Extend the Power of Your ERP with Sage Sales Tax & Document Management

Editor's Notes

• #4: Tom Bemiller is a founding employee and Strategic Alliance Manager with Avalara, the leading provider of sales tax and compliance automation services in the cloud. Tom has been actively engaged for 30 years helping businesses solve problems through automated technological solutions. At Avalara, he has assisted companies of all sizes identify problems that keep them out of compliance with current tax regulations so they can improve processes that help ensure full compliancy. Laura Lechien is Altec’s Sales Director for the Northeast area. She has over 15 years of experience in workflow and content management and is adept at equipping organizations with state-of-the-art tools and knowledge to successfully streamline business processes and drive down costs. Most of you know Kellie Pitt as your customer success manager at BrainSell. She is also our executive vice president of ERP and was name a top women influencer in ERP technology by Solutions Review.
• #8: SAM Partner Staff Development - 2018
• #9: When most people thing about sales tax compliance, they focus on calculating the tax and specifically about using the correct rate. But rates are just the tip of the iceberg. Let’s take a minute to explore some of the key sales tax challenges for your business.
• #10: The first question to answer is “Where do you have the obligation to collect the tax?” Nexus is a concept that a state, under their laws, can declare that you have enough of a business presence in their state so that they can force you to become a tax collector for them. Each state has it’s own rules for establishing nexus, and the rules go well beyond physical presence. Tightening rules for nexus obligations is a major trend to address their loss of tax revenues due to out-of-state ecommerce sales. They generally look at facility location, sales and service people in state, product, either rented or leased, and activities in state like sales visits, training, trade shows. They also consider any Inventory that’s located in the state and affiliates sellers. Many states argue that companies who are able to generate revenue without any physical connection in the state still enjoy the benefits and protections offered by that state to other business and therefore should be required to support these benefits through the collections and remittance of sales tax. 
• #11: In June last year, this happened, which only added to the complexities.
• #12: First, a little history: This might be a little wonky, but in March 2017, the South Dakota Judicial Court ruled that the state’s economic nexus legislation was unconstitutional. Then, in September 13, their Supreme Court struck down the decision. The U.S. Supreme Court agreed to take up the case in January 2018 and the ruling on June, last summer, was in favor of the state. So basically, all SCOTUS did was flip the decision back to the state courts. By doing that, since the SD Supreme Court already determined that economic nexus was acceptable, SCOTUS effectively overturned the long-standing physical presence nexus rule from 1992, Quill Corp. v. North Dakota. What does it mean? South Dakota, and in fact all the states, now have the authority to impose sales tax obligations on out-of-state transactions using economic nexus as the basis.
• #13: Historically, states have come up with all sorts of different rules that trigger nexus. There’s affiliate nexus. There’s even “cookie nexus”! And this is just a new way for states to impose a tax collection obligation on sellers. It’s based on revenue or your sales activity in the state. The concept argues that by selling $x or by producing some specific number of sales over a given period in their state, you have created nexus. For instance, the Nebraska legislature introduced a bill that requires sellers with sales > $25k or 200 transactions to collect. If the seller refuses to collect sales tax, it must notify Nebraska purchasers that sales or use tax is probably due, send a notification to buyers by January 31 showing the total amount paid by buyer, and file a statement by March 1 with the DOR. Unlike physical presence, it is based entirely on sales revenue, transaction volume, or both. There are about 33 states plus the District of Columbia who currently have various  “Economic Nexus” rules. And as you’d expect, economic nexus criteria vary by state. Some states look at sales Last year; some look at sales in the previous 4 quarters; and some look at sales over the last 12 months. And the revenue threshold also varies by state. Although it aims to level the playing field between non-collecting out-of-state sellers and in state brick-and-mortar businesses, it becomes another layer of complexity to deal with.
