Vertex Tax Decision

Prior to Vertex, an analyst in accounts payable would review invoices, not hard coded by vendor or account number, and apply a tax code unique to the shipping state which would then allow the Legacy system to make a tax determination. When Milliken transitioned to SAP, we began using Vertex to automate this decision based on the “material group” assigned to the individual line item on the purchase order. Material groups define what the item is and how it’s used. Vertex would then make a tax decision based on the material group and the jurisdiction of the purchasing location. However, if the user assigned an incorrect material group to the line item, the system would make an incorrect tax decision resulting, most often, in an overpayment
Each morning, reports listing purchase orders entered the day prior were examined. The analyst would review the purchase information, material group, general ledger account, etc and determine if the correct material group had been assigned. If not, the material group was corrected on the PO to ensure that Vertex would make a proper tax decision. By period 11, 2014, purchase orders for all US locations for all company codes were being reviewed which required significant intervention by two administrative associates. As a result of the new process and updated mapping, tax overpayment adjustments were reduced by 23% from $555K to $427K in 2015.
To further improve the process, a new report was developed in the latter half of 2015 which provided additional information from the purchase order system eliminating the need to physically view a copy of the purchase order in SAP. The new report included information regarding g/l account, cost center, quantity, tax, delivery location, etc that was not included on the initial report. Our process has effectively resulted in a decrease in tax overpayments and smaller period adjustments; tax overpayment adjustments were reduced by 23% from $555K to $427K in