Have you ever calculated the cost of reclaiming VAT? If you are like many businesses, you only have a vague sense of the real costs of VAT recovery, or perhaps no idea at all. It can be tempting to throw in the towel and default to recovering VAT only when it is a large enough amount worth the effort. There is a better option though: a smart, automated VAT tool like VATBox.
What is the Cost of Manually Reclaiming VAT?
To give you an idea of how much an automated solution can reduce your costs and increase your VAT recovery, let’s set the stage with examples and stats for expense reporting in general. The following are some of the hidden costs of expense reporting that have clear parallels to VAT reclaim:
- The cumulative time spent to create, review, and approve reports
- Hours spent on reconciliation and reimbursements
- Opportunities lost for performing other tasks
- Tangible costs such as paper, printing, and postage
- Storage fees to archive expense reports (physically and/or electronically)
Now, for the stats and math. According to PayStream Advisor’s 2017 survey, the industry average to process one report is $26.63 for manually processed reports, $17.31 for semi-automated processing, and $6.85 for fully automated processing of reports. That is just for one report and is based on businesses that actually track the real costs of processing expense reports. Fully automating the manual expense report process saves an average of $19.78 per report, and that adds up.
Another way to think about the cost of manually processing expense reports and reclaiming VAT is in time and opportunity losses. Not only is a manual process time-consuming for Finance and Accounting staff, it takes time away from primary functions for staff in other parts of the company.
As a general time cost for an employee involved in generating, reviewing, or approving expense reports, the calculation is simply:
Time spent per report (in hours) X wage or salary (hourly) = Overhead cost for one report
To get a total cost, calculate the cost for each employee involved in the process and add it together. Voila! You have a calculation of the total cost in staff time.
When considering opportunity loss, the calculation is a little different, but still fairly simple. Let’s take a sales representative as an example. Your sales rep needs to spend as much time as possible on activities related to selling. When they have to spend time on expense reporting, it is an opportunity loss. Here’s a way to calculate the percentage of opportunity loss.
Time spent per report (in hours) X available selling time (in hours) = Selling opportunity loss (%)
Given the cost of manually processed expense reports, and the overlap those processes share with VAT reclaim, it is easy to see how automation can support your VAT recovery efforts and lower direct costs as well as the costs of opportunity losses.
Expenses Can Increase Exponentially
As your business expands into new markets and your staff travel to exciting locations for conferences and other work-related events, the complexity of VAT reclaim can become exponential. You can save everyone headaches and time with an automated VAT technology, like VATBox. With smart automations, deep learning AI, and up-to-date rules and requirements for every VAT-charging country, VATBox can help you make sure you get every penny of your VAT recoverable expenses back with your VAT returns.
What opportunities are you missing out on by sticking with costly manual processes? It may be time to look into technological advancements to reduce costs, simplify your processes, and free your employees up to focus on what you hired them to do.
If you’d like to learn more about how your company can achieve total compliance in VAT related transactions, VATBox can help. VATBox is an automated, enterprise-wide, cloud-based VAT recovery solution that has successfully streamlined the global VAT recovery process, providing businesses with unrivaled visibility, compliance, and data integrity, and ultimately boosting its bottom line. Let us show you how your company can thrive in today’s complex financial times.