The Hidden Cost of Sales Tax Errors in Retail: How Sovos Prevents Them

Retail businesses are all about the customer experience. Their omni-channel ways of reaching customers and global reach can create some of the most complicated sales tax requirements. Sales tax errors can lead to everything from lost customer trust and missed sales opportunities to fines and penalties. The large numbers of products sold across jurisdictions, point-of-sale reporting and online/electronic receipt generation required across channels can also present tax challenges that impact the speed of a customer’s purchase.

Leading retailers protect their brand and margins by ensuring the hidden cost of sales tax errors are under control. Organizations in SAP S/4HANA environments should be looking for systems that provide real-time tax determination, calculating Sales & Use Tax when transactions happen, no matter what channel a customer is using to purchase. Tax engines should be integrated with SAP S/4HANA environments to ensure fragmented tax systems don’t increase audit exposure and compliance costs. Tax automation is a top priority in the retail industry to prevent manual processes from burdening tax, finance, and IT resources. Most importantly, it can prevent the incorrect application of tax rates that can lead to disputes, refunds, and reputational damage.

As E-Invoicing mandates continue to unfold, compliance that supports clearance and archiving and is integrated into SAP billing processes is important. Invoices must reflect exactly the right tax. AI-driven mapping of SKUs to tax categories can prevent errors from misclassification of goods or services that can lead to overpayment or underpayment of tax.  Automatic updates to tax rates and rules across jurisdictions ensure tax is accurate in real-time and can be electronically invoiced properly.

Data centralized with dashboards, analysis tools, and audit-ready reporting give retail finance leaders visibility into sales tax impacts on cash. With AI embedded, tax professionals can automatically map goods, uncover tax trends, look for anomalies, and proactively manage risks. As an example, proper management of tax remittance protects against surpluses that can result from late remittance and often lead to fines and penalties.

Sovos ensures seamless tax integration with SAP. As governments continue to push for greater transparency retailers must be even more vigilant about ensuring global compliance coverage is accurate. A partner with SAP for more than 20 years, Sovos is certified and aligns with SAP’s Clean Core framework giving businesses the retailers the ability to lower their total cost of ownership and technical debt by minimizing customizations.  Integrations exist with SAP R/3, ECC, and S/4HANA platforms. Sovos offers comprehensive end-to-end indirect tax compliance solutions for SAP customers that cover tax determination to reporting for on-premise, private cloud and public cloud environments. Their indirect tax solutions cover tax determination for Sales & Use Tax, VAT, SUT, and GST in addition to E-Invoicing requirements of continuous transaction controls (CTCs).

Sovos, Sovi™ AI is a suite of embedded AI and machine learning capabilities purpose-built for tax compliance. Integrated across analytics, automation, and regulatory workflows, Sovi enables technical and non-technical teams to navigate complexity through natural language, visual interfaces, and intuitive guidance. Sovi “…codifies Sovos’ global tax compliance and regulatory expertise,” says Kevin Akeroyd, CEO of Sovos. Sovi AI capabilities are already operational across Sovos solutions, including advanced biometrics for face and liveness detection, image recognition, and secure authentication built into Sovos Trust solutions. The roadmap includes ambitious expansions such as AI compliance checks, Ask Sovi for embedded assistants, automated mapping tools for goods and services classification, and intelligent document agents for AP process automation.

For multi-national retail businesses with high-volume transactions across the globe Sovos covers tax jurisdictions in North America, Latin America, AMEA and APAC and annually processes over 16 billion transactions. The platform ensures compliance with local tax regulations, offering complete visibility into tax obligations in real-time and continuously monitors changes in regulations across jurisdictions. Sovos solution benefits include:

• Future-Proofing Compliance: Seamless integration with SAP ECC, S/4HANA and BTP offers retail businesses the ability to quickly adapt to new regulations without impacting daily operations or customer experiences.
• Sovos Sovi™ AI Capabilities: Including advanced biometrics for face and liveness detection, image recognition, and secure authentication built into Sovos Trust solutions. In addition to a strong roadmap of expansion into deeper AI integration including compliance checks and automated assistants.
• Speeds Customer Purchase Experiences: Mobile, online, and point-of-sale transactions across the globe apply tax consistently using real-time tax determination.
• Comprehensive Coverage: The Sovos platform addresses tax determination, E-invoicing, and E-reporting in almost 200 countries.
• Cash Flow Protection: Minimizes fines and penalties that come from late payment fees by automating tax determination, eliminating manual application, determination, and validation of tax.
• Broad Ecosystem of Partners: Global network of partners including Big 4 firms, Independent Software vendors (ISVs), that ensure seamless implementation or migration.

What this Means for SAPinsiders in Retail

• Multinational retailers that operate globally with high-volumes of transactions will value Sovos adherence to SAP’s Clean Core framework with seamless integration with SAP platforms – R/3, ECC, and S/4HANA for on-premise, private cloud and public cloud environments.
• Retailers with global and high-volume transaction requirements can automate real-time tax determination for Sales & Use Tax, VAT, SUT, and GST creating consistent application of tax across all channels.
• Sovi AI embedded AI and machine learning capabilities that are embedded across analytic, automation and regulatory workflows is an ideal approach for putting AI into day-to-day practice for retail tax teams.