How SAP S/4HANA Finance Can Simplify Tax for Your Organization

This blog was updated on December 12, 2023

Sovos recently sponsored a benchmark report with SAP Insider to better understand how SAP customers are adapting their strategies and technology investments to evolve their finance and accounting organizations by utilizing SAP S/4HANA Finance. This blog hits on some of the key points covered in the report and offers some direct responses made by survey respondents, as well as conclusions made by the report author. To get the full report, please download your complimentary copy of SAP S/4HANA Finance and Central Finance: State of the Market.

In the 2023 report, research found that most companies are focused on reporting, planning and insights as a primary driver of their overall finance and accounting, including tax strategies. Increasing real-time visibility into finance and operations is the top strategy being implemented to improve reporting.

Clean and harmonized data and a centralized single point of truth are the most important requirements that SAPinsiders are prioritizing. Survey respondents reported that clean data is important or very important (81%), while highlighting the significance of the Universal Journal in centralizing critical information (76%) was also key.

How do technology and tax intersect?

Continued complexity within core financial and accounting systems is limiting organizations’ ability to adapt rapidly to changing business conditions and provide real-time visibility into operations. The need for increased real-time visibility into finance and operations was the number one driver of finance and accounting strategy, the survey found.

Survey responses and interviews with customers about their largest sources of pain consistently mention system and process complexity as one of their most significant challenges. Respondents are focused on addressing this obstacle in a variety of ways such as through investments in analytics, automation, centralization, and system consolidation.

This directly impacts how companies approach tax as rapidly changing global tax laws and mandates often have organizations playing catch up to ensure they are charging and remitting the proper amounts of tax to each country in which they operate. Failure to do this can lead to costly audits, potential fines and penalties and damage to brand reputation.

Survey respondents have also mentioned the importance of investing in tax and indirect tax management solutions. Nearly one-third (28%) of respondents said they are adopting tax and indirect tax management solutions, second behind only payment processing solutions.

Why move to SAP S/4HANA Finance?

Simplicity, speed and easy access to data were among the top benefits cited by survey respondents who have completed or nearly completed their move to SAP S/4HANA Finance. Several mentioned the ease with which they can go from high-level reports and drill down to the document or line-item level, making it easier to understand the numbers and perform in-depth analysis quickly. This directly aligns with the pain points that were identified in the benchmark report survey.

Why now?

What is clear from this survey and subsequent report is that complexity across all layers of finance is having a direct impact on a companies’ ability to function at the highest operational level possible and is threating to impact the bottom line.

Accounting for tax early in your migration strategies and technology upgrades is a key component to ensuring that you are prepared to handle the challenges of modern tax on an international scale. For companies that operate on a multi-national basis, having a centralized approach to tax with enhanced visibility and reporting capabilities is imperative to achieving and remaining compliant no matter how many changes to tax law are introduced every year.

Please download the full report for a more detailed explanation of these critical areas of focus.