- Author: Kate Jones
- Posted: September 6, 2023
Insights to Inform your 2024 Tax Compliance & DX Strategy
Digital transformation started its journey long ago in the world of finance, but today it’s gathering momentum at a head-spinning pace. The fast-moving world of technology has seen automation and artificial intelligence become productivity arms in the war on time-consuming processes.
In a recent CFO WebCast hosted by James Solomons, Global CFO and COO at Xref, three finance leaders talk all things digital transformation – why it should be adopted, how to implement it and the increasingly crucial role it, along with ESG, plays in the future of business. Here are my key takeaways:
Reaching for the easy value-adds
There are countless repetitive tasks that are ripe for automation within finance. Santiago Spada, CFO for Pirelli Tyres Australia, said he made it a priority to automate time-consuming tasks so that staff could be free to pour their energy into more important tasks.
“My job was to identify the low hanging fruit, that low hanging fruit meaning those processes that could easily be automated or streamlined in some way to reduce the burden on people’s daily tasks,” he said.
“This was not just to reduce headcount or make people go home early. It’s to really allocate those resources to more value-add activities.
“We used to have people inserting the invoices one by one on the system, demanding a lot of time in processing and approvals, so we streamlined the whole process and automated so that invoices are getting done and recorded.”
Ditching legacy systems has allowed Spada and his team to concentrate more on creating commercial opportunities.
“My motto and my principle is to change people from number crunchers and into business partners,” he said.
“What I normally advise my colleagues, CFOs, is to challenge the status quo, to understand where is that low hanging fruit in your company that can free up some capacity in your team to be able to dedicate to data analytics, business intelligence and to partnering with the commercial team, to be more commercial I think that’s the trend.”
Where to get started?
In a live poll taken during the WebCast, viewers were asked: “What stage is your department or team at in your digital transformation journey?”. At 57 per cent, the majority said they were at the moderate level with some automations in place, but admitted they need to do more. A further 39 per cent identified themselves as late adopters and 3 per cent said they were futurists leading the pack on innovation.
Spada advises other CFOs to dive right in and explore the digital options so they can take advantage of the value-adds sooner.
“A lot of CFOs resonate with this concept (digital transformation) but are maybe struggling to find the time with allocating resources and energy because it does require a lot of time and effort,” he said.
“Some of the things I’ve done, not to name any particular brand or company, on the accounts receivable front, there’s the chance for us to reduce significantly in allocating cash. The effort is much lower and also the financial cost is going down because there’s so much option out there.”
The key is to keep your business goals front of mind, said Andrew Hay, Head of Proposition, Software (Corporate, Legal & Tax), Asia & Emerging Markets at Thomson Reuters.
“I don’t ever think there is one solution that is a 100 per cent perfect fit for everybody,” he said.
“So as you go through, embarking on the process, for me the big thing is really understand what you’re trying to achieve. “My advice is to make sure you go through, once you’ve bought software, you want to make sure it’s actually successful and that you and your team can go ahead and use it.”
More technology doesn’t mean less jobs
Some finance professionals might equate technology, particularly AI, with job losses. Fear of new software coming at the expense of staff may be putting some CFOs off replacing antiqued systems.
However, research revealed in the Thomson Reuters DX in Tax Compliance and Statutory Reporting 2023 Survey Report suggests technology is not impacting employee numbers and is in fact expanding the expertise of finance teams.
“At first glance you might conclude that reduced headcount equates to cost savings, but I don’t think that is borne out in discussions with our customers who are already working with lean teams,” said Mark Oh, Indirect Tax Lead, Thomson Reuters covering Australia, Asia, Middle East, Africa and Russia.
“What I believe it’s showing, is that digital transformation is not driving headcount reductions but actually helping teams move up that value chain and pivot to more than just repetitive, process-oriented tasks.”
Push for tax transparency encouraging digital transformation
Oh said tax regulators themselves are adopting automated processes that produce finer levels of results and this is motivating organisations to keep up.
“We have this era now when tax administrations and tax authorities themselves are embracing digitalisation,” he said. “Our customers can’t stand still from a technology perspective because they are required to really file more and more granular data to tax authorities and keep up with these shifts in tax transparency and regulation.
“What we’re hearing from our customers is they really need to address these challenges by turning to digital transformation and technology.”
A further live WebCast poll fetched mixed results from viewers, who were asked: “Has your department or team’s level of digital transformation benefitted your relationships with regulators?”. The majority at 40 per cent responded in the negative and 27 per cent said ‘to a moderate extent’, while 33 per cent said the question wasn’t applicable to them.
Asked in another poll if they anticipated their organisation to spend on tax and finance-related digital transformation projects in the next 12 months, 48 per cent said it would stay the same, 41 per cent expected a moderate increase and 12 per cent said it would increase significantly.
Environmental, social, and corporate governance (ESG) remains top finance priority
While digital transformation is taking place, finance teams are very much invested in how their organisation is performing responsibly and in line with ESG principles.
Finance plays a huge role in ESG and much of this relies around tax compliance and financial transparency. The cost of doing nothing is too high a price to pay, Hay said.
“Fundamentally investors are really putting their money where organisations are going through and doing the right thing,” he said.
“It’s around making sure organisations are paying their fair share. The role tax and finance play here is, for me, it’s around making sure the data that underlies it is right and it is being used consistently.”