed with additional systems, and teams can ensure fiscal reporting and legal compliance are always in sync.
For more information about the limitations within SAP and how you can adopt an intelligent approach for global compliance, check out Sovos for SAP here.
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