More Tax Leaders Turning to Digital Transformation: Report
Tax leaders and chief financial officers alike are ramping up investments in digital transformation technologies to help their companies adjust to hybrid work models and the new economic realities brought on by the pandemic.
These were some of the findings in a recent PwC Pulse Survey, which examined business leaders’ evolving approaches and strategies on a host of topics, including the overall business environment, employee engagement, ESG and technology deployment.
The survey found that many tax departments have recognized the importance of digitizing their functions and are moving away from older, manual processes toward the adoption of tools that automate routine but time-consuming functions and processes. In fact, 84 percent of tax respondents said they have a concrete approach in place for how they will digitize their tax function.
More than one-quarter (27 percent) said this will include an increased investment in cloud and automation technologies. About one-fifth (21 percent) said they are redesigning processes, while 18 percent plan on leveraging their internal enterprise IT teams to help with their digital transformation efforts.
Getting a Digital Transformation Head Start
The survey’s authors recommended tax leaders take a proactive role in this area to realize their digitization goals as quickly as possible.
“Whether encouraging and incentivizing employees to develop automations or leveraging trusted pre-built automations, tax leaders can get a head start on their digital journey and easily show the impact to the business, saving weeks if not months of time.”
Many tax leaders are also keen on utilizing automation technologies to a greater extent in the months ahead. When asked to choose among various strategic business changes they are making based on their experience throughout the pandemic, 47 percent said they are making changes to their processes, such as automation and documentation, to make them less dependent on employee institutional knowledge.
The report’s authors cautioned against ignoring the need to leverage advanced technologies to improve a company’s tax function, saying that those who do so “could be missing the bigger picture” in a landscape forever changed by the pandemic.
“Tax leaders who plan to maintain the status quo going into the next year and ignore opportunities to bring extensive transformation to tax may also lose their chance to build a more resilient tax function during a crucial time.”
Rather than being perceived solely as an unwelcome impediment to progress, the upheaval caused by the pandemic, the authors suggest, can in fact act as a catalyst for positive change within organizations. It can prompt them to “reassess processes, reconsider team alignments, and allow for a more streamlined tax function overall.”
Tax Departments and Remote Work
Remote work has been a key feature of the employment picture for most companies since the pandemic first gripped the world in March 2020. This has had a big impact on tax departments, with the survey finding that 75 percent of tax respondents said they are accounting for the implications of employees who are working remotely across state or country borders in some way. Most are considering potential salary adjustments for fully remote employees.
The report authors stressed the need for cross-department collaboration during these unprecedented times in order to effectively manage risk as they support a hybrid work strategy.
“HR, mobility, legal, corporate tax and payroll, among other functional areas, will likely need to break down the silos and come together….Rather than feedback on the back end, organizations can allow tax to come into the conversation early to avoid unanticipated but likely tax assessments.”
CFOs Embrace Digital Transformation
Tax leaders aren’t the only executives looking toward digital transformation as a key means of enabling this new world of work brought about by the pandemic. Chief financial officers are also focusing on increasing their use of cloud and analytics solutions, among others, to help their firms be ready for the future of work.
When asked which areas they were increasing investment in over the next year, 68 percent of CFOs named digital transformation (cloud, analytics), while 67 percent also checked cybersecurity tools and training. These were the number one and two items cited by respondents.
This commitment by CFOs to technologies like cloud and automation is nothing new. Near the beginning of the pandemic, in June 2020, PwC found that 56 percent of them said that their tech investments would make their organization better in the long run.
“Their bets are paying off,” wrote the report authors, “as their investments helped make their companies more agile and able to handle the huge shift to remote and hybrid work.”
The survey also found that CFOs are more comfortable relying on technology to facilitate remote work than were other groups that were polled - 44 percent said tech isn’t a challenge versus 26 percent of all respondents.
Helping tax leaders and finance departments realize new efficiencies and leverage data-driven insights through digital transformation is a key focus for Caseware. Our ReviewCompTax solution intelligently combines engagements into one workflow, allowing data to flow through to financial statements and tax returns alike. This means engagements are completed faster with automated processes, real-time collaboration and value-added insights. Learn more about how Caseware ReviewCompTax can further your firm’s digital transformation journey.