Last week, we introduced the Sovos Compliance Cloud. The industry’s first and only solution that unifies tax compliance and regulatory reporting software in one platform, providing a holistic data system of record for global compliance. Accompanying this launch, our CEO Kevin Akeroyd wrote about the global landscape of tax compliance, how we got to this point and why the market was ready for this type of solution.
As Sovos’ chief product and strategy officer, it’s my role to work with global customers and tax authorities alike to anticipate changes, prepare and provide products that meet the challenges of modern tax compliance. This was a critical step in creating the Sovos Compliance Cloud, which included building custom technology in-house while acquiring and integrating best-of-breed technologies from the outside.
Through this process, we were able to identify what we consider to be the five steps of modern compliance. I’d like to take a closer look at each one of them and explain why each plays a critical role in your business operation and ensures that you remain compliant across every transaction, no matter which market you operate in.
1. Connect
Businesses, especially multi-national enterprises, invest heavily in technology platforms across ERPs, procure to pay (P2P), eCommerce platforms and others. Having a compliance solution that can connect seamlessly with a rich ecosystem of partners, financial technologies and government agencies is critical to creating economies of scale in your compliance processes. Compliance should sit on top of or within your existing IT infrastructure, not force you to redeploy decades of work.
2. Identify
In an online world, where there are not physical forms of identification or handwritten signatures, legal certainty of who is engaging in a transaction is a foundational requirement to enabling compliance in a digital world. It is important to have a framework in place around the use of digital identity to ensure privacy and security. This includes the international context to help facilitate the cross-border transfer of a wide range of data.
3. Determine
When it comes to compliance, accuracy matters. Ensuring that every transaction conducted is completed accurately, in the moment in which it is being conducted needs to be a centerpiece of any compliance strategy. We operate in an always-on compliance world now and correcting mistakes after the fact is no longer an option.
4. Report
Reporting is not going away. Summary reports are moving to more granular data to full on ERP ledger extractions. All this data must be reconciled with the transactions stored in the government systems and the data must be consistent across the life cycle of that invoice data being reported. From invoice filing to monthly filings which are now being prefilled by governments, to audit files, to corporate tax filings, reports must now ensure that the data is the same. What you file initially must match what you will file later – it’s all interconnected.
5. Analyze
In an always-on world, you need the same view into your data as the government has so that audits don’t impact your operations. This level of insight is the basic foundation. But obtaining this degree of insight doesn’t have to be a burden and the payoff can be immense. Based on this data, you can optimize business processes and leverage this information as a strategic advantage to fuel business growth.
Tax authorities have doubled down on their use of technology in recent years. They have become adept at using it to ensure they are collecting all revenue legally owed, identify irregularities in reporting and identifying fraud. Tweaking existing mandates and introducing new rules and laws is part of the playbook now and won’t stop as long as tax gaps exist.
It can be overwhelming and all-consuming for businesses if you don’t have the right strategy in place. My advice, stop trying to plug one hole at a time through point solutions and look at a comprehensive solution that can manage all of your compliance obligations through a singular dashboard.
Take Action
If compliance is starting to stretch the resource boundaries of your business, talk to an expert at Sovos.
