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Oxymoron: Paperless Tax DepartmentShedding the paper weight to improve global collaborationTechnology plays a prominent role in corporate tax departments, as more companies implement tax software to process data more efficiently. However, collaborative tools that support the exchange of internal and third-party information have not kept pace. Despite the proliferation of tax provisioning and preparation tools, corporate tax departments continue to rely just on paper and manual, paper-based tools like spreadsheets and email to share information. Working in a 1990s mode, many tax divisions keep documents on their desktops, exchange data via email and don’t maintain a comprehensive repository to work collaboratively on documents for the year-end close, tax returns, or any tax data manipulations. In fact, corporate tax departments are historically one of the biggest consumers of paper – even in today’s technology-driven business world. Paper is weighing tax offices down, hindering global collaboration and leading to inefficiency, inaccuracy and noncompliance.Results from a survey conducted by the Sales Tax Institute with 1,243 companies revealed that approximately 90% of survey respondents use a hybrid of paper and electronic forms of data management, with very few working in a paperless environment. Lack of standardized collaborative technology and processes are often reasons for reliance on traditional paper methodologies. For example, employees that need to share tax information historically operate in their own “silos” with incompatible technology that does not support real-time interaction. Without the right management tools, confidential information cannot be securely managed, organized and accessed from different sources. Instead, tax departments rely on manual processes to collect and input data, which leads to errors and long lead times (that can result in penalties). Email, arguably one of the longest-serving and most popular collaboration tools used in business, should support greater productivity in the tax department but actually now hinders efficiency due to large file sizes. A recent survey of 200 U.S. accounting professionals found that more than half (55%) could not share certain large files while 39% experienced delays waiting excessively for email approvals. Large file sizes result in recipients printing or editing documents or sharing them on unencrypted thumb drives. Sometimes, complex data files bounce back, making email communications totally ineffective. Looking to drive automation, some tax departments build workarounds such as a spreadsheet-driven patchwork tax system. However, spreadsheets depend on a single user, lack a reliable audit trail, do not enforce quality workflows and have no version control. So, if a state tax code changes, for example, the person responsible for state and local taxes may only apply it to their spreadsheet but no one else accounts for that change. Fortunately, most companies realize that spreadsheets and shared drives are a thing of the past that doesn’t encourage collaboration and puts data at risk as there is not an automated mechanism for version control. Even so, tax departments are not fully leveraging integrated tools that automate workflow, promote accuracy, reduce risk and increase collaboration across the business lines. Old habits die hard as tax departments in both large and small organizations continue to rely on traditional paper ways, opening themselves to unnecessary risk and inefficiency, and – possibly even worse – preventing them from operating more strategically. As companies extend their presence into more regional jurisdictions or engage in mergers and acquisitions, they cannot chance a tax mistake or missed regulation due to a manual error or incomplete information. With the complexity of tax calculations, companies without a collaborative tool that supports transparency may not be able to find a mistake until it’s too late. Benefits of Tax Collaboration TechnologyIn its current state without collaborative tools, tax departments are using many manual processes, making paper copies of everything while using email to collect data and share files. Signoff processes are tracked manually or in spreadsheets, with multiple versions of files traveling across the company. Tax calendars also are tracked by email or in spreadsheets while the same source data is pulled multiple times, in multiple formats for separate uses.Using collaborative technology, corporations can establish more engaging interactions throughout the company to obtain more accurate and complete tax data with greater visibility into all stages of transactions for individual accountability. With real-time data securely stored in a shared environment on a common platform, employees can access up-to-the-minute information to successfully work together on projects, share and edit files, ask questions, and track activity without the threat of lost documents. Centralized workflow and structured data enable the tax team to work more efficiently and productively. When the tax team moves from paper-driven processes to a virtually paperless environment, individual and group communications are sent via file links, with electronic sign-offs. Activity is automatically tracked for more proactive management. In addition to supporting a standardized and more efficient delivery of communications, collaborative technology offers greater security and protection of data from different sources. Automated calendars predict the necessity of specific data for