VATBox is committed to keeping the tax community connected during this challenging time.
That’s why we’ve launched a series of webinars called TaxTech Connect. In this series, we candidly discuss the most urgent challenges currently facing our community of global organisations: Unlocking additional cash-flow and accelerating the recovery of funds during the COVID-19 era and beyond.
In this article, you will learn how to adapt and prepare for the immediate financial future by leveraging the range of opportunities hidden in your historical transactional data. The article and supporting on-demand webinar are designed to help you achieve:
- Optimal savings
- Resilient business continuity
- Time optimisation
Watch the full webinar
Joe Hyams, Director of Product Management at VATBox, co-hosted the webinar alongside Isaac Saft, VATBox CEO and founder.
Joe framed the conversation by reflecting on the following statement made by Sequoia Capital’s Board of Directors on March 5, 2020:
“In downturns, revenue and cash levels always fall faster than expenses. In some ways, business mirrors biology. As Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.”
Joe compared Sequoia’s views with PwC’s survey to understand how Finance Leaders are responding to the crisis.
Survey respondents’ concern about the impact of COVID-19 on their business’ liquidity and capital resources is accelerating at a rapid pace – 64% cited financial impact as a top concern on March 30 as opposed to 48% on March 9.
Isaac joins the conversation to explain how VATBox can make a practical difference and achieve savings and optimisations right now for businesses. He discusses four elements of what the ‘new normal’ might be like post-pandemic.
1. Remote Working & Time Optimisation
More and more employees will be forced to work from home or under strict restrictions.
The financial industry will have to change its mindset and processes to support the new reality.
- Processes will have to be clearly defined and designed to be executed both remotely and on-premises. For example, what type of work can be done remotely, and if you have to work remotely, what kind of data should be made available.
- Prioritisation is key. Stakeholders must decide which processes can be shifted to be completed automatically via technology, and which should be done manually. How can we optimise staff time effectively? Focus on factually and effectively communicating to employees and stakeholders.
- Support for employee wellbeing. Companies will need to supply WFH facilities, equipment, support and training, leveraging automated tools to avoid exhaustion and burnout.
2. Speed up NextGen Transactions
The way money is spent will inevitably change. Next-generation transactions refer to spend that is driven by employees, usually paid by credit card, whether the employee’s personal credit card or the company credit card or even a dedicated credit card like procurement card. These employee-driven transactions bypass the standard procure-to-pay process with its built-in data checks, rendering these traditional processes obsolete. These NextGen transactions are expected to increase moving forward and are estimated to reach $2.4 trillion annually.
The growth of these employee-driven transactions – coupled with the lack of data traditionally accessible in ERP systems or T&E Management systems – opens the door to potential losses for businesses.
Isaac references Uber as an example. Leveraging their BI module, VATBox saw that in the last three weeks, the volume of Uber transactions on clients’ systems rose dramatically. These transactions were flagged because, in the current situation, people are travelling less; they stay at home; they don’t use taxies. Inquiries uncovered that the number of transactions was high due to Uber food and Uber delivery.
These simple transactions may be eligible for VAT recovery, but the supporting data is limited. In most cases, there is no supplier set up in the system, no purchase order or itemised receipts, or VAT breakdown. There are no validation checks or eligibility engines. These transactions may be filed as a private expense, which could have BIK implications. In any case, these NextGen transactions represent a missed business opportunity and lead to lost revenue due to insufficient business processes.
Companies must have a single process and communicate it effectively with the entire team.
To overcome the next-gen transaction challenges, companies must follow these simple steps:
- Bypass the built-in data checks of procure-to-pay processing by using an automated solution.
- Defend growth and profitability through timely actions
- Meet individual country priorities to minimise the risk of business disruptions
3. Optimise Savings and Cash-flow
Savings and cash-flow are hot topics these days. Companies are trying to optimise spend in every area to impact cash-flow positively and to lead by example. From executives to middle management to individual contributors, everyone has savings as a goal.
Here are a few proven savings opportunities:
- Automate and manage cash taxes, obtain available refunds and consider local government and tax authority measures in response to COVID-19.
- Collect and recover historical transactions (Backlogs)
- Deploy savings opportunities (P-cards, AP)
There is a tremendous savings opportunity hidden in historical transactions. Isaac explains that clients have recently been requesting analysis on new data sources that are related to the past such as Foreign AP, Procurement cards, backlogs, entities using different travel expense systems, etc. that had not been streamlined to VATBox’s platform before.
Isaac emphasises that while Travel will eventually be renewed, employee-driven transactions are already on the rise and will probably pick up in parallel to the current situation.
And the opportunity will continue to grow. There has never been such a major opportunity to influence business continuity with such minor action.
4. Tax, Auditing & Submission Norms
In this ‘new normal’ business environment, are companies going to face the same type of audits by authorities as in the past? Isaac expects on-premise audits and conversations with authorities to be replaced by remote audits, powered by data. This means that companies will have to supply more data to the authorities, and they will need to facilitate this change with improved infrastructure. Manual processes will become obsolete by deploying and leveraging technologies that will serve as the infrastructure for this new reality.
To meet the new auditing and submission norms, the following processes will have to be in place:
- Ensure digitalisation of shared service centres’ workflows
- Reevaluate service providers and contractors’ capabilities for the new WFH environment
- Accelerate digital tax transformations and deploy globally compliant VAT recovery solution
Remote working & time optimisation, NextGen transactions, savings and cash-flow optimisation, and tax, auditing & submission norms are all contributing factors to the new normal business environment.
The bottom line is that with people becoming less available and processes becoming more complex, data is becoming more important. Technology that can harness that data can help people work smarter and contribute to business continuity. Not everything can be done immediately, but as Joe pointed out at the start of the webinar, businesses that can adapt quickly are the ones that will thrive.