• #14: South Dakota was the first to get permission from the court but many other states are following their lead with similar economic nexus rules. Here’s a visual overview of states that have various nexus laws in place as of April 8, 2019. States in blue have already adopted the idea. Vermont, Kentucky, and Hawaii have laws that took effect July 1st, less than 10 days after the ruling was made. Four states came on board at the beginning of January and we expect most, if not all, will pass legislation this year allowing them to impose this collection obligation. CA will begin collecting in April; VT and PA in July; and TX in Oct. NY will set their date “sometime this year” Avalara.com, choose Resources, then SD vs Wayfair Now you’re wondering, “What should I do?” You’ll need to understand the changing tax obligations. You’ll want to reassess your nexus footprint and register where necessary. If you have a trusted SALT CPA or attorney tax advisor to counsel you, that’d be a great starting point. If you do not, Avalara has an extensive directory of experts you can contact or you can even use our Tax Advisory Services team to determine where you have nexus and work on other tax-related needs.
• #15: So let’s get back to the key challenges. Nexus is not the only concern. Understanding which tax jurisdictions a specific address belongs in can be a significant challenge. There are over 152M addresses that fall into multiple jurisdictions, of which there are over 16k of those. There are 10’s of thousands of rates Millions of product, buyer and seller exemptions And thousands of changes annually <CLICK> And tax jurisdictions tend to overlap. Here’s an example from parts of 3 counties around Denver showing just 6 zip codes. <CLICK> Here you can see how the different jurisdictions are geographically positioned in different parts of the zip codes with the various different rates, and <CLICK> In just 1 zip code, you’ll see 6 different jurisdictions with 9 different tax rates that need to be applied. <CLICK> Clearly, zip codes cannot uniquely define a tax jurisdiction, so using zip-codes for jurisdictional assignment will lead to tax errors. The full mailing address must be used to pinpoint the correct jurisdiction.
• #16: So you’ve figured out where you have nexus and have identified all the jurisdictions your customers are in. But different product categories fall under different rules, and with 1,800 different rules, it’s impossible to keep track of them… Taxability laws are changing. It is essential for a seller to know what is taxable in each jurisdiction to prevent exposure and liability under audit. Product taxability laws are not consistent across state lines—what may be taxable in one state, may be exempt in another. Also, you need to know what is not taxable in order to avoid over charging customers. We recommend a taxability review on your products and services, especially if you’ve added new products or services. Here are some examples of similar products being taxed differently– Indiana– can you imagine WHY nestle crunch is taxable, when kitkats and twix are exempt? Kitkats / Twix have flour so not considered candy – they’re food! Cotton balls exempt (medical device) but cotton rounds are a cosmetic The following industries have varying taxability rules: Software / Hardware Digital Goods Services Medical device / equipment Food / Beverage Clothing / Apparel School Related Products Dietary Supplements …just to name a few. Clothing in NY, PA, NJ, MA Examples
• #17: And on top of all that, some of your customers might tell you they’re tax exempt. This is a problem because: Employees find it difficult to collect them Can add friction to the sales process Collection is important, but not urgent, so not a priority Business process controls to ensure collection often don’t exist Employees are not trained to validate them properly An invalid certificate is just as good as no certificate Processes for detecting and updating expired certificates can be overlooked Certificate retrieval is time consuming and hard Multiple storage methods is common- hardcopy file, computer file, email attachment, etc. An audit may go back 3+ years- where did your predecessor store the certificates? A single missing certificate could cost much more than the taxes you failed to collect A proven source of audit revenues A single missing certificate could cost you back taxes on 3+ years of sales
• #18: And then, after you understand nexus, locate the jurisdictions and their rates, identify all the product taxability rules, mark some customers tax exempt and figure out the tax, you can look forward to sitting down to do the tax returns, generally monthly. Tod od this right, you’ll deal with: Managing the filing calendar Efile and payment processes Filing deadlines County, city, and outlet reporting Local filing in home-rule states Aggregating information across multiple billing systems to enable consolidated filing ERP, billing, ecommerce systems Retail POS On-line ecommerce marketplaces Responding to state tax notices Must reply on-time to avoid penalties Must spend the time to avoid future audits Spending too much time on prep and filing vs. higher valued projects - Prep and filing is not a revenue generating activity - Prep and filing doesn’t improve sales competitiveness - Takes time away from strategic projects