routine compliance and reporting activities, making the tax department more proactive in meeting internal and external deadlines. And, dashboards provide daily status over activities.Through unified communications and information sharing, corporations eliminate wasted time for greater productivity that extends beyond the tax department. Advanced collaboration solutions connect the tax department from end-to-end and around the world, and can be easily integrated with other enterprise financial systems within the company to improve data capture, analytics and reporting capabilities. In addition to serving the tax department, collaborative software enables other departments to operate more efficiently. Metadata-based information can be pulled once and transformed as needed for separate users. The result is a strategic tax management office that contributes to the business rather than just a team of number crunchers.Graphic 1 depicts how collaboration fits into the tax technology landscape. While data management tools like Excel clean, process and analyze data for output and reporting, collaboration technology offers an online platform for files, supplemented by metadata, that automates and centralizes document management, and workflows while providing calendars and dashboards for greater control and visibility over tax operations. NOT SURE HOW TO EXPLAIN THE BLUE PORTION.What You Might Need in a Collaborative ToolDepending on the size and market reach, companies value different capabilities in a collaborative tool that can best support their operations and address any pertinent issues experienced in the past. Here are some features to consider when choosing a collaborative technology that best meets your requirements: Document management processes allow better data accessibility globally. A library of files and folders can be stored with metadata, version control, and security features to make them much more powerful than a standard network drive. Security control restricts access by different levels of users. By building a unique site architecture that outlines a hierarchy of users, companies can establish limitations for individuals within the tax team. Security is maintainable at the site or library (documentation) level. Real-time version control ensures users are always using the latest data version. Rather than rely on email to circulate data, a centralized share system time stamps the most recent revisions and who made them. Some collaborate tools provide the capability to turn versioning on one library and not others. Besides, versions can be tracked to see changes over time and restored to a prior time by an end user. Metadata-based information can supplement or eliminate the use of folders with data files that are intelligently searchable for quick access and analysis. The metadata, in essence, supports business intelligence reporting. Do you want to use the graphics from the SharePoint presentation to explain the difference between folder and metaview?20002530607000259080027749500To view a business case in a folder structure (left), users would need to go into Client A, then into Client B to pull the correct business case folders. In the metadata world, (right side) users can easily filter by “document type, business case” and see all of those business cases whether Client A or Client B, etc. The metadata structure provides more results with fewer steps and an overall view of the related files. Real-time data availability through the clouds with version controls that support concurrent editing that everyone can view. Process management control workflows for better administration of daily operations, recurring and ongoing tasks. Now, instead of maintaining tax calendars in Excel, a collaborative tool can automatically track all taxes to be filed by jurisdiction throughout the year, providing due dates, reviewers, KPIs, and sign-offs as part of one process. In foreign data collection when tax departments typically use spreadsheets to track the activity among groups of people worldwide, a collaborative tool can automate this process by sending a link to files that allows recipients to review, update and approve reports. Management can accurately review status at any time.Flexible platform enables system modification to fit a company tax structure and organization. While having similar tax functions, companies may be organized differently with provision teams, planning teams or segregated offices that do everything in one region. A good collaborative system should support a company, whether vertically or horizontally aligned.The system must also be flexible to meet the needs of tax, treasury, legal, and finance operations. While tax departments require certain information to process tax returns, other departments may need the same information for their tasks. Interoperable with the enterprise financial system, the collaborative software can be used to create reports and dashboards that are shared with others in the company. Document Management through dashboards, data analytics, and data intelligence. A dashboard can keep the business running smoothly by reporting on task status and when new activities should start. A business intelligence/dashboard that displays the current status of metrics and KPIs for an enterprise is the next wave of technology on the horizon. 