Tax Automation: A Solution For CFOs And The Future Of Tax Accounting
According to Caba, 55% of accountants admit to experiencing stress and burnout, compared to 41% of employees in other industries. CFOs managing tax accounting also face significant pressure in a volatile business environment, from ensuring tax compliance to handling inconsistent data. Tax automation is not just a trend—it’s a solution to reduce burdens and increase efficiency.
Challenges CFOs Face in Tax Accounting
CFOs today must overcome numerous barriers when managing taxes in a context where regulations and technology are changing rapidly:
- Complex and Constantly Changing Tax Regulations: The complexity of taxes stems from the fact that each country has its own distinct tax regulations, particularly in international fields such as corporate taxes and digital taxation, which frequently change and are continuously updated. CFOs must monitor these laws, ensure they stay informed about the changes, and guarantee compliance.
- Inconsistent Financial Data: Many enterprises use different accounting systems, varying data formats, and diverse data sources. This creates difficulties in consolidating data for tax calculations, leading to errors and delays.
- Cost and Efficiency Pressure: Traditional tax processes consume significant time, manpower, and costs. With these issues, CFOs face considerable pressure as the expenses of the departments they manage increase, alongside the pressure to maintain departmental efficiency.
- Risk of Tax Disputes: Any errors that occur during tax audits can lead to serious consequences, such as heavy fines or legal disputes. This places CFOs in a position where they must ensure absolute accuracy and bear significant responsibility.
- Integrating Tax into Business Strategy: Taxes and tax-related issues are not limited to “following the law” or the accounting department; they also impact the strategic decisions of the enterprise. Tax policies, tax rates, and incentives in different regions directly affect profitability, costs, and the competitiveness of the enterprise.
How CFOs Overcome Barriers with Tax Accounting Automation
Tax automation is a vital tool for CFOs, easing pressure as workloads grow more complex.
This process can become more streamlined when technology is applied effectively: First, CFOs should reassess their company’s operating model, collaborating with tax leaders to adjust for business and legal changes, ensuring a flexible system. Next, optimize human resources by integrating automation technologies to handle repetitive tasks like data entry and reconciliation, freeing staff for strategic work.
In summary, leaders must evaluate current data quality, use it for strategic decisions, and move toward automation with next-generation ERP systems or specialized tax software.
Tax Automation: Superior Benefits for Businesses
In Deloitte’s Tax Transformation Trends 2023 survey, participants valued access to modern technology (54%) more than reducing operating costs (51%).
Outsourcing is a common strategy for tax departments, allowing businesses to adopt advanced technology without large investments. In other words, it’s a way to embrace innovation without excessive cost concerns.
Specific benefits tax automation brings to businesses:
- Scalability: Tax automation adjusts tax functions as businesses expand or enter new markets, adapting to changing regulations automatically.
- Regulatory Compliance: It retrieves and applies compliance requirements from government agencies, keeping businesses updated with the latest laws.
- Efficiency: Automation tax simplifies data entry, extraction, processing, validation, and tax calculations, eliminating delays and reducing human errors.
- Integration Capabilities: It connects with various software, linking data from sales channels like retail, websites, or online marketplaces, accurately calculating taxes per activity.
- Better Workforce Management: Managers can boost staff efficiency by reducing manual tasks through automation and co-sourcing. Per EY’s 2023 Tax and Finance Operations Survey, tax staff spend 72% of their time on repetitive compliance tasks (data collection, cleansing, filing, reconciliation), leaving 28% for high-value work like data analysis, tax planning, or risk management. By cutting repetitive work, managers reduce staff pressure and encourage contributions to long-term company goals.
Why Shift from Traditional Tax Accounting Methods?
With the current development of the digital business landscape, coupled with the diversity of business types and varying operational methods, traditional tax processes and functions are no longer suitable or optimal. Continuing to apply traditional processes means that your enterprise will fall behind, continuing to waste manpower and costs when it could instead optimize, save costs, and reduce time.
Tax compliance is not simply an obligation for tax accountants or the enterprise; it is also a way to build trust and drive strategic outcomes. To achieve this, there is a need to focus on improving quality, automating tax accounting processes, or reshaping the operational model by integrating automation technologies.
Conclusion
The modern business landscape is changing at a breakneck pace. The integration and utilization of automation technologies by enterprises are no longer something overly novel. Although transactional financial functions have nearly reached full automation, tax compliance remains an aspect still in the refinement stage. Global businesses have gradually recognized the value of tax automation and have begun investing resources to transition toward it. With the right technology, CFOs can not only reduce pressure but also transform taxation into a strategic lever, ensuring compliance, saving costs, and guiding the enterprise while making confident decisions for the future.
AFusion – a company specializing in providing automation solutions for businesses. We are a company dedicated to delivering end-to-end (E2E) process automation solutions, with a focus on building automation robots based on your existing workflows. The standout feature of our solution is that you don’t need to make significant changes to your working methods when implementing it. We understand that every business has its own unique way of operating, so our solutions are designed to integrate seamlessly, helping you optimize performance without disrupting or slowing down your enterprise’s activities.
Tax accounting is a field closely tied to legal regulations. Therefore, it demands a high level of accuracy and continuous updates to reflect changes. Tax automation can alleviate the burden of this work by supporting tasks such as entering data for tax filings, reconciling figures, and handling paperwork-related duties, as well as repetitive tasks like calculating taxes, updating changes in tax laws, and preparing tax reports. This saves time in completing these tasks, making the process both fast and accurate.
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