Why your POS system needs real-time tax calculations in 2023

As inflation and other economic challenges continue to impact consumer spending behavior, seamless and exceptional service for consumers will remain critical in 2023. If not provided, customers may look elsewhere.

Supporting a steady checkout experience is no exception, especially when it comes to fast and simple tax calculations at the point of sale. In fact, in our new Avalara Tax Changes 2023 report, we explore how in-store sales systems must quickly identify and access shipping and billing information for loyal customers. Moreover, businesses need to ensure their point-of-sale (POS) systems have offline capabilities because of spotty service and internet outages. POS systems with an offline mode allow businesses to accept credit card transactions even while not connected to the internet.

With price sensitivity on the rise, the risks associated with manual tax calculations could make or break either acquiring a new customer or retaining a loyal one. Businesses can reduce this risk by adopting a tax calculation engine that can integrate with their existing POS system.

Avalara integrations with retail POS systems

One example of this is Avalara’s SAP Customer Checkout. SAP’s intelligent POS software not only has online and offline capabilities but can integrate back into a business’s existing ERP system. SAP ERP customers already using Avalara can use the same tax functionalities in SAP Customer Checkout.

One company taking advantage of the new integration and featured in SAP’s recent product expansion announcement is Leica Camera AG. “All sales transactions within the store are now automatically transferred to SAP ERP and all sales tax rates based on several thousands of different tax codes and tax jurisdictions are calculated by the external tax provider Avalara in real time,” says Jan Zuschlag, project manager of POS Systems at Leica AG. “Overall, it was a successful implementation project. And this was only possible due to the strong collaboration between Leica, Avalara, and the responsible SAP team.”

Businesses benefit from more than just Avalara’s automated sales tax calculations in SAP Customer Checkout; customers can also exempt specific transactions, validate addresses, add tax hint codes to articles and article groups to help determine the proper tax rate, enter shipment information and tracking numbers, and much more.

Importance of real-time communication between your ERP and POS system

This latest Avalara integration is one of many advancements Avalara is making with SAP solutions — which include SAP S/4HANA integration on SAP BTP — that helped us win a 2022 SAP Pinnacle Award. The SAP Customer Checkout integration is another way to help SAP customers achieve automated tax compliance.

“Having seamless, online, offline POS-to-tax-engine integration is critical,” explains Melissa Metcalf, Senior Director of Enterprise Solutions at Avalara. “The integration between SAP Customer Checkout and Avalara goes one step further and embraces the RISE with SAP principles of simplicity. Avalara is the tax engine that can link all your commerce systems thereby simplifying your IT infrastructure.”

Retailers no longer need to worry about whether they have accurate tax data in their ERP system or face the burdensome processes of entering new tax information into their ERP system. With the data flow from SAP Customer Checkout to an ERP, tax calculations happen in real time.

We’re excited to see the continued success of the new Avalara integration with SAP Customer Checkout and to help retailers achieve fast and automated tax compliance directly from their POS system. Read more about our partnership and capabilities with SAP.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.