Modern technologies such as real-time reporting, artificial intelligence, and machine learning have reshaped the way taxes are managed and paid. Old-school tax systems are overly complex, inefficient, inequitable, and costly to administer. Members of your finance team may be skilled at business valuation or tax strategy, but the fact is that they only do that 10% of the time with outdated tax payment software. Using automation solutions can flip the script so your employees do the more valuable work 90% of the time.
In this article, you’ll learn why finance companies need tax payment automation software, what the trends are, and how you can automate your tax payment routine.
Why Financial Companies Need Tax Payments Automation Software
Tax payment automation software calculates and files tax documents, effectively doing the tax work for you. This frees your finance team from cumbersome manual processes and allows them to focus on strategic decisions. Here are the key benefits of automating your tax payment system:
• Reduced Error Probability
No matter how professional your finance team is, they are still humans, and humans are prone to errors. By some estimates, 80% of manually created spreadsheets contain errors and information gaps. Using multiple manual systems for tax payments and tracking deadlines only doubles your risk of error. Integrated tax monitoring software automates data entry and gives you a single source of data.
• Time Saving
Manual tax calculation can be a major time and labor sinkhole. With sophisticated automated taxes tools, it is no longer necessary to do it manually.
• More Consistency
Although best practices exist within organizations, many finance team members still have their own way of doing things. Even basic processes may differ from person to person. Tax system automation provides more consistency across teams and reduces the risk of errors and information gaps.
• Real-Time Data Collection
Automated, real-time data collection extensively increases the utility of business information and provides actionable insights. It enables employees to identify and eliminate problems and inconsistencies at an early stage.
• Reduced Likelihood of Fraud
Automated tax payment apps leave no chance for dishonest employees to commit fraud. Standard financial tasks are made much safer.
• Simplifying Tax Compliance Requirements
Automation dramatically simplifies the steps required to meet tax compliance requirements. By reducing the time spent tracking deadlines, automating your tax administration tasks, and having your invoices paid automatically, you streamline your processes and give your finance team more time to develop strategies to reduce your tax bills.
Technology Trends in Tax Payment Automation Development
• Smart Process Automation (SPA)
When it comes to a tax tracking app, SPA incorporates machine learning and allows repetitive tasks to be automated. Not all of these tasks are easy to solve. There are exceptions that cannot be answered with simple business logic and require a more cognitive answer. This is where machine learning comes in. SPA doesn’t just do tasks, it thinks and learns how to perform a task by relying on patterns and inference. That is, the computer can predict how a human will react in certain cases. In this way, the activity is performed with a higher degree of accuracy and speed.
• Digitized Paperwork
Gone are the days when legacy processes required physical handling and manual document extraction, slowing down workflow. Now, team members or service providers can scan documents and turn them into electronic ones. SPA processes extract all necessary data, structure it, and send it to the tax system automatically. No more messing with paperwork and dusty document archives – it’s time for efficient and streamlined document management.
• Flexible Reporting & Audit Trail
Reporting is one of the main tasks that eat up your time. With automated tax software, you will never be caught unprepared. It gives you live access to transactions and past reports in seconds.
• Print-to-Mail Automation
Outdated mailing processes with spreadsheets for addresses, manual check requests from accounts payable, printouts of required returns and other accompanying information reduce the effectiveness of your team and your business as a whole. Instead, you can streamline and simplify mailing by making it digital. Tax automation software stores your tax information in a database and electronically connects your office directly to a print and mail center. The mail center completes your mailings for you according to your instructions. Automation reduces the risk of human error and the likelihood that you will incur penalties. It gives you greater transparency in your mailings, and most importantly, it’s more cost-effective for your business.
Steps to Automate Tax Payments
✅ Do the research and prepare a plan
It’s very important to involve stakeholders and users in the planning phase to make it effective. The main target areas to be discussed are:
• Potential challenges that could hinder the implementation of the tax software. For example, regulatory compliance. Automated tax systems should comply with both local and international tax regulations if the company operates internationally. Tax payment software should always be up to date without the need to update monitoring or implementation.
• Key features you need. The client and service provider should discuss which features are basic and need to be implemented first and foremost, and which features are nice-to-haves.
✅ Consider the main features
Although the feature set varies from company to company, there is a core functionality:
✔️ Tax Calculation – enables identification of the most appropriate tax treatment for transactions in real time, without interrupting the customer’s checkout flow.
✔️ Tax Collection – an instant collection of General Sales Tax (GST) and Value Added Tax (VAT) directly from payment providers.
✔️ Real-Time Tax Rates – accurate, up-to-date tax rates in the local jurisdiction.
✔️ Variety of Payments – support of different payment types: subscriptions and one-time transactions.
✔️ Reporting & Audit Trail – clarity in all tax records including historical data to current findings.
✔️ Automated Submission and Remittance – complete automation of the taxation process, without stamps, paper, or checks.
✔️ Self-Service Web Portal – a platform that is easy to use for people with different computer skills.
✔️ Print-Ready Tax Forms – ready-to-sign forms with accurate, up-to-date tax rates.
✔️ Automatic Invoice Delivery – synchronization of data from payment providers and delivery of PDF tax invoices to your customers.
✔️ Fill in Tax Returns – automatic creation of sales tax returns.
✅ Select additional features
✔️ International Support – users can select the regions and countries for which they want to provide VAT and GST liability.
✔️ Additional Integrations such as tax accounting automation systems, ERPs, and CRMs.
✅ Find the software development company
It’s important to find a trustworthy software development provider that has extensive experience in fintech in general and financial process automation in particular. Itexus has over 10 years of experience advising clients on the best possible tax automation solutions, and financial software development, including tax payment system development, and third-party services integration. We know how tax payment systems work in different countries and states and can provide the right level of security for all operations.
Cost reductions, efficiency gains, and increased accuracy are the major drivers for financial organizations are integrating automation into their daily processes such as data entry, data verification, and reporting. If you are looking to streamline these processes, get in touch.