Indirect Tax – Manual vs Automated Oracle ERP Solutions

by | Sep 28, 2017 | Oracle ebtax/etax/e-business tax, Oracle ERP, Oracle Fusion Tax, Tax Engine, Tax Manager, VAT | 0 comments

The application of our fully automated indirect tax solution offers any business huge advantages over the choice to simply setup the eBTax engine with the default rates (a Manual Solution).

The definition of tax automation within Oracle is to configure the eBTax engine with a complex set of business specific rules, backed up by country specific legislative parameters in order to determine the correct tax.

A solution design where tax is defaulted either at a supplier or purchasing category level is considered to be a manual solution. And here are some of the pitfalls awaiting business that look to this, rather than automation:

 

Manual Configuration Drawbacks:

  • Requires VAT knowledge from AP user to get the decision right.
  • Payables staff processing time goes up due to requirement of vat decisions, adjustments and holds.
  • Slows down the VAT reporting process to correct errors / enter adjustments.
  • Leads to compliance issues due to VAT errors that may not be spotted.
  • Tax authorities have started to ask for VAT determination logic when auditing companies.
  • Sales Invoices with incorrect VAT need to be re-billed (customer perception, cash flow).
  • Can lead to reliance on VAT team to assist AP User where they do not have knowledge.

In a Manual setup, there is no visibility of the regime from a single easy to locate place (without Oracle knowledge), making it very difficult for Finance/Tax personnel to manage and review the rates. Moreover, with regards to compliance, without having an analytical tool reviewing transactions, incorrect tax rate selection is often not noticed until the time of the actual tax return submission.

Our proven Automated solution is built on rules – it can identify and highlight users (in real-time via our award-winning Tax Compliance Manager tool) who are choosing something different to that which the Tax Engine has deemed applicable. At this point, anyone in the Tax/Finance team can drill down into the actual transaction and correct – educate – understand the choice made.

Automation & Scalability – our solution is scalable to over 120 countries, it’s fully supported, based on the same country specific legislation and can be utilised across all LE and OU’s.  Don’t just plan for now – future-proof your solution to cope with the ever changing global business landscape.

VAT Calculation

Both a manual and automated solution come with the ability to calculate indirect tax within your Oracle ERP. However, the capabilities of both solutions vary widely. A manual solution will include the tax rates but will leave the onus to choose the correct tax code on the end user.

Requires User Expertise

A manual solution often requires a highly trained Invoice Clerk to choose the correct tax code for each transaction entered. The AP Clerk will sometime need to verify the tax treatment with the internal tax team.  When faced with a complex regime this process can be time consuming and increases the possibility of user error. An automated rules-based system takes the decision from the user and draws information from Oracle built on tax legislation to apply the correct tax rate to each transaction no matter how complex.

Reduces User Error

A manual solution by definition means the inputting of correct tax codes by the Invoice Clerk. Within a complex tax regime, this could mean the choosing tax codes from a list of hundreds, each with specific variables. This invariably means the chance of human error is high, ultimately leading to non-compliance and possible financial penalties. With a rules-based automated system this risk is eliminated. The tax logic is built upon the legislation and eBTax has the ability to choose the correct tax rate based on a wide range of information, ensuring the transaction always has the correct tax amount applied taking the pressure from the tax team to manually select the correct rate.

Real-Time Analytics

An automated solution that can provide real-time transactional data from Oracle which is drawn from various sources within the ERP. Real-time analytics allows the tax team to track data within seconds of an invoice being processed. This ability to track data allows for more accurate and instantaneous reporting, flags up possible errors/discrepancies and aids compliance.

Tax Compliance Manager tool

One of the many benefits of our automated solution is the ability to run our award-winning Tax Compliance Manager tool (TCM). TCM uses real-time data to track discrepancies within the system. Designed with the user in mind, the tax team can easily pin-point errors, manual overrides, check the transaction and amend accordingly within seconds allowing for total compliance. TCM is an invaluable tool that allows the tax team to be a pro-active rather than re-active force in the business.

Ease of Compliance

Automation has many advantages including; reduced human error, real-time analytics, the ability to track, trace and amend discrepancies, accurate reporting and ultimately compliance. Remaining compliant is key, avoiding costly penalties and ensuring the business is reclaiming the correct tax back from the government. With an automated rules-based solution, compliance becomes a much simpler task. Compare that with a manual solution which requires a highly skilled team, slow business process and increased user error, potentially leaving the business at risk.

Efficient Business Process

A manual solution requires time, expert user knowledge and runs the risk of non-compliance. There is a hidden business cost to a manual solution, the time taken to input tax codes, check them, find and amend discrepancies can all be negated by an automated solution. When eBTax is setup correctly, the tax team become a much more efficient arm of the business.

Samuel Thomas

Samuel Thomas

Business Development Consultant

Sam has a commercial background, with experience in various locations across Europe. Having spent considerable time working and living abroad Sam has gained valuable business experience in a wide range of sectors. Sam’s role as Business Development Consultant is to drive growth, build relationships and provide clients with our award-winning solution for tax automation.

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