CFOs Can Foster Compliance With Dedicated Tax Technology Team

So what role should a CFO play in an organization’s tax compliance strategy? And how can they make sure it’s treated not just as a functional requirement, but rather as a force for business growth?

CFOs can—and should—take the lead in modernizing their tax technology and compliance fundamentals by considering their team’s responsibilities, technology, trust, and innovation.

Team

In a survey that was conducted at a CFO Leadership Conference in October, Sovos asked a select group of attendees how they staff their tax function. Only 10% of respondents reported having a dedicated tax team, while over half revealed that they split the tax function among finance team members.

This prompts the question: How do finance teams navigate the tax and regulatory compliance landscape without a dedicated tax team?

To create an effective tax technology team, CFOs should first partner with their chief information officer or chief technology officer. But they also should look across the enterprise at all departments affected by tax compliance—legal, sales, marketing, billing, and accounts receivable—and at related regulatory demands.

Having a dedicated tax team can improve an organization’s efficiency, adaptability, security, and data insights while reducing risk.

Technology

CFOs surveyed noted they seek the ability to reduce time employees spend on compliance management tasks.

Using technology to gain visibility into transaction data will help inform decision-making, increase efficiencies, and mitigate compliance risks, particularly when it produces a singular view of all tax and compliance data.

Trust

When managing tax processes, CFOs and CIOs often prioritize values such as time savings, infrastructure costs, and reductions in audit exposure. All are key considerations when seeking more value from technology.

A CFO also should focus on the organization’s vision and growth strategy, and the actions of up to 19,000 tax authorities across the globe. As regulatory changes such as e-invoice mandates and continuous transaction controls drive compliance to the center of a transaction, enterprise resource planning and other enterprise financial systems become only one piece of the puzzle.

• It should help you connect into an ecosystem of partners, financial technologies, and government agencies and create an accurate, real-time ledger of transactions, inventory, fixed assets, and payroll information.
• It should identify and verify each party in the transaction or obligation, as well as determine every transaction accurately and ensure every transaction is compliant in real time.
• It must allow you to report immediately, file correctly, and help maintain fidelity between your company’s records and the various tax agencies.
• It must support your ability to use compliance data to mitigate future risk and optimize business processes, and use it as a strategic advantage to fuel business growth.

Transformation

As generative artificial intelligence advances, modern tax technology and the companies that embrace it can realize extraordinary business value. Such innovations have potential to reduce risk, streamline finance operations, and improve insights.

Generative AI can be used to study past performance to predict future regulations and generate scenarios using those changes to assess potential business outcomes. CFOs will benefit from this increased ability to prepare for changes before they are announced.

CEOs and boards of directors rely on CFOs as the primary owners of tax compliance. Tax leakage can result in heavy cash drains and business interruption.

Companies that want to thrive must make compliance central to their strategic planning.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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