INSIGHT ARTICLE |
Co-sourcing and automation are frequent go-to solutions for enhancing operational efficiencies and affective resource management. However, there are lots of important questions that need to be addressed before deciding on an approach. No one size fits all.
What are the true needs of your tax function?
The determination of what a company needs in co-sourcing is a process where you need to understand what everybody does on a day-to-day basis. Who does it? What are they doing? It’s not what everybody believes they’re doing, but actually sitting down and documenting what they’re doing—from the top, the leader of their tax function, to what all the staff members are doing.
You’ll also want to identify the areas that can be realigned or rerouted so that your tax function can focus on what’s most important. There’s a few other things to consider such as sales tax, state taxes, incentive documentation or those non-tax areas such as unclaimed property.
Will co-sourcing be more cost effective for your business?
Co-sourcing is often a more efficient way to address your tax needs, especially as it relates to specialty areas where you can access the specialist you need in the right amounts and at the right time and in the right balance.
A co-sourcing function should be most likely a blend of both what the company has, as well as the resources that are needed outside. As the company grows, expands, becomes more complex or goes into areas that are new to the current staff, while they can hire people to deal with the volume, they may not be able to hire the necessary people to deal with the complex issues that will show up.
How do you know if co-sourcing is working well?
You’ll know you have a strong solution when you get buy in from all stakeholders involved, and that means both the C suite and the tax team. If you don’t have that buy in, you need to get it.
A strong solution means hammering out clear, documented responsibilities. That up-front effort will pay huge dividends down the road.
And you’ll be able to focus on your strategic goals knowing that your tax function is well aligned. The tax function is working with the other finance functions, C suite is being informed and the co-sourcing people are helping with the functions within the company. If it’s working well nobody, makes complaints.
The last way you know that the co-source arrangement is working is that the strategic plan of both the company and the tax department and the tax planning is being effectively implemented and it’s showing up on the financial statements as well as in other areas of the business.
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This article was written by Gretchen Valentine, /content/mcgladrey/en_US/about/profiles/ording-tom and originally appeared on 2021-09-16.
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