Finance transformation as a necessity
The changing business environment is increasingly pushing businesses to look for external assistance with financial matters in more flexible and strategic ways.
Finance transformations are considered as a clear risk and but also opportunities for tax functions. The term finance transformation is a broad term used to describe any change programme focused on the finance function. Generally, there are broadly two types: organisational change and finance system change. Either of these generic change programmes will impact on the tax function’s ability to continue to remain tax compliant as inevitably the data, systems and processes which tax rely on to deliver tax compliance and reporting will be impacted.
It is therefore imperative that the tax function fully engage with the finance transformation.
According to an EY survey[1] released in January this year, the overwhelming majority (81 percent) of companies are more likely than not to co-source some tax and finance activities in the next two years.
In addition, 84 percent of respondents said they are planning to transform their tax and finance business models during the same period.
This is most common among international businesses following a trigger event such a merger for example.
To provide further context, tax relies on data provided by finance functions, systems maintained by finance and processes established by finance. Tax authorities legislatively impose obligations upon senior finance personnel (e.g. SAO in the UK) and require data from organisations directly from finance systems (e.g. SAP requirements, famous ERP). It is clear then that tax, and the wider organisation, can no longer deliver its legislative commitments effectively if it accepts data from finance that is not suited to its requirements, or where the finance processes inadequately support the tax function.
A finance transformation project is the opportunity for tax to define those requirements. A key success factor is the ability of Tax to position itself as a primary customer of the finance transformation programme.
In order to achieve this, some crucial aspects will need to be taken into consideration:
- comfort with the language of finance transformation
- a commitment to working with and influencing Finance leadership and relevant experts
- a clear recognition of the importance of success.
Tax can establish itself in an integrated role in the programme governance, ensure authority to sign off and review project stages and obtain appropriate resources to ensure Tax requirements gathering, design and testing is adequately covered for Tax.
Most of the time, a lot of efforts may be required to define the business case for Tax’s involvement and to bridge the comfort gap experienced between both traditional tax practitioners, and traditional finance and IT practitioners.
Outsourcing tax and finance to focus on strategic decisions
Finance and tax transformations are key to make sure companies stay ahead of the market and on point with evolving regulations. Smaller businesses can struggle to successfully cover all areas of finance with in-house personnel.
For example, the current finance staff might be great at forecasting but struggle with other disciplines like audits and corporate tax. Experts in these specific areas can help companies, allowing management to focus on strategic decisions. When finance is outsourced, these experts create reliable financial systems while you focus on core functions and provide leadership and direction for your business. As your business grows, you will be assured that your finances are in a state to grow with your vision and innovation.
Outsourcing CFO services allows companies to take advantage of professional financial strategy and usher in transformational changes. Has your company implemented proper accounting controls, or does it trust its admin to not fall for hacker fraud? The risk of fraud can be reduced when a third-party accountant is present. Hiring a professional with financial expertise means employing an industry expert knows best practices and how to implement them. This includes financial controls like double checking work, segregation of duties, and identifying hacker and phishing emails —all fraud reductions practices.
Outsourced team can be used only when and where you need them. Because you are not hiring someone full-time, you can choose the level of support you need and when. It means increased time and support at critical times like during an audit or while selling your company.
Finally, hiring a specialist can increase stakeholder confidence. Investors and lenders will have a positive reaction when they know you have a financial professional on your side.
To learn more about how your business could benefit from outsourced finance, please do not hesitate to contact us at inquiry@serviceonnewgrounds.com and visit our website at https://www.serviceonnewgrounds.com
[1] https://www.ey.com/en_gl/tax/realizing-the-value-of-your-tax-and-finance
