How global tax teams are saving time and money with automation

Check engines. Commence countdown. Project “initiate automation” has begun.

Many tax and finance departments still handle routine tasks manually, but more and more are automating day-to-day accounting, tax, and finance processes. And guess what? A majority of European and North American business leaders surveyed in June 2023 report being most efficient in areas they’ve automated.

The survey was conducted by Hanover Research to find out 1) the top challenges finance and tax departments face today, 2) their future strategic plans and priorities, and 3) how technology is helping them achieve their goals. Among other questions, survey participants were asked:

• Which finance/tax responsibilities are the most time-consuming?  
• To what extent has your company automated tax/finance activities?
• How efficient is your tax/finance department?
• How is automation improving efficiency?

Read on to discover how they responded.

For about a third of respondents from both sides of the Atlantic, budgeting and forecasting topped the list of “most time-consuming” activities. Financial planning and analysis and financial modeling also eat up a lot of time.

There were some interesting location-based discrepancies. Tax management was a “most time-consuming” responsibility for 29% of North American business leaders polled but only 14% of surveyed Europeans. Bookkeeping was also far more likely to be time-consuming for North American respondents (26%) than European respondents (6%). And while 29% of European survey respondents said strategic decision making was time-consuming, only 7% of North Americans surveyed said the same.

See what you make of the numbers.

The survey shows many respondents still handle a host of tasks entirely manually or mostly manually. Yet increasingly, they’re finding it pays to automate.

Managing payroll, producing financial statements, and managing receivables and payables are the tasks most likely to be automated. This should come as no surprise. It’s been possible to automate payroll services for decades, and automation can reportedly reduce payroll processing costs significantly. Automating the management of accounts payable and accounts receivable can cut down on tedious data entry tasks, improving accuracy while saving companies time and money.

Reconciliations, researching and calculating tax rates by jurisdiction, and preparing and filing sales tax returns were more likely to be managed manually, according to the Hanover survey. But a growing number of companies are discovering the benefits of automating these necessary and time-consuming processes.

Take Bottomline Technologies, an Avalara customer that provides software-as-a-service solutions for domestic and international payments, cash management, regulatory compliance, and other essential tasks. Before implementing Avalara’s tax compliance suite, Bottomline struggled to keep up with ever-changing sales tax rates at multiple regional and local jurisdiction levels. “The process was very manual and time-consuming,” explains Courtney Sullivan, the company’s tax accountant. “Having to Google an exact address to find all of the applicable tax rates is a big pain, and keeping up with the constant rate changes is very hard to do manually. You’re climbing a mountain that keeps growing.”

Back-end compliance tasks can be equally burdensome, especially for companies that do business internationally. “The last thing I want to do is to spend my precious time doing things like booking tax debits and credits in our accounting records,” explains Jason Macatangay, Chief Financial Officer of Threadless, a global ecommerce marketplace and Avalara customer. Macatangay also appreciates the support Avalara provides with international sales tax collection, customs and duties, and the like. “Being able to offer the added convenience of collecting those taxes and duties up front is a nice enhancement for that customer set.”

This table shows which key tax and finance activities have been automated by the survey respondents, and which are still handled manually.

If the survey results are to be believed, there’s lots of room to improve the efficiency of tax and finance departments. With few exceptions, no more than a third of respondents (give or take) find their finance/tax departments to be either “very efficient” or “extremely efficient” at any one task.

Overall, producing financial statements, managing payroll, and managing receivables and payables lead the efficiency game. Monitoring compliance programs also comes in strong. Far fewer respondents identified “managing exemption certificates” as a task “very” or “extremely” efficiently handled by finance and tax teams.

Hanover points out some interesting geographical discrepancies in the full report. It notes that more North American respondents (87%) than European respondents (61%) described their tax and finance departments as very or extremely efficient at producing financial statements. Yet far fewer North American (37%) than European (60%) respondents think their tax/finance teams are handling exemption certificates efficiently.

Check out these survey results for a more granular view of responses from all geographic areas.

As noted above, managing payroll, producing financial statements, and managing receivables and payables are the three tasks most likely to be automated, according to the Hanover study. And guess what? Per the survey, these are three tasks tax and finance departments tend to handle efficiently.

Few of the business leaders surveyed have automated any aspect of exemption certificate management, and just 3% of accounting, tax, and finance professionals have fully automated exemption certificate management. And wouldn’t you know it? Survey respondents, especially in North America, identified exemption certificate management as the least efficient activity for their tax/finance teams.

Coincidence? Probably not.

Many of the business leaders who participated in the survey seem to recognize the benefits of automation. Hanover found that 71% of the survey respondents are investing in more tools and solutions to become more efficient overall, while about half are automating and optimizing processes, increasing cross-team collaboration, and offering more training.

As for tax and finance teams specifically, 69% are investing in technology to close efficiency gaps, while 45% are automating and optimizing processes.

Survey methodology

In June 2023, Hanover Research surveyed nearly 400 managers, directors, vice presidents, and C-suite executives at companies based in Canada, Denmark, Finland, Iceland, Norway, Sweden, the United Kingdom, and the United States. More than half (57%) of those surveyed work for organizations with 1,000 or more employees, and 49% are at companies whose tax/finance departments have more than 21 employees. Most of the businesses participating in the survey sell internationally.

Want more insights? Read Businesses are investing in financial technology for the future, and get the State of finance market trends report.