For any twenty-first century enterprise, customer experience forms one of the most integral parts of its operation. Businesses have leaned on customer experience to drive positive reviews which turn their customers into brand evangelists. In an era where there are so many places a company needs to address concerning customer experience, one expects that some of these methods will fall short. One of the areas that is relatively simple to fall prey to poor customer experience is the arena of taxation.
Sales tax and VAT need to comply with specific state regulations. However, these regulations are complex and vary from state to state. Accuracy in their tax calculation is one area that companies need to be vigilant in maintaining, as a negative customer experience can happen when the estimated tax doesn’t agree with what the authorities expect. Taxation compliance needs to be an integral part of customer experience, but local legislation is making that even harder.
Most recently the Pennsylvania Department of Revenue had to post on social media that if a company from the state sent a notice to customers from out of state that they may owe tax on purchases made in Pennsylvania, it wasn’t a scam, and the company was just trying to comply with Pennsylvania’s new stance on sales tax. Immediately we can see how this can cause a problem with customer experience. The customer doesn’t like having to pay for something they’ve already paid for (and probably previously used). An experience along these lines draw ire from customers who may accuse the company of “hidden fees” among other things.
Simplifying the System
The balance that one should be looking to maintain in an e-commerce system is complexity and compliance. The system, according to lawyers, must be simplified and easy to use, but at the same time, be able to comply with all compliance laws. Simplifying the system is as easy as addressing a few questions:
1) Is the System Aware of all Current Tax Rules?
Regional and international rates of tax change from quarter to quarter. Automatic updating of these tax rate changes allows professionals to focus on more important details. Automation reduces the complexity of the system while keeping its system tax compliant.
2) What is Needed to Link the Tax System to the E-Commerce System?
In a lot of cases, there needs to be a custom approach to joining the sales tax and VAT system to the e-commerce system. Integrations may be complicated and could take a lot of time. There are ways to automate this integration, but the professional may need to deal with some parts of the combination manually. Less manual work needed means the system is less complicated by design.
3) How Accurate is the Tax Calculation on the First Instance?
Ideally, a system should calculate tax redundantly, at multiple points, to ensure that the calculation is correct. Automation of this calculation removes the possibility of human error. However, the system depends upon the data used in those calculations and the steps taken to apply the taxes to be correct.
4) How does Sales Tax Operate with Identification and Jurisdiction?
Who gets charged what tax rate is the crux of the entire compliance issue. Automation of the process to ensure that one applies the right jurisdiction to each transaction is critical to the success of an integrated simplified taxation compliance system. As a new customer enters the system, the software should detect the location and define the jurisdiction based on a set of rules as determined by the local revenue authority.
Integration without Complexity
SAP and Vertex, in combination, offer an ideal method of creating a robust integrated system for managing tax. The Vertex tax calculation integrates with the SAP Commerce Cloud to develop tax automation that remains dedicated to a simplified system structure without sacrificing compliance. In this way, a company can rest assured that their tax systems and the jurisdictions for each transaction are up to date and accurate.