Dive Brief:

• Thomson Reuters announced last week its ONESOURCE Global Tax solution will now be available on SAP Ariba's cloud platform, as the two companies aim to make procurement transactions more seamless. 
• The solution will provide users in 180 countries with a tax compliance tool to help more effectively reconcile invoices by eliminating errors and reducing inaccuracies resulting from manual calculations for constantly changing global tax regulations.
• Such errors in documents can cause liability risks an overpayments that "can easily exceed $6 million per $1 billion in spend," SAP Ariba's Senior Director for Partner Open Ecosystems John Lark told Supply Chain Dive. Over 2.5 million companies use the platform to transact almost $1 trillion in commerce each year.

Dive Insight:

"Every purchase order and every invoice has a tax consequence, and for most companies this is a continual challenge," Lark said. "This can involve multiple countries, each with unique tax laws. Buyers and sellers not only need to understand these laws, but comply with them."

For the procurement manager, managing such complexities is part of the day to day job. Often, tax inaccuracies due to complex regulations upstream are accepted as sunk costs, and reconciled during the accounting process. In fact, such errors may lead to added tensions between buyers and suppliers as invoices are passed back and forth for days, or weeks even, until a price is agreed upon.

"Budgeting is an important aspect of any business, and every transaction has a tax determination anywhere between 0% and 20% of the purchase price," Chris Carlstead, managing director for Indirect Tax at Thomson Reuters told Supply Chain Dive. "Getting this right affects the budget, available cash, bottom line, and ability to invest. Getting it wrong also may lead to additional penalties and interest assessed by tax jurisdictions."

SAP Ariba's buyer-supplier network aims to facilitate interactions between vast networks of business partners. Thomson Reuters seeks to help buyers and suppliers improve tax compliance with its software.

The new solution advances a natural partnership, and is part of a recent industry trend wherein complementary companies use APIs to integrate a specific solution to a more general platform with an established user base. It's a win-win: the platform's versatility improves, while the API provider gains access to a new segment of the market.

"Improvement in technology has driven big data and transparency, benefiting corporations and governments alike and bringing transactional taxes to the top of the agenda for both," Carlstead added. "Think of it like a Digital Tax Officer who automatically ensures you get the right tax, the first time, every time."