Why Your Compliance Solution Needs an ROI Study

It’s important to know how much your tax processes are costing you, and areas where you could be more efficient. That's where a Total Economic Impact™ (TEI) study comes in.

Table of Content

    Why your sales tax software needs an ROI study

    In today’s business environment, efficiency is key, especially as it relates to tax compliance management. Returns, filing, and keeping up with complex and changing tax regulations all can  be time-consuming and burdensome for the teams handling these tasks manually. What’s more, sales tax compliance software can reduce your business’s risk of noncompliance, saving you money on hefty fines and penalties. Having a sales tax software solution is practically a given for businesses that want to get ahead — and stay ahead.

    Whether your company manages tax compliance manually or with software, it’s important to know how much the process is actually costing you, and areas where you could be more efficient. That’s where a return on investment (ROI) or a Total Economic Impact™ (TEI) study comes in.

    How often are businesses measuring the effectiveness of a solution?

    Maybe businesses look only at the overall cost before signing a contract or during contract renewal time each year. Some businesses might even renew without calculating because they know their tax solution is making their jobs easier, and don’t look further than that. Plus, finding the total economic impact of a solution can be a difficult thing to calculate, and your team has more important things to do than dig into a cost-benefit analysis of a solution you’re already using.

    It’s a good idea to measure how effective your solution is annually, or at least every few years. Business needs and budgets change, and it’s much more efficient to address a problem in real time than to go years with a solution that isn’t the right fit for your business.

    Your solution solves a problem, but at what cost?

    Look at it this way: Perhaps you invested in an expensive lawn mower to save time when cutting the spring grass. It saved you plenty of time, but you also learned you don’t really need to mow the lawn that often. Now, when considering the cost of gas and maintenance, you’re unsure if the initial time saved was worth the investment. So, you found a local service that will mow your lawn only when you need it for much less than the price of the mower. As a result, you’re still saving time and effort with a lower upfront cost and less ongoing expenses.

    Determining the return on investment for your sales tax solution is similar. You know your sales tax software is supposed to be saving you time and helping to save you money, but is it doing what it says it will? On top of the time saved, businesses should also be aware of the other money they’re saving by avoiding audits, noncompliance, and many hours of manual work.

    Is your sales tax solution in it for the long haul?

    Avalara Tax LogoThis is where the graphs and charts come in. Let’s say a software solution is a big upfront cost but the maintenance costs are basically nonexistent, or maybe it looks like a bargain at first but the solution is finicky and requires a lot of manual labor to get it to work right. It’s important to determine the economic impact of these solutions over the long term; how much time and labor do they actually require?

    Can your sales tax software grow with your business? A solution that can integrate with existing systems and integrate with future ones could help prevent future friction and provide a return on investment year after year.

    How an ROI study works

    A researcher like Forrester Consulting takes a look at real customers and creates a composite organization to calculate what customers are getting out of a solution. They run the numbers and create a Total Economic Impact™ study based on their findings. A tax solution software ROI study can determine how much time and money can be saved on tax compliance tasks like:

    • Filing tax returns
    • Managing exemption certificates
    • Preparing for audits and avoiding audit penalties
    • Hiring third-party tax experts
    • Researching taxability rules, looking up rate tables, and keeping your research up to date

    A study can also find unquantified benefits, like the ability to reduce sales tax liabilities and shift focus to business needs rather than tax-decision making.

    Automation can help

    If you’re managing sales tax manually, you know how costly and time-consuming those processes can be, and that’s before adding in the potential cost of human error in the form of a missed tax update or miscalculated rate. Automation can enable businesses of all sizes to stay compliant and avoid costly mistakes and fines. Plus, it can empower company leaders to focus on driving successful business outcomes rather than grappling with tax compliance complexities.

    Ready to see for yourself?

    So what does an ROI study look like? We commissioned a study from Forrester Consulting to determine the Total Economic Impact™ (TEI) of Avalara on the companies who use our solutions. Read The Total Economic Impact™ of Avalara for yourself to find out how Avalara helps customers save time managing, streamlining, and filing tax returns; eliminate hours spent managing exemption certificates; gain efficiency in audit preparation; and save money spent on third-party tax experts.