Businesses will improve their forecasting if they adopt operational transfer pricing, according to speakers at ITR’s Global Transfer Pricing Forum USA in New York yesterday, September 21.
“Having that OTP down will get you better at forecasting. With your data, you’ll be able to tell your own story,” said Troy Siegfried, director of global TP at manufacturing company FMC Corporation, during a panel.
Siegfried ran into an issue in Asia in which products were stopped due to TP issues and it took an extended period of time for the items to be released. This presented a risk for the business as it could have had an impact on sales.
“Not only will your CFO visit you, but your CEO as well,” he said.
However, OTP could have minimised that risk, according to Siegfried.
While OTP relates to the management of data, processes, and governance through the use of technology – all these features can enable businesses to gain better forecasts on their operations.
During the panel, Thoihen Heisnam, director of global TP at real estate company CBRE, said that having a “good governance structure around processes” was crucial so that all stakeholders have clear visibility of their responsibilities.
Technology plays a significant role in automating these processes and ensuring they are implemented smoothly, according to Heisnam.
In short, the panel found, corporations must implement technology to improve their data usage.
'Night and day'
Michelle Velez, executive director of tax at manufacturing firm ITT, echoed Heisnam’s thoughts, claiming that unless companies had “an army of tax people” they should start thinking about technology.
Two years ago, her business adopted a technology solution and spent a year and a half working with the team. By the time ITT had fully implemented it, however, the company had stopped using it.
Later, her firm spoke to the finance team and agreed to adopt a different vendor. Now that the technology is efficiently implemented, processing data has become a different ball game.
“It’s night and day. The amount of time I used to spend sending files and consolidating data – now it all happens so easily and quickly,” explained Velez.
“Now, I spent time analysing the data instead of consolidating it,” she added.
Siegfried echoed Velez’s thoughts, stating that while technology can be costly, the advantages of OTP would recoup the expense.
Technology can be considered a solution to the TP work burden for many companies, and speakers on the panel reiterated the significant human aspect of TP.
Danny McVeigh, TP east leader at consulting firm Crowe, said that while technology had many benefits, the “people process was very critical”.
Businesses, therefore, need to think outside the box when recruiting the right skill set to implement technology.
As Siegfried noted, “Data is an important concept – but you will always have data. It’s about consistency.”
ITR’s Global TP Forum took place on September 21 in New York and welcomed more than 100 attendees to discuss the pressing issues of tax and TP.
