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Author's profile photo Swati Singh

Avalara and Vertex Integration in SAP Business ByDesign

Business ByDesign is a Cloud ERP Software as a Service, which caters to small and mid-sized businesses. Taxation is an important part of any such solution. The system provides the flexibility to the end-users to maintain and update tax rates and configure tax rules as per the requirement in a specific tax area.

The tax rates are maintained in Business Configuration-> Overview-> “Tax on Goods and Services”-> “Define Tax Rate Schedules”.

When done for countries, this maintenance looks simple. However, in case of the US, this maintenance becomes cumbersome for businesses because of the plethora of tax rates and rules which vary from state to state, county to county, district to district and even at lower levels of jurisdictions, frequently over time.

ByDesign users currently maintain the US tax rates manually in Business Configuration-> Overview-> “Tax on Goods and Services – US”-> “Define Sales Tax Rate Schedules”.

These US tax rates are maintained per Jurisdiction Code within the system and change frequently. There are more than 50,000 tax jurisdictions in which tax rates may potentially need to be maintained (e.g. larger user companies).

The proposed solution is to integrate tax calculation in business documents with an external tax providing service, such as Avalara AvaTax or Vertex Inc. These tax providing services, maintain tax rates, applicable on sale or purchase of goods and services across the jurisdictions in the US. Integration of an ERP suite like Business ByDesign with an external tax provider eliminates the maintenance of huge amounts of tax rates and compliance to tax rules, thereby saving the overhead caused to businesses.

The presence of third-party software for getting appropriate taxes for transactions within the system has the following strengths:

  • External tax determination service removes the administrative burden of maintaining jurisdiction tables and tax rate tables because tax rates and jurisdictions are maintained by the tax providers.
  • External tax determination service minimizes the configuration effort as compared to that needed with internal tax determination.
  • External tax determination service is generally capable of more accurate tax determinations because of its comprehensive up-to-date data storage.

SAP Business ByDesign provides a point-to-point seamless integration with taxation software in the US namely (click the below links to visit the blog for details on configuration or set up of respective external tax providers): –

  1. Avalara AvaTax
  2. Vertex Inc.

The features of Product, Business Partner, and Freight taxability are also supported within the ByDesign system based on some configurations as explained in Product, Business Partner, and Freight Taxability for Avalara.

For more details, on recent enhancements made in the integration with external tax vendors, have a look at the Release Highlights video.

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