Increase revenues or reduce costs and expenses, so that earnings are improved

Definition of ‘hidden factory’ or ‘hidden operation’ : the rework and cover-ups, the hours and days of wasted time in a company of people who constantly correct mistakes (unnecessary rework). The objective is to make the hidden factory visible (measure/calculate ROI) and as a result, return precious time and money to the business.

When an incorrect VAT result is caused by the incorrect data in the Purchase Order (PO), the remediation takes place via updating the PO with correct data and re-processing the related transactions (goods receipt, etc). Such a process causes workforce inefficiencies due to the hidden factory. 

It could be about extra man-hours, additional costs due to rework (e.g., creating credit and debit notes) and retrospective corrections and disclosures. 

Some other examples:

  • How much rework is required before numbers received from finance systems can be used?

  • Does the process of preparing and compiling the client’s VAT return take more than 5 man days? (starting from the moment of VAT-data collection until the VAT return is approved and filed).

  • Are manual adjustments made to ERP figures before inclusion in VAT Returns?

What do we offer

During an assessment of any solution we determine the amount of increase of workforce efficiency, how much rework is avoided, risk exposures are decreased but as well how visibility and awareness are improved by which the tax function is able to set better priorities.

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Take aways 

Formal support and active involvement of senior management

Optimum process improvement or business transformations will not likely be realized by the sum of individual independent efforts.The risk is that individually everybody knows what needs to be done within his or her own area of expertise, but what is lacking is overall direction and thus progress.

Set up a project plan

  • Set up a project charter that will take effect preferable during feasibility but ultimately during design
  • Write a business case and problem statement
  • Define scope of the project
  • Define objectives and goals of the project
  • Involve stakeholders and define priorities
  • Set measurable milestones
  • Ensure that the right sponsors provide buy-in.
  • Identify (project) risks and how to manage them
  • Jointly validate and refine the project plan and develop a roadmap to success
  • Hold regular meeting to track progress of the various work streams

Efficient process

A process that achieves the end result with minimum time and effort, and for minimum cost.

Lack of visibility

Employees that do not know a problem exists because their own or overall interactions are not looked at critically.

Value of a project or solution

Imagine how much you could save if the problem was completely eliminated. How long does this process take within your organization and what will be the amount of annual saving (i.e. Return on Investment period) after implementation of the solution at hand?

Bottom line saving

How changes eliminate wasted time, resources, and money and the completion of improvements(s) adds a specific amount to the bottom line (reduce expenses):

  • Less resources needed
  • No rework
  • Improves working trade capital
  • No disruption of the business
  • Lower external advisory costs
  • etc.

How projects or solutions increase revenues or reduce costs and expenses, so that earnings are improved.

Process improvement

Reduce both time and cost in tax processes, improve quality and reduce risks.

Time spent on compliance

Does the process of preparing and compiling the client’s VAT return take more than 5 man days? (starting from the moment of VAT-data collection until the VAT return is approved and filed).

Stakeholder analysis

A process to determine who will be affected by the outcome of a  project or solution.

From concept through completion and beyond

VAT should be considered in every aspect of the process, from concept through completion and beyond.

Managing by design

Looking at any process or transaction from end to end and factoring in all the requirements and controls essential to designing and optimizing a compliant VAT process.

Global tax environment is in a state of fast change

The key to success in the management is the ability to translate tax knowledge into workable business processes.

Size of the tax function

The tax department consists of the right number of tax personnel and the right level of skills and capabilities.

Tax team management

Creating and maintaining an efficient, effective, pro-active, highly skilled tax department identifying opportunities and managing tax risk and thereby creating value

Employee development

To develop and apply a people development, recognition and retention model and to allocate resources in line with employee skills and prioritized business requirements.

Individual career development plans

Individual career development plans created and maintained and career paths for tax professionals to senior roles within and outside tax department encouraged.

Contributing value to internal customers

The added value to involve the tax department is understood by internal customers (e.g. business, legal, procurement, supply chain, etc).

KPIs and measurement

The efficiency and effectiveness of the tax department is periodically measured and compared with financial and operational KPI's. Interaction with the business is evaluated and improvement points are identified and action plans executed.

Measure cost effectiveness

The cost effectiveness of the tax department is periodically measured. Outsourcing is considered as an option for routine work.

Quality review

The quality of the output of the tax department is periodically assessed both internal and by external parties (internal audit / independent testing / external parties).

Tax planning

A systematic approach exists to tax planning using consistently applied criteria and sufficient consideration is given to the extent and type of work carried out by external advisers. Tax planning is applicable to cash flow planning and impact analysis of changes in business and tax laws.

Resources and budget

The resources and budget is aligned with the outcome of the tax risk assessment: tax resources spent most of our time on high risk areas. Ensure that tax department has sufficient resources and budget to fulfill its role and carry out the corresponding responsibilities.