1User-friendly and designed for non-technical users, reducing its learning curve and extending its use throughout the company. In-house vs. The CloudIn the past, many tax departments relied on financial planning software that operated on the desktop as a standalone application to support their operations. Today’s modern collaborative software that provides capabilities to share and manage information across the company is available for use both onsite and from the cloud. While an on-premise solution requires space on servers and IT resources to manage it, some companies want data to remain on site as it offers greater control over information and compliance standards. But as documents become large, hybrid and cloud technologies are attractive options, where part or all data resides in company servers and the cloud. Should we explain the hybrid? Is the functionality still on the Intranet but files in the While a cloud configuration requires zero hardware installation and little to no ongoing maintenance as software applications and information are maintained remotely by the software vendor in their cloud infrastructure, corporate data must be migrated to the cloud. Some companies are bound by restrictions to move corporate information offsite, so must continue to process it on local servers. While an on-premise solution represents a capital expenditure with the purchase of hardware and software licenses, the cloud is a monthly operating expense. The cloud offering typically enables companies to scale software capabilities as needed. ?Before making a decision for an on-premise or cloud-based collaborative solution, companies must consider infrastructure requirements, administrators, data security, features and costs to choose the right option that provides a viable return on investment.Best Practices for ImplementationReady to get rid of the excess paperwork and move to a collaborative tax operation? Before jumping in, consider taking the following steps to prepare for implementation. Assess current processes to identify problems and areas needing improvements. What is the current data flow and practices? And what software and collaborative tools are being used? Companies must understand employee collaborative patterns and current issues in working together. Define goals and create a strategy. What do you want to achieve from this new software implementation? Planning ahead for what you want to achieve avoids misunderstandings and rework done the line. Evaluate collaboration technology solutions. What type of platform works best for your company? Do you have the business infrastructure and staff to support different options? What features are important? Determine business costs and requirements. Will you need to buy new hardware and increase space in your data center? Or, if choosing a cloud configuration, what is the monthly service fee? What is the ROI in the next five years?Outline an integration strategy that defines the system set up and replication process. Who will manage the implementation? How will data be migrated onto the new software? What is the timeline?Testing and Rollout. Conduct a pilot phase to troubleshoot problems and get input before deploying the platform to the entire company. Determine if your IT team, the vendor, or a consultant will lead implementation. Employee training. Who will you train first – IT, power users, tax department, etc? Who will lead the training – IT, software vendors or fellow employees? Governance. Once implemented, how will you ensure new processes are used and maintained throughout the company? Collaborative Software Is Transforming a Multi-Million CorporationAs previous noted, collaborative technology can support the tax department in different areas:Document managementFinance intranetEntity contract listsCompliance tax calendarFinancial close task listTreasury cash managementTax package document collectionDocument approval workflowState notice trackerAudit trackerDashboardsCross functional processes Using some of these tactics, a global $15B company is using cloud-based collaboration software to transform its tax department from a functional, transactional department to a more strategic operation that impacts the business. Existing tax operations posed several challenges: Through acquisitions, the global corporation inherited a larger number of ERPS that did not talk to each other. As a result, data gathering and analysis are challenging and time-consuming as the tax department needs to pull information from different sources then manipulate the taxonomy into a standardized format before even using it. Current processes do not provide the transparency or capabilities to satisfy ever-complex tax laws and new international regulations that require companies to expose more details on financials from all areas of a company. For example, proposed Section 385 regulations for tracking intercompany debts and dividends will require substantial documentation and tracing of inter-company transactions. Unprepared to address these types of pending reporting requirements, the tax department, in its current state, will be overburdened to comply with new guidelines in addition to managing daily work. In-house resources are limited and technology outdated, with archaic, legacy processes. With many large acquisitions in recent years, the tax team is absorbed in bringing new business on board while managing daily tasks. With so much additional work, the tax department is short on time in address government requirements. However, any missed deadlines will result in penalties and interest. To optimize operations for greater efficiency in reducing current workloads, while adding new capabilities to work more strategically, the multi-million international company reevaluated its technology to streamline business processes. As the internal IT department