In the complex and ever-changing landscape of VAT Compliance and Reporting, automation is critical to drive operational simplification, cost reduction, audit risks mitigation and capability acquisition.
“Routine tasks do need to be automated, but for the purpose of freeing up people to explore new approaches to create even more value.” This statement from a June 2017 Harvard Business Review article by John Hagel III, founder and chairman of the Deloitte Center for the Edge, and John Seely Brown, former chief scientist at Xerox, was focused on scalable learning. It discusses how automation should not be considered solely for the sake of operational simplification, but rather also to help institutions thrive by learning faster together.
While the article focused on larger organizational aspirations in a highly competitive global economy, its underlying message is quite fitting for the difficulties companies are facing as they navigate today’s rapidly changing tax regulations. Requirements for real-time electronic value-added tax (VAT) reporting are forcing businesses to significantly revamp their internal processes to handle an increasing volume of transactions, and provide the right information, in a timely manner, to avoid fines and other penalties.
Maintaining compliance in this dynamic environment can be quite a challenge, since there’s a lot of data that has to exchange hands between businesses and government tax authorities. That’s where automation is vital. “Almost every occupation has partial automation potential,” noted the McKinsey Quarterly report “A CEO Action Plan for Workplace Automation.” At Sovos, we know that statement is very true for VAT Compliance and Reporting. There are many tasks related to finance, accounting, accounts receivable, accounts payable, inbound receiving, shipping and logistics, that could be easily automated.
Not only does automating these core functions make compliance easier, more efficient and less prone to errors, it also frees up employees to focus on innovation and driving value, rather than being tasked with manual data entry and reconciliations. Automation can drive improvements not only in simplifying operations, but also in the quality and flexibility these teams deliver.
Innovation, productivity and other business benefits are sure to rise with greater automation in VAT Compliance and Reporting. In fact, the McKinsey Quarterly report noted that the “benefits of automation enjoyed by individual firms will feed into the global economy. We estimate automation could raise productivity growth by between 0.8 and 1.4 percent annually.”
As more countries begin to implement transparent VAT Compliance and Reporting processes, businesses will need to increase the automation in their back office processes, not only to report accurate information, but also to ensure that the productivity of their employees doesn’t suffer with the demands of the real-time reporting process. Ultimately, such automation is the only way for companies to truly realize control over their VAT Compliance and Reporting measures – knowing that there is no room for error in core functions like reporting and validations.
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To learn how an Intelligent Compliance approach that automates VAT Compliance and Reporting measures would make your company more efficient and reduce audit risk, contact us.
