When a major airline wanted to improve the health of its balance sheetWe landed them a major win from inside their data |
Airline Case Study Financial
Analytics: Financial Performance Management
Abstract
Our client is a large international airline, recognized as one of the world’s leading long-distance carriers. They employ approximately 32,500 people and offers services across a network spanning 182 destinations in 44 countries. Deloitte was approached to carry out work for this client, and while completing this work we recognized a way in which processing of the company’s Goods and Services Tax (GST), which forms part of Australia’s Value Added Tax, was letting them down.
Leveraging Deloitte’s deep expertise in airlines, indirect tax, and data analytics, a multifunctional team identified an opportunity for the airline to recover unclaimed GST credits. The Deloitte review uncovered US$25 million available for a one-time GST recovery.
The challenge
The airline reported its Value Added Tax credits to the national tax authority on a monthly basis. We reviewed its processes to determine the amount of GST not claimed back from the tax authority as early as possible and to correct any timing delays of the processing of the accounts payable invoices.
The challenge was to use the company’s internal accounts payable system to identify invoices that were not processed in their month of receipt, in order to gain interest benefit on GST credits.
How we helped
We investigated the airline’s platform, and used state-of-the-art methodology to investigate every transaction in the Accounts Payable module. In this way we identified many unclaimed GST credits.
Solution
The potential cash injection was made possible by invoices not being processed in their month of receipt. Such invoices are delayed from being entered into the finance system until the next month, and are therefore not claimed as a GST credit on the Business Activity Statement (BAS) in their month of origin. That meant our client was not obtaining the interest benefit of these GST credits that are effectively ‘on loan’ to the Australian Tax Office.
A joint effort between the Indirect Tax team and the Deloitte Analytics team ensured that data was extracted and ‘crunched’ properly and that the subsequent insights were relevant and actionable for the client.
