Sales Tax Accuracy and CRM

Quote-to-Cash (or QTC) is the information technology term for the integration and automated management of an end-to-end sales process. More and more businesses are automating key elements of the QTC process, extending their CRM to automate the entire order lifecycle.The result is higher revenue optimization and better customer satisfaction scores.

Even with the most technologically advanced CRM systems, however, sales tax accuracy is often overlooked. Without accurate sales tax calculations, quotes submitted to a customer can be lower than the actual final invoice. And project estimates and pricing that don’t match initial quotes can ruin a deal before it’s finalized. This inaccuracy is an especially important problem on large orders or high-ticket goods. On many deals, an invoice 9 or 10% higher than the initial quote can cause customers to walk away.

Too often, businesses are stalled on their climb to the top of the deal mountain. Knowing how to navigate the critical steps between quote generation and revenue collection can be what gets them over the hurdle.

Ensuring correct sales tax calculation is important at several steps in the QTC cycle:

Pricing products to reflect current exemptions, discounts and inventory levels
Quote creation for a prospect or customer, and price/project negotiation
Changes to the order
Supporting credits/returns
Contract and order management
Invoicing
Payment receipt

For omni-channel sellers using a robust automation and CRM environment, the customer’s expectation is that the quote they’re given will match the invoice.

The Price

Quoting the correct price and securing approval for that pricing is trickier than it seems. Depending on the technical sophistication of the seller, pricing resources may be manual or automated. Key questions include: What products should be offered at what price point. How does the seller’s internal approval process for pricing work? Is it clunky and manual, or is it automated? Providing incorrect pricing impacts everything from the initial deal, to returns and credits. Using a high quality CRM provides a consistent flow that should include sales tax and supports the sales tax management process. The customer experience is improved, and deals close faster and more frequently — as the customer sees full price (including sales tax) up front. The nuances of sales tax might include sales tax holidays, accurate sales tax exemptions, product taxability needs and bulk purchase discounts.

Revealing the true cost including the right sales tax all the way from quote to final invoice can make or break a deal.

The Quote

In order to create a quote that includes any tax-exemptions, sales tax holidays, and applies the right sales tax where applicable, the sales team needs real-time sales tax information. When managed manually, quotes can take an inordinate amount of time and are prone to error. An automated system for sales and sales tax, that takes into account not only the product or service purchased, but any product taxability rules, sourcing rules, and whether or not shipping is taxable, can make for better quotes and more customer satisfaction. Without accurate sales tax calculations, quotes can be lower than final invoice. Project estimates and pricing that don’t match initial quotes will doom the deal before it’s finalized.

The Approvals

Getting approvals from supervisors to move ahead with deals can stall a deal-in-motion. Like the car salesman running upstairs to speak to the manager about the car price he’s quoting, the process of manually getting supervisor approval can seem like a bait and switch to a customer waiting on estimated price.

The Fulfillment Process

How tax applies to the whole fulfillment effort is one of the more complicated parts of the process.

This includes stock level maintenance, order tracking, shipment and various approaches to tracking customer data against product levels. If any of the customer or product data is incorrect, it could result in the wrong order being shipped to the customer and have cascading inventory mistakes.

The Invoice

Whether generated manually or within an ERP or accounting system, or an integrated tool, the invoice needs to be accurate and correct. This accuracy must be presented to the customer throughout the QTC process in order to maintain customer satisfaction and grow the customer base.

The Payment Receipt

Whether automated or manual, payment receipts must be in place to handle the inflow and capture of payments from customers, as well as booking and categorization of customer receipts. Also crucial is the capturing of additional discounts the customer may have after the fact and include the impacts that would have on sales tax liability.

About Avalara

Avalara makes sales tax compliance simple and automatic for thousands of customers every day. Its SaaS-based, sales tax and compliance automation software solutions span the compliance spectrum; each year these solutions deliver billions of tax decisions, manage millions of exemption certificates, file hundreds of thousands of sales tax returns, and remit billions of tax dollars to states nationwide.