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E-invoicing, SCF & E-procurement

Only 10 percent of US companies comply with IRS tax requirements, study finds

Wednesday 16 May 2018 | 10:50 AM CET

Tipalti has released the findings of a survey indicating that a significant percentage of US businesses do not have a payables transformation strategy in place today.

The survey commissioned by Tipalti, a US-based payables automation company, and set in motion by the market research company Gatepoint Research, was conducted between January and March 2018. Gatepoint polled 100 finance and accounting executives from different industries across a range of company sizes.

The study results have indicated that an elevated number of companies do not have AP tax measures in place to comply with the IRS chapter 3 regulations and avoid tax penalties.

The survey has found that only 10% of those surveyed are automatically validating whether suppliers have submitted error-free tax forms. Furthermore, 30% do not validate forms at all and, of those that do validate, 45% are validating tax forms with a highly manual, time-consuming process, which often can be error-prone.

While invoice workflow automation (49%), AP fraud controls (42%) and electronic payments (31%) were top of mind for organizations focused on payables transformation, only 11% of organizations recognized that it’s essential for them to get the supplier onboarding process right.

Moreover, one-fourth of respondents do not currently have a strategy in place for transforming payables. One reason for this may be that 34% of organizations are struggling to understand the costs and risks involved with running legacy manual AP processes.

Additional findings from the survey include the fact that the responsibility for transforming payables rests on the Controller or VP of Finance (64%), organizations are remitting across a broad range of payment methods adding to process complexity. Also, 63% of respondents felt that retaining payees was critically relevant to their organization and OFAC SDN checks are rare to see in an organization (13%) putting AP at risk of regulatory penalties.