Maximise S/4HANA success with advanced SAP tax integration

SAP S/4HANA offers powerful functionality, and when paired with advanced tax integration, it becomes an even more powerful tool for managing complex tax scenarios. Keeping your tax determination fully optimised and allowing you to achieve the highest levels of tax management efficiency and compliance.

In this blog Roger Lindelauf explores some of the benefits of using a certified SAP tax integration component alongside SAP S/4HANA.

Achieving touchless automation for accounts payable with an SAP S/4 HANA integration

SAP S/4HANA provides a robust foundation with strong core functionalities, offering an excellent opportunity to enhance and automate procurement processes. Features like Plants Abroad and DRC are valuable, but for advanced tax logic to automate complex tax treatments within procurement processes you should look at implementing a specialised SAP tax integration. One that can seamlessly integrate with SAP S/4HANA to manage complex tax scenarios and achieve compliance. Embracing this opportunity allows businesses to realise the full benefits of SAP S/4HANA and achieve a truly automated procurement process.

The ultimate goal of automating procurement processes is to create a touchless, quicker and more accurate Accounts Payable (AP) workflow. Specialised integrated tax determination in SAP eliminates the need for manual tax interventions, reduces the dependency on staff knowledge of complex tax rules and accelerates invoice processing. The result is minimised errors, optimised costs, and maximised value from automation investments.    

Minimising tax audit risk

Using technology to minimise audit risk presents another valuable opportunity for businesses. While some may perceive a tax engine as a ‘black box’ with opaque processes, integrating specialised tax technology with SAP S/4HANA enhances transparency and clarity in tax management.

All relevant characteristics used for tax determination in SAP S/4 HANA can be viewed by users. By integrating a dedicated tax engine with SAP S/4HANA, businesses gain access to a comprehensive log of the data, reasoning and tax logic behind each tax treatment. This enhanced level of transparency not only facilitates consistency and clarity in day-to-day operations but also during audits, making it easier to demonstrate compliance and support tax decisions. Embracing this opportunity can significantly strengthen your audit preparedness and overall indirect tax management strategy.

Address data challenges to avoid e-invoicing failures

When it comes to e-invoicing, the biggest opportunity lies in data quality. While e-invoicing is primarily a technical task that involves transmitting data to the authorities, the accuracy of that data is crucial. If you get the data right, the e-invoicing process becomes straightforward and efficient.

SAP S/4HANA can be enhanced further with a specialised SAP tax integration for determination. Businesses can proactively address data accuracy by mapping end-to-end data flows, identifying critical end points, utilising automated processes and building dashboards to monitor everyday data. This approach helps track anomalies and reduces the risk of errors. With clean and reliable data, e-invoicing can then work seamlessly. 

Given that tax authorities increasingly employ sophisticated methods, such as AI and machine learning, to detect data anomalies, having accurate data is more important than ever. By prioritising data integrity, businesses can safeguard their relationships with customers and vendors and mitigate the risks during an audit. Investing in data quality not only makes e-invoicing efficient but also positions your business well for long-term success in tax compliance. However, without clean, accurate data, e-invoicing just doesn’t make sense. 

Creating tax compliance agility in the supply chain

When businesses integrate tax determination with SAP S/4HANA, alongside fewer errors, reduced maintenance costs and overall improvements in tax compliance, they often report greater agility in responding to new markets and changes. For instance, during the ongoing Russian-Ukraine conflict, shifts in steel and iron supplies affected VAT determination. Because of the disrupted supply of steel and iron, companies were suddenly forced to purchase their raw material from other sources. These changed supply chains required changes to their VAT determination set-up in their SAP S/4HANA. Without flexible systems in place, adapting to such changes becomes a major headache. However, if you have the right systems in place, your business remains agile and can pivot your supply chain to address the tax implications of changes more effectively. In addition, with a transparent tax process, explaining tax determination decisions to authorities becomes much simpler, making audits far less stressful.

Choosing a certified SAP tax integration component

A certified SAP tax integration component, such as Vertex, offers significant advantages for businesses using SAP S/4HANA. Vertex integrates into the SAP S/4HANA environments for a seamless experience without disrupting existing processes. By focusing exclusively on indirect tax, these components provide a higher level of functionality and expertise tailored specifically to meet tax requirements. Additionally, dedicated teams continually monitor and research global tax legislation, so the solution remains current and compliant, enabling businesses to manage their tax obligations within SAP S/4HANA.  

Managing total cost of ownership

Do you really know how much tax determination in SAP is costing you? The hidden costs of managing complex tax scenarios with VAT within SAP, including all the workarounds, are often not transparent or measured. This can make it difficult to compare options and build a solid business case for investment in a tax engine, where the cost is there in black and white.  

Start by evaluating what you are currently spending on VAT determination in your SAP system and then what it will cost when you move to SAP S/4HANA. Compare those figures with the cost of a dedicated tax engine. Vertex offers an ROI tool to help with this, tailored to the VAT and indirect tax rules that matter most to your business.  

Embracing specialist tax technology for agile tax compliance

It’s clear that integrating proactive, specialist tax technology into SAP S/4HANA upgrades is beneficial. Automation will streamline processes and significantly reduce errors further. However, as a business your challenge is also an opportunity. Take the chance to make sure tax determination systems remain fit for purpose and flexible over time. Rather than relying on static scenarios, adopt technology and systems that are agile and can adapt to evolving tax legislation in real-time and over time, future proofing your business for what lies ahead. By embracing and implementing a specialised SAP tax integration that champions flexibility, you can improve your tax determination, compliance and agility – staying ahead in a shifting tax landscape.