ERP for construction. Ensuring you calculate your VAT correctly
Many construction companies are still in the process of selecting a Construction ERP provider and others not yet progressed as far as that. With VAT, its implementation and maintenance, the need to track, manage and audit all financial elements in minute detail has created greater immediate demand for effective ERP Software across the board and in no industry more so than construction. The construction industry has a number of nuances that make VAT implementation more challenging. Take for example the complexity of sub-contractor agreements and variations and the fact that construction projects are likely to span many years rather than start and finish within a tax reporting year. So, what should you be considering when looking at how a Construction ERP solution can help you with your VAT?
1. Prior Planning Prevents Poor Performance (The 5 ‘P’s)
If you haven’t already done so, make a plan. Construction professionals are nothing if not used to working to a blueprint or project plan so why deviate here? Involve and consider all elements that will be impacted both internally and externally, as VAT will have wide reaching implications across all departments. Designate a project manager or management team to make sure input and information is garnered from and with the executive team and ensure that they are fully engaged. Selecting Construction Software and adapting seamlessly to the management of VAT are very significant matters with far reaching impacts across the entire business.
2. Assess the Impact
Depending on the size of your organisation, you may or may not have a specific finance department or an individual specifically assigned to tax matters. It is important that the business understands what VAT is and how it will impact the operational aspects of the business. Taking the time to assess these elements and to prioritise them in terms of risk and importance will be a core factor for smoothly and successfully implementing the necessary changes that will arise.
Construction ERP, such as CCS BuildSmart, is fully developed to factor in VAT to the individual parts of the business and to the operation as one entity. Having been conceived, tried and tested within a VAT environment, your software should be a valuable tool assisting with your VAT considerations, so make sure your teams and business get the maximum benefit by using it to its full potential. Your software provider should have a clear training strategy and program as part of the implementation phase which includes training requirements.
3. System Review
Carry out a review on your proprietary systems and their ability to cater to VAT nuances. CCS BuildSmart will be able to integrate these departments and apply the correct VAT considerations to the financial aspects and will be important in identifying if changes are needed in the systems themselves or even in the format of data entry and process currently in place. Managing VAT collection and off-setting VAT payments is fraught with error when handled manually and the risks are considerable. Even Al Capone (who was extremely careful not to get his hands dirty) was finally brought down by the tax man, so underestimate the seriousness of the matter at your peril.
4. Follow the Map
Staying on track is so much easier if you have a map of the track to follow. Map out the expected VAT payment and collection parameters to make sure you are not caught out and find yourself on the wrong side of a tax audit or a missed tax payment. There will be changes that need to be made but knowing that these were assessed, planned for and put into an implementation plan should give you considerable confidence to move forwards. The irony is, your ERP Software is going to all but remove the headache or difficulty of VAT and allow you to operate comfortably knowing it is working for you. Most of the change and adjustments will be for the adoption of the ERP solution itself rather than the specifics of VAT.
5. Testing 1, 2, 3
Assuming you have selected a market leading Construction ERP System, you can be quietly confident that the hard part is over. A program like CCS BuildSmart is now going to pull together all elements of your business and allow you to drill down, step back, review specifics and even factor in variations and change. All this because it is able to integrate every individual part, node or transaction seamlessly.
Even so, for your further comfort and that of your financial team, check, then check it again. Now that you are confident that the system will deal with your VAT calculations, you can focus on driving the business.
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