• #19: There’s a better way. So what would you want to look for in an automated system? The Avalara Sales Tax Suite provides a cloud-based end-to-end tax compliance solution. There are other server based systems on the market, but there are maintenance and update ramifications to consider with those. So, by outsourcing the sales and use tax processes, you will achieve compliance, cut cost, increase efficiencies and be able to focus on the more strategic initiatives important to your business. AvaTax sits in the cloud, between your Order Entry module, web store, billing systems and the government. In < 1/3 second, your systems will have an accurate tax calculation for 100’s of thousands of products, across all 16k jurisdictions, taking into account the tax status of your buyer. All you do is set it and forget it. <CLICK> Cert Capture is an exemption certificate management service. It manages, stores and organizes customer tax exempt certificates, has a built communication system to communicate with your customers when changes or updates are needed. That means you no longer have to keep these documents in an accordion file or scan them in to a disparate system not related to your taxability. And when the gov’t comes calling, you can comply with their requests with the touch of your mouse. <CLICK> At month end, you’ll want a company that can prepare and submit the tax returns as well as provide treasury services to ensure the returns are submitted and paid accurately and on time. As opposed to a signature ready system where you’ll still need to produce check reqs, stuff envelopes or fill out on line forms and then track everything. You’ll probably also want a company that can provide Professional Services, or tax based expertise deployed when you need and how you need it. We do Audit defense, nexus studies, product taxability studies, VDAs, backfilling and other projects so you have a partner combined with a calculation tool that can provide support to your specific situation. It is Customized and tailored so “You have your own dog in the fight”.
• #20: So why would you want to outsource your tax services? Bottom line: 1) You’ll save time. Manual sales tax management is time consuming and expensive. 2) You’ll reduce risk. 3 times as many businesses are audited annually for sales tax than the IRS audits for income tax Tailor: This is why 20k customers and an additional 500 per month are choosing to eliminate this risk by outsourcing to Avalara 3) You’ll have less aggravation. Nobody really wants to do the job. Would you? Most of the tax return accountants I speak with that are employed by manufacturers or distributors readily admit to being there to get promoted into another position, or finding another position in a different company. You’re training people to do a job that is not their long term career, and then you’ll retrain their replacement.
• #22: A few housekeeping notes before we begin -- your lines are on mute. If you have comments or questions throughout, please type them in as I will be monitoring the chat and Q&A boxes. If you don’t have much experience with document management, this will be perfect for you . . . OR if you’re well-versed in doc management, hopefully we’ll provide you with some content to bring back to coworkers who might not be. With that, let’s go ahead and get started.
• #23: Digital transformation is happening and we all need to be on the forefront of this wave. This surge in technology is about helping companies manager their data, documents and processes better. Its about taking the friction out of internal processes – resulting in streamlining traditional paper and data entry intensive processes and paving the way for companies to achieve their strategic initiatives. In the world of document management we tend to think first about the document that precedes the process. But at the end of the day it is about connecting the paper, with the people, the processes and the data.
• #24: So what is it? What can it do? It allows a business to Capture and index documents in all shapes and forms from anywhere Then we can deliver that document out based on how the customer or vendor or person or printer wants to receive it. There is a powerful and configurable Workflow engine to speed those documents and data along all your various business processes including moving the data and document into the ERP and back again as transactional changes in the ERP occur. Plus there is the easy Search and Retreival of the document. Imagine documents at your fingertips, searchable in DocLink, via the web, via mobile, from within the ERP. There is even full text search which really explodes the possibilities of getting access to documents. In addition to the standard features of document management, DocLink also offers Smart Forms (or configurable windows) that can be used to enhance and personalize the way DocLink works for the business and its processes. You can create documents like a Requisition or an Expense Report or support a process such as HR onboarding. Any way you want to use it, DocLink can work with any document, any process, anywhere.
