How to steer your reporting team through the complexities of today
We follow the news or see it in our daily life. Post-COVID-19 the world is not only struck by war, but also struggling to get back to normal in almost every part of life. Some things are just not the same. Many predict the current rate of inflation combined with increasing global interest rates will inevitably lead to a recession. Companies face delays in provision of raw materials resulting in higher cost of business or lack qualified employees.
In this blog, Frank Metsemakers shares his observations on these developments and how they impact tax and accounting reporting teams across the globe.
When speaking to CFOs and tax directors across the globe, the nature of conversations and the typical topics of discussion have changed due to these developments. I see reporting teams currently stuck between that so-called “rock and hard place” when talking about their current and future reporting cycles:
- Teams lack the capacity to fulfill all reporting deadlines across the globe. There is insufficient qualified personnel and proper automation of reporting processes is suboptimal; and
- The amount and complexity of reporting requirements is increasing. Only from a global tax perspective all we need to do is look at initiatives like Pillar I, Pillar II, DAC7 and ESG requirements.
The “hard place”:
3. The increasing cost of doing business and the looming recession put pressure on the budgets of these reporting teams.
We see clients decide to use the above challenges as a valid but also necessary reason to look at their reporting process. By acting now, they have time to get their reporting process “recession and capacity proof” for everything that is coming their way in 2023.
From my conversations and experiences, I detect five basic steps clients use to steer through the complexities of today:
- A kick-off conversation: A conversation about your current reporting process. Simple but crucial questions start this conversation:
- Are we compliant and how do we know we are?
- What are our costs of reporting and how much time does it take?
- What is the reason for any non-compliance in certain areas?
- Do we have the capacity to handle upcoming reporting?
- Do we have a standard process for similar reporting requirements?
- Are there opportunities for technology and automation?
- The “as-is” process: A session with your entire compliance team focusing on a specific (part of your) reporting process to map the “as-is” situation. The goal is to see if your outcomes and expectations are backed up by data and the input from your reporting team. By involving the entire team valuable input is gathered, bottlenecks are identified, and your team is immediately motivated to work on improvements.
- The “to-be in 2023” process: After the “as-is” process you can determine which parts of the process should be safeguarded and which elements are classified as “waste” and therefore should be eliminated. Through these three steps, the aim is to come to an improved process for 2023. Typical actions we see that can help you optimize reporting processes are:
- Create an overview of all global reporting formalities.
- Combine multiple areas of reporting into one process.
- Think about monitoring, standardizing, and transforming these processes.
- Work towards an end-to-end reporting model. Not merely focus on deliverables, but on the end-to-end process including location and quality of underlying data.
- Assess the overall setup of your global tax function and reporting team(s).
- Make the best decision between in-, co- and outsourcing of reporting.
- Make sure your reporting process is ready to “follow the business” (acquisitions, foreign expansions, new lines of business and/or IPOs).
- Implementation: Implement and roll-out of your preferred compliance model. By having this conversation now, you can be ready ahead of 2023.
- Continuous improvement: Implementation of a new to-be process is just the first step. The aim should be to repeat these conversations and continuously keep improving your reporting process.
Over the past months I’ve been having great conversations with clients on how they aim to improve their reporting processes. We share good practices and of course assist along the way. My advice is to start small and focus on one or two reporting processes. I am convinced that by taking a step back to look at the road ahead, you and your team can jointly work towards the best possible reporting process for the future.
Frank Metsemakers Aysha Sammy
Senior Tax Manager Director