Earlier, it was rare that an organization would implement or enhance an enterprise resource planning (ERP) system. However, significant acquisitions, migration from a mainframe system, increased functionality and the desire for a common platform are some of the key drivers that compel organizations to undertake this significant effort.
Organizations that already have or are considering implementing an ERP system often underestimates the impact of tax planning on its processes. The ERP system plays an important role in optimizing the quality of the tax provision but it is not the recommended home of the end-to-end process. When it comes to enterprise taxation, organizations face multiple challenges and are unable to meet the taxation requirements.
While the ERP system can easily provide both management and statutory reporting for tax purposes, to accurately execute the detailed tax accounting processes including book-to-tax adjustments, tax reclassifications, apportionment, and allocations, would require significant customization of the ERP.
Today, the primary tax provision applications have matured to the point that they have gained the native ability to integrate with the major ERP systems. This approach develops the best of both ensuring alignment between systems.
Integrating a tax platform with your organizations’ ERP can help you navigate the potential pitfalls of an ERP implementation and also help leveraging your ERP system to generate the critical tax-relevant data and information needed to streamline your tax compliance processes, more effectively identify and implement tax planning, and provide better tax examination support.
A tax platform centralizes and merges tax-sensitized data for both direct and indirect taxes, providing a single data source for all of your analysis and reporting tasks. It also helps automate the risky spreadsheet based activities.
A tax configuration engine supports multi level tax on tax and it can be customized as per requirements. It is combined with centralized data and audit security and allows a comprehensive risk management review. Moreover, it comprises of a formula builder to support complex tax calculations. It also prevents unauthorized user access. It validates data from the ERPs and can also capture missing data with audit trail support.
Besides this, it is also necessary to mull over what a lack of integration would mean to your everyday business processes Also, while considering ERP/tax platform integration, prioritize which objects are most critical to the success of your business, and what type of data each of your teams needs visibility and access to.
Integrating a tax platform with your ERP ensures that the necessary statutory registers and reports are in sync with the statutory compliance. It also allows data upload between two companies, enables inventory tracking, and encourages dramatic ROI improvements and long term savings.
By Udyog Software Marketing Team