• #25: Why start in AP? Because there is the most tangible and obvious ROI in this department and process. That is why Most DocLink opportunities start in AP. The efficiency of AP processes relies on 1) the time to process an invoice and 2) the cost to process it. This is why we generally find the AP department a logical place to start. For instance… Did you know that it takes $20 in labor to file a document but $120 to find a misfiled document, and $220 to reproduce it if it’s lost? Most of our customers START in AP before expanding to other departments and processes.
• #26: Time and money are the key drivers for AP automation – most AP departments suffer with high AP transaction costs and cycle times. But research shows, for example from the Ardent Partners, that AP automation ie best-in-class accounts payable performance, significantly lowers processing cost and time per invoice as shown in the above chart - when companies automate AP their invoice processing costs is about 81% lower and processing cycle times are around 73% faster than traditional paper-based AP.
• #27: See all the tasks that can be eliminated…they’re all manual and time consuming. They’re also the areas of your process that are inefficient and are susceptible to error.
• #28: Vendors can submit invoices in a variety of different ways With an automated AP process, DocLink automatically extracts relevant data into its system Then the designated administrator receives notification that invoice is received, and then it flows through usual workflow and approval process DocLink essentially mimics your current workflow, which is established with a pre-determined electronic approval process And you can have as many approvers as you want based on your business needs Approval times are significantly decreased
• #31: Go into email and approve it
• #33: You could also approve this invoice via our mobile app or via email on your mobile device. True access to the information you need where ever you are.
• #34: You can also login to the desktop see all the items waiting for approval in your workflow and approve via your desktop.
• #35: You can make notes, add sticky notes, see all the property values indexed to thesis document and approve.
• #36: You can make notes, add sticky notes, see all the property values indexed to thesis document and approve.
• #41: Instead of copying the bill and sending it to each cardholder… Or creating a spreadsheet that gets circulated to everyone…
• #42: 600 Employees 5 stores in Puerto Rico-30,000 square feet each Sales of $110 Million last year They operate under a license and trademark agreement with the Econo Supermarkets, the largest supermarket chain in Puerto Rico. They had allotted an area of 2,000 square feet of their new offices to warehouse and when they began bringing all of those documents over, they quickly realized that they would need to find a paperless solution, and fast.  The customer found DocLink at a Convention in 2011 in San Juan, PR. They have done two major integrations in Doclink since. First, they implemented their ERP-Retalix-Doclink project. Doclink solved the issue for them. They installed digital signature capture devices for their vendors and employees to sign on (for those PO’s, receivers, and invoices). And with DocLink they stopped using paper at once. That allowed them to go from 8 employees in the Accounts Payable Department in two offices for the five stores, to just 4 employees and a manager. Not only did it save time, but it allowed them to establish a web page to manage cost differences in invoices. The supplier just sends them the number of the check, or the invoice number, or PO number or receiver number, and from there we can get all the documents and justify the cost we are paying because we have all the data now, at the touch of a button.  DocLink was implemented and running in one week, and in less than two months was fully integrated with their ERP application. “the power lies in the indexing”, says Agosto, “a scanned document becomes an indexed digital document that you can send into any third party application, and search for with the click of a single button”.
• #44: For those of you that are familiar with DocLink, you may know about us for our AP Automation solution and we will cover that shortly. But when you are considering Document Management for your organization, it is better to select a solution that can be used for far greater business processes than just AP automation - though that is where most companies start. The value of the overall solution is that you can use it wherever you are experiencing paper based pains and bottlenecks. So the question to ask yourself is: Where do documents and paper based processed causing me the most frustration – and what is the associated costs or missed opportunity costs? Lets explore some possibilities together.
• #45: The goal in these is to help you start visualizing where else you can take DocLink for your customers. The possibilities are endless – what lightbulb moments do you have? What other departments can be affected? Manufacturing Process – Shop Floor control Asset & Equipment Tracking Certification Compliance Etc…
• #46: DocLink offers a wide range of options to help you organize, secure, and process documents throughout your enterprise for any document, any process, anywhere. Will you take the initiative? Let’s get in touch today! Questions?