The modern CFO has more responsibilities than ever before, with a 2024 study finding that over 80% had taken on additional demands in the previous two years. As the report points out, “CFO is not a finance role. It is a strategic business role whose mandate is finance.”
With multiple priorities competing for time and attention, tax sits at the centre of many of the metrics CFOs are accountable for, from cash flow and risk exposure at the operational end of the scale to corporate reputation at the strategic level. Tax functions are under growing pressure to meet these expectations, with workloads increasing even as resources and budgets in many organisations remain flat or decline.
Under these conditions, tax teams are forced into a reactive, deadline-led operating model, and it’s understandable that work is completed in cycles rather than as part of an ongoing, connected process that continuously inputs into business decisions. The problem this creates, however, is that it perpetuates a clear disconnect between the undeniable importance of tax and the role it can and should play in day-to-day financial management.
A Taxing Set of Problems
It’s a situation that has evolved over a considerable period of time. For instance, most CFOs progress through finance-led career paths, with limited exposure to the depth and breadth of tax as a defined discipline.
In addition, tax is highly specialised and fragmented. It covers multiple complex, often interrelated requirements, each with its own processes and requiring access to specific subject matter experts. Even within tax teams, knowledge is distributed across individuals.
Tax also operates in a context where interpretation is often required, and clear-cut answers are not always immediately available. Bring these issues together, and it’s hardly surprising that many organisations view tax as a risk-sensitive function that must exist in its own bubble, rather than as one integrated into broader financial strategy or front and centre for the CFO.
The many and varied supporting technologies used across the tax function inevitably reflect this fragmentation. A large, expanding list of multiple-point solutions is used to address specific requirements rather than to provide a unified view of the tax function. This means tax data is almost inevitably spread across disparate systems and teams, and as any tax professional knows, the potential for inconsistencies and errors is ever-present.
Much of the work required to manage this complexity remains manual, and even where integration exists, insights are often buried within compliance outputs rather than being fed back into planning or decision-making.
Empowering the CFO
For CFOs, this situation almost inevitably draws them towards retrospective processes and analysis, when what they need is forward-looking insight. In practical terms, this reinforces a cycle of reactive intervention and increases the likelihood that opportunities to improve tax outcomes are missed.
This is increasingly at odds with the role CFOs are expected to fulfil, particularly given the emphasis on agile decision-making and the high levels of accountability that come with the job. How, for example, can a CFO be expected to make the best decisions about business expansion or investment when they do not have a clear, connected view of the organisation’s tax position?
Addressing these challenges should start with a commitment to break down the process, expertise and information silos that have historically defined the tax function; away from managing tax as a series of separate activities and towards a more integrated approach.
Tax needs to operate on a shared foundation where information can flow between different areas and be updated consistently. CFOs should be empowered with a coherent view of the organisation’s tax position and what is happening at any given point in time, without relying on the need for remedial work or retrospective reporting.
With better, integrated visibility at their disposal, the CFO can shift their focus towards strategic planning and opportunities, while the tax team can also address potential risks before they escalate.
Data Insights
A key part of this approach is making better use of the data generated through compliance processes, treating it not simply as an output but as a source of insight that can also be fed back into planning and forecasting.
Clearly, technology has an important role to play in facilitating this transformation, particularly in reducing the manual effort associated with routine tasks and improving the accessibility of data across the organisation. Don’t forget, the objective is not to remove human judgment from tax, but to ensure that specialists can focus their time on supporting the wider business.
In this context, the tax function takes on a different, more strategic role, with CFOs empowered to draw it into their decision-making processes rather than engaging with it only at the point of reporting, as so many still do today.
Learn more at alphatax.com
- Artificial Intelligence in FinTech
- Digital Payments