Esker links Sabrix MTS and SAP to free up 4 work days a month and free itself of audit hassles

“As we grew the business, we were at the point of needing to staff up before tax audits proliferated. Sabrix has saved us at least a full annual headcount in addition to freeing up four work days a month.”

-- Joyce Zeasman, Controller, Esker

At a Glance

Tax Challenges

  • Team of 3 non-tax professional manually entering tax on orders
  • Finance staff diverted to tax maintenance issues
  • One week a month spent on compliance
  • Tax invoice errors resulted in customer’s highlighting accurate tax

Benefits

  • Team of 3 non-tax professional manually entering tax on orders
  • Finance staff diverted to tax maintenance issues
  • One week a month spent on compliance
  • Tax invoice errors resulted in customer’s highlighting accurate tax

The Customer

Founded in 1985, Esker is a recognized leader in helping organizations eliminate manual processes, gain process visibility and control, and reduce the use of paper by automating the flow of documents into, within and out of the organization. Esker operates globally with more than 80,000 customers and millions of licensed users worldwide. Esker has global headquarters in Lyon, France and U.S. headquarters in Madison, Wisconsin.

The Challenge

With patented document delivery automation software and hosted delivery services, Esker is expert at helping companies automate exchanges of information. But like so many businesses, Esker found itself mired in time-consuming and error-prone manual processes when determining, calculating and reporting sales tax. With nexus in nine states and forecasts for considerable U.S. growth, the company faced hitting a tax administration wall unless it made a change.

“We had a team of three people keying in sales invoices and applying the tax for states where we had nexus,” says Joyce Zeasman, controller, Esker U.S. “They were manually checking charts, looking up applicable tax on the Internet, and calling into jurisdictions. As a result of this painstaking and error-prone procedure, Esker had customers esclating invoices due to incorrect taxes, leading to substantial reworking of invoices every month.

“Transaction taxes get very complicated when you get down to the jurisdiction level,” claims Zeasman. “When you are depending on people who are not tax experts by training to apply rules and think everything through each time, you are going to get errors. In our case, we had to cover unpaid taxes out of our own pocket because of the changes made to invoices after the fact. Not only did we end up having to report and pay these taxes ourselves, but we were annoying our customers in the process.”

In addition, the company wrestled with audit exposure. “We had two California state sales tax audits,” recalls Zeasman. “The first one resulted in substantial penalties, and you couldn’t call either one of them fun. The effort you have to put into documenting everything for an audit is a considerable drain of time, resources and business focus.”

The tipping point came with Esker’s implementation of a new SAP system. In going live with SAP it made sense to integrate a new solution that would automate their sales and use tax processes.

The Solution – Sabrix MTS seamlessly links to SAP to provide automation and tax expertise.

Esker evaluated three different transaction tax management solutions and ultimately selected Sabrix MTS as it was the only service available in the market to provide on-demand technology managed by a team of skill tax professionals.  Sabrix MTS not only delivers the end-to-end coverage Esker requires -- from address validation and tax rate maintenance, determination and calculation to return preparation and audit support – but also increases the degree of accuracy as the business grows. Beyond that Sabrix’s team of tax professionals reviewed and configured Esker’s tax policy, provide a three step review process to guarantee timely, accurate returns and help support tax changes resulting from business growth.  “Other solutions would have required us to maintain internal tax expertise to effectively use them – with Sabrix we are relieved to have this off our plates.”

“That Sabrix MTS is a hosted solution was also a big driver of our decision,” claims Zeasman. “It was a much more cost-effective solution compared to other options because Sabrix MTS eliminates the need for on-premise software, new hardware, additional IT support, and on-going software maintenance.”

The seamless integration required no special IT resources or business user training, and the integrated solution was up and running quickly.  “This was very big for us,” says Zeasman. “Sabrix had a pre-built connector to SAP, so we didn’t have to write anything to make the integration happen. As a result, we were able to go live very quickly, and our business users were amazed that getting the right tax on an invoice had become effortless.”

The Results

Sabrix MTS

  • Reduced tax liability and audit exposure—With Sabrix MTS, accurate, up-to-date tax rates and rules for over 13,253 taxing authorities across the U.S. are now applied automatically and consistently for accurate tax calculation on invoices processed in Esker’s SAP system. This has eliminated the need for time consuming and costly corrections, as well as customer complaints about faulty tax calculations. “We now have confidence that all the jurisdictional pieces of the tax are being applied correctly,” says Zeasman. “One proof point is the dramatic decrease in customers calling to say the tax on their invoices is wrong. Consequently, we feel we’ve plugged a potential hole in our reputation for excellent customer service, as well as repaired a cash drain from having to pay some of those questioned taxes ourselves. And, of course, we’ve minimized the chances of being penalized during a tax audit as well.”
  • Operational cost savings—It used to take Esker one full week a month, across seven people, to handle all its transaction tax chores, from doing research and figuring the tax on each invoice, to handling the almost daily rate changes, and preparing the monthly returns. With Sabrix MTS, the company now spends just one day each month for an 80% time savings. “Recouping four days a month is quite a savings when you’re talking sales tax,” says Zeasman.
  • Informed tax judgments— Esker has now eliminated guesswork from their tax compliance process, and in doing so, has reduced the risk of audit exposure.  “Depending on who you get on the phone at the taxing jurisdiction, you can get different answers. That’s why we like the tax research that Sabrix does. Sabrix has the expertise and means to make the informed tax judgments, not us.”
  • Scalable hosted service—As Esker grows, it is now able to scale its transaction tax management capabilities without adding new internal headcount or investing in and maintaining expensive new internal systems for tax administration. “With Sabrix MTS, everything is on-demand and hosted, which is Esker’s philosophy regarding our own products and services,” explains Zeasman. “Sabrix maintains everything, the tax and the IT.”

Concludes Zeasman, “Due to the growth of our business, we were at the point of needing to staff up before tax audits proliferated. Sabrix has saved us at least a full annual headcount, delivered a higher degree of accuracy and eliminated the need for us to be tax experts.  Now we operate without the hassles and know we have compliance with confidence.”