Bringing tax to the top table

Today’s CFO is responsible for more business-critical duties than ever, with a recent study reporting that over 80 per cent had taken on extra demands in the past two years. The role is rapidly evolving from a purely financial function into a broader strategic leadership position that is tasked with also understanding how AI can support decision-making, improve operational efficiency and shape long-term business strategy.

With multiple responsibilities clamoring for time and attention, some can get overlooked or neglected. Tax, despite sitting at the heart of many of the key CFO metrics, from cash flow to risk exposure to corporate reputation, often falls into this category. Despite this, tax functions are under increasing pressure to hit targets, whilst facing growing workloads and limited resources.

In the context of these pressures, tax departments are forced to adopt a reactive, deadline-driven approach. Unsurprisingly, this causes work to be completed in separate cycles rather than via an ongoing, connected model that continuously feeds into wider business decisions, emphasizing the persistent shortfall between the importance of tax and its role in daily financial operations.

A complex yet fragmented landscape

This problem has been developing for years now. Many CFOs have progressed through finance-focused careers with minimal exposure to the ins and outs of tax as a singular discipline. Moreover, tax is highly specialized and fragmented – encompassing multiple, complicated, interconnected demands, each with its own processes and associated subject matter experts within the company.

Tax professionals also function with a context where interpretation is necessary and clearly defined answers are not always forthcoming. As such, many companies see tax as a risk-sensitive operation that must function in isolation, rather than a key, integrated part of the CFO’s wider financial strategy.

This sense of fragmentation is also reflected in the wide range of technologies that support the tax department. An ever-lengthening list of multiple-point solutions is leveraged to address discrete demands as opposed to supplying a holistic, integrated overview of the tax operations. This means that critical tax data is scattered across many disparate systems and teams, leading to increased risk of inconsistencies and errors, not to mention huge amounts of duplication of effort across solutions.

What makes it worse is that managing all this complexity is largely manual and time-consuming and, even where there is a degree of integration, insights are frequently hidden in compliance reports rather than being fed back into planning or decision-making.

This is where AI comes into play as a powerful tool for CFOs navigating this growing complexity. AI excels at connecting fragmented systems, surfacing insights across large volumes of data and reducing the manual effort involved in routine processes. This allows finance and tax teams to focus more of their time on higher-value analysis and strategic decision-making.

Supporting the CFO

Nevertheless, from the perspective of the CFO, such a complex landscape inclines them to reactive analyses and processes rather than the forward-looking insight that the modern enterprise

demands. Practically speaking, this strengthens the cycle of retrospective intervention and increases the chances of missing opportunities to improve tax outcomes.

However, this reactive stance is at increasing odds with the role CFOs are expected to play, especially because the modern company expects agile decision-making and high levels of accountability. Let’s take an example: the company is considering a significant business expansion or investment; how can the CFO provide the best decisions when they do not have a handle on the tax implications or, indeed, a clear, connected view of the organization’s tax position?

To begin overcoming these challenges, we must break down the process, expertise and data siloes that have traditionally defined the tax department. Only then can a business transition from tax as a series of discrete functions towards a more coherent, integrated outlook. Tax needs to be built on a shared foundation where information, expertise and data can flow between different functions, update constantly and consistently, while providing one holistic view of operations.

This approach would empower the CFO with connected transparency when it comes to tax status and knowledge of what is happening at any particular point in time – without requiring remedial work or retrospective reporting. With an improved, integrated view of the business and the tax implications available on demand, CFOs can focus more on strategic planning, while the tax department is empowered to tackle potential risks before they can escalate.

Central to this new approach is making better use of the vast reams of data generated via compliance processes. Rather than treating data as a simple output, it instead becomes the source of insights that can add value to the planning and forecasting processes.

When data is connected across the wider tax function, it creates opportunities for more proactive and efficient ways of working. AI-assisted analysis can help teams identify issues earlier and reduce manual effort, while also giving CFOs a clearer view of how tax is impacting the wider business. In this model, tax becomes more than a compliance requirement and starts contributing more directly to financial planning and business decision-making.

But AI is only as effective as the foundations beneath it. Without connected data, consistent processes and visibility across the organization, businesses risk accelerating inefficiencies rather than solving them. When implemented effectively, AI can help create a more unified view of operations and provide earlier visibility of risk, more accurate forecasting and greater confidence in the information underpinning business decisions – all key concerns of the CFO.

Technology as an enabler

Without question, technology, and specifically AI, has a crucial role to play in making this interconnected dream a reality, especially when it comes to reducing the manual intervention associated with routine tasks and improving the accessibility of data across the company. However, with all the promise of AI-enabled automation, remember the objective is not to eliminate human judgement from tax operations, but to free up time for tax professionals and CFOs alike to spend more time on strategy and supporting broader business goals.

Considered in this context, the tax department takes on more strategic responsibilities, helping CFOs feed tax insights into their high-level decision-making as opposed to engaging with it only at the point of reporting as still happens so often today. Forward-looking CFOs know that now is the time to bring tax to the top table and integrate it into the wider business, using AI as the glue that connects disparate systems and reveals key insights to move the business forward.

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