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  • Accounts Payable

Tax & Compliance

Sales & Use Tax Accuracy

Accounts Payable Transformation or Procure-to-Pay projects must ensure that Sales & Use tax is accurate. To accomplish this, Nitor works with clients to drive as many invoices to have proper “ingredients” for an accurate Sales & Use tax calculation. From there, the Nitor team configures business logic in the invoicing solution to ensure that invoices that do not comply with Sales & Use tax rules are routed appropriately for approval, rejection, or resubmission.

What are the key ingredients for Accounts Payable automation as it relates to Sales & Use tax?

  1. Proper invoice data on each and every invoice line item.
  2. Integration between the Accounts Payable system and a tax engine (i.e. Vertex).
  3. Properly configured invoicing business rules to either:
    • Ensure proper tax and associated approval
    • Identify invoices that need to be routed for approval
    • Identify invoices that should be rejected and sent back to the supplier for resubmission

What are the Data Elements Required to Calculate Sales & Use Tax on Invoices?

To perfectly calculate sales & use tax, every invoice line item needs to have the below data elements:

  • An accurate UNSPSC / Commodity Code at the line level of the invoice.
  • UNSPSC code is 8 digits or 10 digits.
  • UNSPSC Codes are mapped accurately to an actively managed Commodity Code table.
  • The ship-to location zip code (Zip+4) for each invoice line item.
  • The ship-from location zip code (Zip+4) for each invoice line item.
  • If item is a product, the weight and dimensions of the package being shipped.

Almost always, companies (or their suppliers) will not have all of the above information at each invoice line. That’s to be expected and monitored. That said, Nitor tries to push our customers and their suppliers to strive for accuracy, completeness, and digital automation whenever Nitor leads an Accounts Payable transformation.

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