and tax teams were unfamiliar with latest tax technology, the company was unsure of the best tools and processes to support their operation and future goals. Reaching out to a tax technology advisor and consultant provided the company with the resources and expertise in providing a new tax document and data management system.Choosing the Right TechnologyAn initial assessment of the tax department against best practices found that operations were too paper-based compared to their peers. With a lack of data integrity and no standardization to file management, users often couldn’t find a file or know if it was the latest version. If someone left the company, files might be lost in a personal folder on the network drive or email. Decentralized operations don’t encourage interaction, resulting in departments working in their own “silo”, focused on their specific functions. Any file sharing requires a lot of “back and forth” communications that slows down the process and interrupts work flow. Wanting to gain process efficiency to spend less time on routine transactional/manual gathering data tasks and more on tax analysis, the company needed a more modern system with security controls, visibility and automation. While the company was already licensing a collaborative software tool for use globally, functionality was not full leveraged for true collaboration. When implemented years ago, users were left to determine how to use it. Taking the easy route, many just house documents on the platform while implementing email to exchange files and obtain approvals. Offering no version control, no reminders, and limitations in file exchange, emails are inefficient and distracting, often requiring paper printouts of large files. Focused on more efficient data management, the company realized harnessing the power of the software would enable document sharing, real-time collaboration, transparency into processes, as well as a controlled and automated workflow that forced certain processes for compliance and quality. Taking full advantage of software capabilities, the company could enable employees to interact more strategically to gain more insights about tax and enterprise operations. And with data accessible in real-time, employees could start tasks right away without waiting for information from someone in another time zone. The collaborative tool also offered greater data security, ensuring version control and restricted data access to data. In the past, a draft of a spreadsheet would circulate throughout the company, exposing information to the masses while providing no control over which subsequent version had the most current information. After talking with executives and evaluating internal resources, the third party consultant made a list of recommendations and prioritized project implementations. Without the time to dedicate to one big installation, the global company wanted to take a phased approach, with early successes building employee confidence and project momentum, especially among the doubters in the tax department, for continued implementation. After developing the collaboration architecture and metadata template of the platform, the tax technology advisor and consultant started loading both old and new files to configure the process, starting with the compliance group for international, federal and state and, then, with sales/use tax department. Requirements differed by operations. For example, one department wanted to go totally paperless using pdf tools along with calendars and dashboards to manage workflow.Technology ImplementationAs the first year involved implementation and training, the company hasn’t report any saving but reported substantially reduced man hours to reconcile numbers for intercompany transactions. The federal tax return was filed earlier than in the past ten years, due to the process efficiencies gained from the collaborative software tools. Change management has become a little easier because of early successes and implementation is under budget. While the income tax group started using metadata to effectively manage and retrieve documents, the full benefits won’t be documented until the platform is fully established and the rest of the organization accesses it. When fully functional, the company will automate routine functions so employees can spend more time on strategic planning that impacts the bottom line. Employees no longer will waste time chasing, reformatting or manipulating data. Instead, formatted data can be directly downloaded for analysis. Instead of just number crunchers, the tax team will become a mission-critical function in the business. ###About the AuthorAbout GTMGlobal Tax Management (GTM) is the largest firm in the Mid-Atlantic region that focuses exclusively on delivering corporate tax services to mid-size and large multinational, public, and Fortune 500 companies. For more than 20 years, GTM has provided the expertise to build, operate, and manage tax department functions for its clients. Core services include tax provision, compliance, technology automation, indirect tax, and tax planning and minimization services. GTM is distinguished as a best workplace, healthiest employer, and top accounting firm in the region. In 2015, GTM earned a spot on the Inc. 5000 – an exclusive ranking of the nation’s fastest-growing private companies. GTM is a 100% employee-owned company (ESOP) with regional offices in Woodbridge, NJ, Pittsburgh, PA, Harrisburg, PA, and Wilmington, DE. For more information, visit .Resources:1 ................
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