Put an end to overpayments with tax recoveryProcess improvements in accounts payable and tax can put money back in |
Commodity tax legislation is ever-changing and highly technical. Quite often, A/P departments process a large number of transactions with numerous staff involved, which can lead to errors. At other times, entrenched and poorly designed internal processes can be the culprits. This is especially true when it comes to accounts payable systems and the way companies track and recover indirect taxes.
“The recovery service we provide is only partially about the money we’ll put back in your pocket,” says Rory Pike of the Indirect Tax Recovery group. “The more important elements are the system and process change improvements that we will identify and present to you as part of the process. The value is really in the go-forward process change,” says Pike.
Tax recovery specialists can uncover missed opportunities
Manufacturers’ accounting groups are generally more focused on running the business than on ever-changing tax legislation. Exempt and taxable status of goods and supplies is one area of concern, as are multiple jurisdictions that often have varying tax policies. “There are just so many details and technicalities to be considered,” says Holmes.
“We approach our reviews from two separate and distinct angles,” Pike explains. “With so many transactions to consider, human error inevitably comes into play, and our precise review of each transaction will flush out these opportunities. Secondly, being up-to-speed with current legislative and interpretive decisions also allows us to identify issue- or knowledge-based opportunities that are often not widely understood,” says Pike. “In many cases we will point out opportunities that we have developed.”
With a typical client, Deloitte’s team of Indirect Tax practitioners and Information Technology specialists starts with a download of client data. With proprietary software and leading-edge reporting tools, the team is able to uncover overpayments. Using the same data set, Deloitte’s A/P consulting team is able to identify duplicate payments, missed discounts and credits, payments to wrong vendors, as well as payments of wrong amounts and extras. A customized management report will point out system and process errors that will enable manufacturers to improve their approach in these areas.
Saving money through process improvements
Why can’t manufacturers find those missed credits or eradicate the overpayments themselves? For one thing, it’s very time consuming, explains Pike. Also, they don’t own the software or possess the specific knowledge. Most of all, it’s a question of focus. While many CFOs and controllers are well versed in systems and legislation, they are running businesses that make great demands on their time. “Our guys live and breathe tax and accounts payable,” says Pike. “They do it all day, every day and they have for many years.”
“Over the years, our clients have not only been pleased with the money that we’ve been able to save them, they have also been extremely appreciative of the various system and process improvements that we have been able to provide or assist them with,” says Pike. “The value of the work we do pays significant dividends well into the future.”
Sometimes it’s a matter of scale. When a huge organization has thousands of transactions occurring and lots of people processing them, this opens the door for errors. Recovery reviews and identified cost savings are sometimes a bit of a surprise for people — albeit a pleasant one. But poor tax knowledge and accounts payable systems can lead to some unpleasant shocks. A guiding hand is essential.