Think of the average financial manager in your company, or in any given international Fortune 500 company. Each day, the financial manager deals with an influx of expense reports, budgets, and receipts, all of which provide an incomplete story about the transaction itself. On top of that, in order to be successful if all these reports are processed manually, the financial manager must be well-versed with ever-changing international tax laws, internal tax policies, and the processes involved with the recovery of foreign VAT reclaim.
All of this has become too much a burden to put on one person — and also on a team of people. By automating the VAT recovery process, these labor-intensive, mistake-prone efforts can be accomplished quicker and more efficiently without all the efforts of your financial team. With the introduction of new VAT laws on a nearly every day, tax automation is not something you want to delay. The sooner you introduce it to your company, the better.
The Importance of Transparency in VAT Technology
With the speed of business operations on a daily basis, and a field of regulations that are consistently being redefined, determining the VAT recoverable in each receipt can be difficult and imprecise in many cases. When this has to be applied to numerous receipts, the whole endeavor can become overwhelming.
Onboarding VAT technology to an employee expense portal can allow you to streamline the necessary information for this data-heavy procedure. Once the figures are entered and confirmed, VAT technology can generate reports for any breakdown necessary and allow an in-depth look into where your company is reaping the most VAT reclaim, and where they are missing out. Using an automated technology provides more insight into VAT recovery, and can take it and put it in different contexts, such as business trip expenses, company transactions, or other purchases. When those numbers are broken down, decisions can be made regarding guidelines for future international purchases or exchanges.
If this process were to remain manual, chances are receipts will get lost, percentages will be calculated incorrectly, and employees will continue to forget to provide the necessary information altogether. Without transparency and automation, there are more needs for contingencies for every expense that is made on your company’s time.
The Necessary Details of Foreign VAT Reclaim
When your employees go on a business trip or complete a business transaction, there are certain essential facts that everyone needs to know:
- Keep a paper trail. Even if you have a software or app that allows details such as images of receipts to be uploaded to the program, always hold on to the original receipt in case of future audits or document reviews.
- Don’t rely solely on the receipt. Every country with VAT regulations has different thresholds depending on the type of transaction, as well as the total cost of the transaction, among other factors. With automated VAT technology, the details will always be up to date, so when the amount of foreign VAT reclaim is determined, you can be sure that it is accurate.
- You still need people. Technology is great, but you still need a human to oversee the process and make sure everything is entered correctly. A strong financial team, led by a knowledgeable point person or CFO, can help ensure that your VAT refund is being maximized to its proper degree.
Full knowledge is a two-way street: your financial team must be able to provide the necessary information of these new systems to your employees, but the employees need to be giving the financial team the correct data, so nothing ends up being omitted unnecessarily. An automated process for VAT reclaim organizes your data efficiently, allows for your internal financial processes to be effective, and ensures that your company VAT return process is optimized to its full potential.
Making Sure You are Optimizing Your VAT Return
There are advantages inherent in automating many routine processes. In the context of tax functions, implementing an automated system guided by artificial intelligence holds many benefits. Such programs can determine where spending has become excessive and can point out outliers or trends among purchase or transaction habits.
While you may not be thinking of VAT recovery as a routine process yet, chances are you will be soon enough. Digitizing this complicated process can lead to greater profit margins, adjustments to overall approaches to business travel and expenses, and a more methodical approach to financial management. VAT management is a meticulous practice, and it is best to employ the most up to date technologies to ensure your company’s optimal VAT return.