For many growing companies, the decision to switch to a centralized Enterprise Resource Planning (ERP) system is driven by the need to keep up with the increasing complexity and speed of global digitalization. Many common business activities— communication, compliance, e-invoicing, reporting, risk management, modeling, analysis, project management, and more—now require universal access to real-time data. If a company’s legacy business systems can’t handle the task, they need to be upgraded or replaced.
Usually, that upgrade consists of adopting an ERP system such as SAP or Oracle, which acts as a centralized hub or “source of truth” for a company’s day-to-day business activities.
Jump to ↓
| The benefits of an ERP system |
| AI-enhanced ERPs |
| ERPs and digital transformation |
ONESOURCE Indirect Tax
Maximize the impact of digital transformation with integrated tax technology.
Learn more ↗The benefits of an ERP system
While ERPs do provide greater efficiency and data utility to many different business units, they are especially beneficial for corporate tax departments. The transition to an ERP system can, and arguably should, spark a dramatic transformation in how a tax department operates and what it can achieve.
The following are just a few of the many benefits a new ERP system can provide for corporate tax departments.
1. Streamlined corporate tax workflows
One of the key advantages of a centralized ERP system is that it radically reduces the inherent inefficiencies of a siloed business culture. ERP systems centralize data, allowing tax departments to access data from multiple departments—such as accounting, finance, payroll, HR, marketing, procurement—without needing to request it, saving a great deal of time and frustration.
Having better and faster access to the latest financial data also makes it easier to generate tax reports, track compliance, and meet deadlines, which reduces the likelihood of penalties, fines, and audits.
Crucially, ERPs coupled with an AI-driven tax engine also give tax departments the power to automate tax calculations and enable real-time reporting of financial data. By eliminating the need to manually gather data and use spreadsheets for reporting, tax departments can focus on more strategic and value-driven tasks, such as forecasting, scenario modeling, business intelligence, and supply-chain analysis.
2. Tax data management and visibility
Another significant advantage of a centralized ERP system is how dramatically it simplifies the overall management of tax data while at the same time increasing the flexibility, utility, and value of that data—all while providing superior security and control.
ERPs make it possible for tax personnel to view the entirety of a company’s tax data, including its tax liabilities, applicable rules and rates, transaction histories, invoicing protocols, and other relevant financial data. This 360-degree visibility makes it much easier to optimize tax planning, and it provides tax departments with the information they need to guide better decision-making, which can help establish the department’s leadership role in an organization.
When paired with tax automation, ERPs guarantee accurate tax calculations, virtually eliminate tax errors, and yield consistently clean data. Clean, transparent data helps companies lower IT-management costs and boosts overall confidence in a tax department’s ability to identify money-saving tax strategies.
Related blog post
Revolutionizing tax compliance: The power of embedded solutions in ERP systems
Read blog ↗3. Tax compliance and risk management
One of the primary responsibilities of any tax department is maintaining compliance with various tax rules and regulations. ERP systems ease and improve compliance in several ways:
- Automated, error-free tax calculations speed up compliance, reducing the risk of penalties and audits.
- Compliance with international tax rates, rules, and regulations is automatic when using a properly supported third-party tax solution.
- Real-time reporting capabilities make deadlines easier to meet.
- Access to standardized, consistent, real-time financial data minimizes surprises.
- Tools included in the ERP allow for deeper, more accurate tax analyses and forecasting.
ERPs also improve a company’s risk-management capabilities by supplying reliable, real-time financial data that can be analyzed to identify the probability and severity of potential financial risks. Scenario modeling capabilities can also help companies develop risk-mitigation strategies and, once these strategies are established, risk parameters can be automatically monitored and flagged.
4. Modularity and scalability
While ERPs are powerful, they can’t do everything. Fortunately, ERPs such as Oracle and SAP are designed to accommodate third-party add-on modules that extend and improve the ERPs capabilities and performance.
For example, most ERPs don’t include content support to keep pace with ever-changing tax rules and regulations. They are also limited in the variety and complexity of tax calculations they can process. When combined with a content-supported third-party tax solution such as Thomson Reuters ONESOURCE, an ERP’s shortcomings can be transformed into a formidable strength.
Scalability, the ability to expand capabilities as a company grows, is another key advantage of a cloud-based ERP. Together, ERP modularity and scalability provide the flexibility companies need to adapt to such business realities as:
- Mergers, acquisitions, and divestitures
- Evolving or changing business models
- National and international expansion
- International e-invoicing and real-time reporting mandates
- Ever-increasing data demands, both internal and external
AI-enhanced ERPs
Though still early in its development, the integration of artificial intelligence (especially generative artificial intelligence [Gen-AI]) into ERP systems has enormous potential to revolutionize how corporate tax departments manage, structure, and utilize their data.
Among the most transformative capabilities an AI-driven ERP system can deliver are:
- Integrated, harmonized datasets that unify all relevant tax data
- Proactive risk management and automatic compliance monitoring
- Real-time tax calculation, reporting, and compliance
- Automatic data categorization and reconciliation
- Improved forecasting, data analysis, and supply-chain modeling
- More precise and strategic tax planning
Many of these ERP capabilities already exist in one form or another; however, AI-enhanced ERPs promise to radically accelerate and expand these capabilities by processing much larger volumes of data, identifying previously unrecognized statistical patterns, “learning” a company’s tax strategies, and offering predictions and advice based on deep-structure analyses of a company’s known data universe
ERPs and digital transformation
The term “digital transformation” refers to the process a company goes through to upgrade and enhance its technological infrastructure to remain competitive in the digital age.
For growing companies, adopting a hybrid or cloud-based ERP system is central to this transformation. It serves as a central data repository for all corporate business functions and, with third-party add-on modules, greatly expands the capabilities available to the enterprise.
Once installed, ERPs also enable a wide range of workflow efficiencies that save time, increase productivity, improve individual performance, and empower companies to pursue more ambitious and creative business opportunities.
Realistically speaking, companies that reach a certain size cannot expect to grow and compete without the aid of an ERP. Legacy computers systems and manual tax processes may suffice up to a certain point, but once a company reaches that tipping point, it has little choice but to embrace an ERP solution and everything else that such a decision entails.
ERPs represent a significant investment of time and money, however. The combined expertise of Thomson Reuters with SAP and Oracle can ensure a smooth implementation process and help maximize the ROI on any company’s digital transformation.
ONESOURCE Determination Integration for Oracle Cloud ERP
Integrated sales, use, and value-added tax calculation.
Learn more ↗
ONESOURCE Indirect Tax Integrations for SAP
SAP Certified solutions that solve global tax challenges and maintain clean core.
Learn more ↗
