While finance teams are busily automating a growing assortment of processes, many tax departments remain on the outside looking in when it comes to technology investment. That should change, according to a new report from Deloitte.

Tax departments increasingly need software bots to take over repetitive tasks, just as finance departments do, to free up professionals to do more analytical work.

Perhaps an even higher priority, given the vast recent changes to the U.S. tax code as well as to tax regimes around the globe, is acquiring modern data modeling tools. Combining real-time financial information with the latest tax laws and regulations, these tools churn through dozens — or hundreds — of financial scenarios to determine their after-tax implications, the report notes.

More companies are now providing their tax departments with such capabilities, but overall progress is relatively slow.

The Future of Finance Has Arrived

The pace with which finance functions are employing automation and advanced technologies is quickening. Rapidly. A new survey of senior finance executives by Grant Thornton and CFO Research revealed that, for just about every key finance discipline, the use of advanced technologies has increased dramatically in the past 12 months.

Read More

“It’s ironic that businesses plow millions into upgrading their ERP systems, but when it comes to tax, not a lot changes,” laments the report. “Many tax departments have all but missed out on technology modernization.”

Deloitte finds that tax departments typically spend more than twice as much time on data gathering and preparation as they do on data analysis.

The underlying problem is that few companies have taken steps to fully integrate the tax function with their accounting and finance systems. “ERP sits over there, tax sits over here, and human beings go back and forth,” the report asserts. “The result is a hodgepodge of point solutions, with tax teams often scrambling just to gather basic information.”

Underscoring the need for automation in the tax area, the number of tax accounting graduates has nose-dived in recent years, while a large portion of the existing tax workforce is near retirement age.

According to the report, many tax professionals have told Deloitte that finance leaders are inclined to respond by increasing efforts to hire, getting temporary help, and outsourcing certain workloads. But the best solution the staffing crunch is not about finding additional human capital, either internally or externally.

The report presents an anecdote where a controller was involved in a finance transformation project that wasn’t designed to address tax.

“He stopped the project cold, insisting it be re-scoped to include tax modernization,” Deloitte writes. “This executive was certain that the business case for modernizing tax was compelling and wanted the same digital technologies available to them that were going to be made available to the rest of finance.”

Indeed, with tax departments busier than ever and possessing little bandwidth to consider such improvements, senior finance executives shouldn’t wait for them to push for technology investment, the report counsels.

“If you’re the CFO, nudge tax along,” it says. “Even when there’s a great tax leader in place, CFOs need to champion modernization.”

, , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *