Given the tax advisory profession hasn’t been chastised this week by any world leaders, I’m returning to the less political subject of End-To-End processes.
The excellent survey performed by the folks at KPMG each year highlights many of the critical issues raised by industry leaders. Having spent many hours, days and weeks looking “under the hood” of global businesses, it was fairly clear to all that indirect tax touched virtually every part of that organizations operations, processes and controls. As one CFO once said to me, “the day we get VAT right means I have some faith that we are getting nearly everything right”.
Indirect tax can be a major indicator of the overall operational health of a business. Over a beer last week with one of my neighbors, we tried to find where transactional taxes didn’t need to be considered, or have a role, in day to day operations. With the exception of Human Resources (and even then we thought about Expat issues, recharges of salaries etc), all the other major business operations – Logistics, F&A, IA, AP/AR, Sales, Procurement, IT, Risk/Legal and C Suite to name some of the main ones – had medium to heavy needs to ensure indirect tax was working.
Most businesses fail to recognize that indirect tax is often the third or fourth largest item of working capital. This combined with the perception that indirect tax belongs somewhere else in the organization creates a great degree of risk and lost opportunities for businesses. My version of the End to End Process is here – I’m sure there are different words or views out there. The way I have summarized it is:
“Great people using relevant processes, supported by appropriate technology, turning big data into world class compliance.”