Tax & Accounting Blog

Black November: What Tax and Finance Should Know

Blog, Indirect Tax, ONESOURCE, ONESOURCE Indirect Tax November 16, 2017

This is the first of a 3-part series sharing Sales and Use Tax best practices.

In the United States, our holidays are traditions, but how retailers market around them is a fluid process that evolves every year.

Those changes are on full display during the fall, when retailers tend to introduce inventive holiday-cycle sales and promotions. It is important that a retailer’s systems, particularly tax, are prepared to handle the increased volume that many expect during this busy period. Allowing these systems to languish can reduce sales and increase risk.

The story behind Black November, in brief: For decades, retailers embraced the concept of Black Friday, which referred to the beginning of the holiday shopping season when retailers introduce inventive holiday-cycle sale promotions. The phrase dates back to the 1960s and was originally used to describe the congestion shoppers created, according to the Oxford English Dictionary.

(Today, it is generally understood to refer to the point in a calendar year at which the typical retailer can expect to be “in the black” — turning an annual profit.)

Later on, after digital commerce went mainstream, marketers coined the term Cyber Monday. Office workers, returning from the long weekend, would spend their Monday morning post-Thanksgiving scouting online offers from retailers looking to squeeze every last sale possible from their Black Friday promotions. Cyber Monday wasn’t a derivative of Black Friday for long. It quickly became its own retail promotion with a separate marketing strategy.

Marketers are now introducing holiday sales well before the Thanksgiving weekend. Moreover, in today’s retail environment, omnichannel marketing leads, and there is no room for a gap between a brick-and-mortar promotion and a digital promotion.

Black Friday and Cyber Monday have merged. The new buzzword for the holiday shopping season is Black November, and, despite the name, it actually begins in October:

“… 40% of holiday shoppers say they begin their holiday shopping before Halloween …(therefore) it’s important for retailers to think about winning not just Black Friday, but the whole extended “Black November” and throughout the season.” — National Retail Federation Survey 10/20/2015

The NRF survey also found: “When asked which factors are the most important in their decision on where to shop 45.3% said convenience helped them decide. And when it comes to online shopping 28.3% responded that easy-to-use websites or mobile sites were important to them.” Marketers everywhere salivate over these kinds of statistics because they justify the creation of new promotions and channel strategies.

What marketers at large retailers sometimes miss is the fact that, in rolling out promotions for Black November, it is important to not leave tax behind.

Retailers need to get the tax right amid these end-of-the-year promotions or risk either missing out on sales or being hit with penalties for underpayment of sales and use taxes, VAT and GST.

Slow or erroneous tax systems can spoil shoppers’ appetite to buy things. As the NRF survey suggests, speed is important, even for brick-and-mortar shopping experiences. And, obviously, calculating the wrong tax at the point of transaction can either result in an overpayment of tax, which is poor cash management and potentially a customer satisfaction issue, or an underpayment of tax, which can easily turn into fines and unknown expenses to rectify.

Connecting the point-of-sale system to a patented tax solution gives the device access to the right tax-calculation information for everything the company sells. Only the right combination of uninterrupted service, timely tax content, and best-in-class support can ensure a world-class customer experience during busy shopping periods — and utilizing the right combination of technology, tax technical resources, and proven processes will free management up to focus on the many other aspects of running a successful business at the busiest time of year.

This three-part series will express some best practices that can make a difference.

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