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Benefits of Exemption Certificate Software


As states become more aggressive in sales and use tax audits, it has become even more important for companies to maintain good documentation of exemption certificates so that audit exposure can be minimized.

Companies are turning to exemption certificate management (ECM) software in order to reduce their assessments. This software automates certificate collection and improves the validity of certificates that are collected from customers. Many businesses are now integrating their ECM software with their ERP/billing system and their tax decision software. 

Several of the key benefits of implementing an ECM and fully integrating it with ERP and tax decision software are:

• Increased speed and automation of certificate collection – certificate requests for new customers and renewal requests for expired or invalid certificates can be automatically sent electronically.

• Improved validity of certificates submitted by customers – ECM software helps to ensure valid certificates are submitted by exempt customers.

• Decreased non-taxed transaction billing errors – eliminates sales tax refunds and short pays initiated by customers.

• Reduced non-taxed transaction audit risk – ensures exempt transactions are only processed if valid certificates are on file and enables businesses to prove it to an auditor.

• Reduced staff time and effort in preparing for and managing auditor requests – enables fast access and viewing of requested certificates to auditors.

• Increased staff productivity by automating manual certificate processes – ECM software automates and streamlines most of the manual processes commonly associated with collecting and managing certificates.

• Improved exempt customer purchase experience – enables non-taxed orders to be processed quickly and eliminates the need for certificate expertise in your credit and sales staff because it provides built-in best practices.

• Elimination of manual entry of certificate data into tax decision software and customer data into ECM software.

In today’s harsh economic environment where state revenues are dropping, many states are much more aggressive on the sales side of sales and use tax audits. Smart businesses are providing their tax department with the tools necessary to drastically reduce their sales tax liability. An important tool that is being implemented by these businesses is an ECM software. ECM software can be even more useful when fully integrating with an ERP system and tax decision software.

For more tips to survive a sales tax audit, download our Audit Survival Guide.

sales tax audit ebook

Photo credit:One Way Stock via PhotoPin cc

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Lauren Stinson, CMI
Written by Lauren Stinson, CMI

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