#financetransformation “Transformation is the key” #taxautomation #taxtechnology
We read this often on social media and many companies have successfully transformed the way their finance department functions and are reaping the benefits of transformation viz.
- Able to file right compliances on time
- Have audit trail for all activities
- Real time management reporting
- Quick turnaround time to support business processes
- Saving productive hours of finance team
But is it easy to reach this stage?
The answer is NO
So, what does it take to transform finance function digitally?
First & foremost is Management Directive. Culture flows from top to bottom. Digital transformation is a cultural change and it needs support from top management and involvement of other functions like IT, Procurement and Billing/sales.
Why management directive is so important?
Finance function is data warehouse for any company but all this data is fed by functions like sales, billing, procurement, HR and is well supported by IT.
The immediate roadblocks experienced by TaxReco team while working with customers are
Master Data Management – Customer and Vendor data is not accurate in most of the cases and the percentage of inaccuracy varies from 5% to 25%. Implications of messed up master data are
- Inaccurate compliances resulting in audit risk, getting notices from authorities and attracting penalties
- Inaccurate tax credits available to customers/vendors leading to trust deficit
Master data is created at the time of vendor/customer creation, which is done by sales or procurement team. Finance team isn’t involved at this stage.
TaxReco team works with its customers to highlight discrepancies in master data and get them rectified in ERP systems. This is where cross-functional support is required along with support from management.
Permanent fix for this problem is that finance team concerns shall be addressed at the time of customer/ vendor creation. These concerns can be addressed either through IT systems e.g. checking whether GST number entered is valid through GSTIN API or putting a maker checker system where each and every customer/vendor record creation is approved by finance team
Multiple Legacy Systems
Large organizations often have multiple legacy systems, which are used for billing and procurement. We have dealt with customers who have multiple systems.
One such case is where a customer had 5 legacy systems (Standalone architecture) implemented and none them have capability to integrate with other application through API.
Every system has different nomenclature of data, different report formats which makes it cumbersome to collate all data for compliance and management reporting
Implementing any technology system is a task but more critical task is to ascertain that end users are trained to use technology. Often people in finance department are well verse with excel sheets but they may struggle (In case of TaxReco – how to analyze data, access reports, send request to customers for depositing TDS etc.) and adapting the new process workflow.
It is seen that often companies are keen to achieve the end state and start the transformation project in a big-bang approach. The key to transformation is to have a roadmap after assessing the gaps in terms of master data, number of legacy systems to be replace or integrated, training needs of users and managing the change.
While we are implementing TaxReco for a customer who has multiple entities across the country – we have adopted an approach to implement TaxReco in a phased manner depending upon all three factors – master data, IT Systems and training required for users.
Companies need to consider above factors while planning for #Financetransformation and needless to say benefits of any transformation exercise outweigh the efforts and pain taken by any organization