Customer Story
US Manufacturer Streamlines Use Tax Compliance with Sovos OptiTax
Products
Revenue
Employees
Industry
States
Benefits
Reduction in manual data entry
Overview
A U.S.-based specialty manufacturer serving defense, aerospace, and energy markets faced a complex use tax compliance challenge following a Colorado state audit. Their manual, spreadsheet-based approach to accounts payable tax calculation required significant time, was prone to errors, and left the company vulnerable to penalties.
To future-proof compliance and improve accuracy, the manufacturer selected Sovos OptiTax, an ERP-agnostic, automated solution for AP tax calculation. The implementation provided immediate visibility, audit-ready reporting, and the ability to self-audit with confidence.
The Challenge
The company’s small finance team faced three key challenges:
- Manual, time-intensive process: 800 invoices per month were reviewed line-by-line and keyed into spreadsheets, consuming 25+ staff hours monthly.
- High risk of errors: Complex taxability rules related to location of use, R&D activity, and mixed-use purchases were researched manually, often resulting in inconsistent application of tax rates.
- Limited bandwidth to track tax changes: With rates and rules shifting regularly, the team lacked capacity to stay current leading to gaps that triggered the recent state audit.
If this challenge sounds familiar to you, it’s worth connecting with a Sovos Expert so we can take this compliance burden off your shoulders.
The Solution
The manufacturer deployed Sovos OptiTax to automate and standardize AP use tax calculation. Key capabilities included:
- Automated rate and rule updates across all relevant jurisdictions, eliminating the need for manual research.
- Seamless ERP integration for invoice processing without requiring a major IT project.
- Advanced analytics and reporting for self-auditing, exception management, and audit defense.
Implementation was completed in just several days, requiring minimal lift from internal IT resources.
The Results
Financial Gains
- Avoided ~$30K in potential penalties identified during the POC stage.
- Reduced consulting and audit defense costs by ~$20K annually.
- Achieved payback on software investment in under 3 months.
Efficiency Improvements
- 75% reduction in manual invoice data entry.
- 90% improvement in use tax accuracy by applying real-time tax determinations.
- 25+ hours of AP staff time saved each month.
- Faster month-end close with tax calculations completed in real time.
Risk Mitigation & Scalability
- 50% reduction in audit exposure through consistent, accurate tax application.
- Ability to scale to new states or purchasing channels without adding headcount.
- Full audit trail for every transaction processed.
Business Impact
By replacing a labor-intensive, error-prone process with Sovos OptiTax, the manufacturer not only improved compliance accuracy but also freed finance staff to focus on higher-value activities. The company is now equipped with the tools to stay ahead of tax changes, confidently manage audits, and scale operations without adding compliance burden.
Key Metrics
Monthly invoices processed
Manual effort reduction
Accuracy improvement
Audit risk reduction
Payback period
Why Sovos?
The manufacturer selected Sovos for its:
- ERP-agnostic flexibility enabling fast deployment without system overhaul.
- High-value automation at a reasonable cost for mid-sized businesses.
- Proven track record in helping companies meet complex U.S. sales and use tax requirements.
- Self-audit capability for maintaining control while ensuring accuracy.