Digitizing legal entity data can improve your bottom line

Erase the silos: One place, one tool, one truth

Legal entity structures and their underlying data are core building blocks for global organizations – serving as a launchpad for business activities. Akin to an orchestra that requires its musicians to use identical sheets of music, the business can thrive when all functions such as finance, legal, treasury, as well as tax, rely upon the same source of truth. However, when multiple business functions separately track this critical dataflow, disruption can arise due to discrepancies and process inefficiencies.

So why haven’t most businesses fixed this problem? Leveraging one, ‘single source’ of information that evolves in real-time and provides ample transparency to all relevant business functions has been viewed as a futuristic, ‘would be nice’ solution. Historically there have been practical barriers for implementing this type of approach for legal entity data, such as the lack of an end-to-end automated solution that fits the needs of most or all corporate function stakeholders.

The landscape has changed and a leading-edge solution – Entity Ops – exists that can centralize and standardize the legal entity data itself, the governance surrounding the continual evolution of such data, while also meeting specific stakeholder needs. And it keeps getting better as we are continually adding more functionality that helps set us apart from other products on the market. Click here to learn more.

What we’re seeing….

Cost containment

Keeping a lid on costs is a priority for many C-suites: Tax and other functions are being asked to identify ways to ‘run leaner’ and more efficiently. Tracking legal entity data is a growing area of focus because all functions (such as tax, legal, finance, and treasury) are creating multiple versions of this information. Each function typically utilizes its own ‘version’ of this data for compliance and planning purposes, but the data is not openly transparent – only certain personnel have access.

The result is a significant amount of wasted time and resources across the enterprise due to duplicative and manual processes. Companies can reduce costs by embracing a ‘master data’ concept and centralizing one place for this core data.

Demand for quick insights

Many C-suites are pursuing operational changes, such as to supply chains, and other strategic investments, requiring upfront tax analysis. In addition, ‘tax’ is a top policy issue for the C-suite due to the continuing instability of global and US tax environments. C-suites need data-driven acumen based on scenario or ‘what-if’ planning, as well as modeling of federal, state, and global tax impacts to understand potential tax increases and avoid unexpected tax bills.

Legal entity data is the foundation for all of the above – across many functions. Planning and executing strategy quickly is difficult if your legal entity ‘picture’ is not accurate. Tax in particular needs accurate, up-to-date organizational structure charts and related data at its fingertips for reporting – not just a current snapshot, but historically as well.

Timely and accurate reporting

Companies are facing mounting compliance requirements and heightened complexity around the world. Rising reporting burdens underscore the need to have core information in real-time, from a secure source, without manual ‘checks’ with other functions.

For example, we’re seeing tax functions track only a limited scope of legal entity data such as names, addresses, ID numbers, ownership percentages, and entity classification for tax purposes. Other important information – such as local tax IDs, officer appointments, functional currencies, qualifications to do business in particular jurisdictions, branch information, and who prepares returns – may be stored somewhere else and not ‘matched’ with core data.

The power of digital

C-suites are focused on digital transformations across the organization, yielding incredible efficiencies and capabilities. At the same time, we’re seeing companies struggle with slow-moving manual updates to core legal entity data that many functions rely upon. The good news is that companies can apply the same transformation ‘mindset’ to address this challenge, but still utilize a platform that can be either ‘off-the-shelf’, as well as fully customized to meet the company’s specific needs.

Leveraging an industry leading digital approach such as Entity Ops can address many fundamental difficulties with which companies are grappling, such as:

  • tracking historical data, e.g., understanding what the legal entity structure looked like at a specific point in time in the past, which is critical to current year tax reporting. Companies using a manual, ad hoc approach experience bottlenecks when data is requested between tax teams and other functions, with limited ability to track who made changes and when. Imagine sifting through emails and documents to pinpoint prior years’ data during a complicated tax audit – this may not be the right allocation of time and resources when significant dollars are at stake.
  • generating a detailed organization chart for all or part of the legal entity structure. Companies using a manual approach incur significant hands-on effort to do this accurately.

A ‘single source’ of legal entity data can alleviate pain points across functions, including the high risk of cascading financial errors, process inefficiencies that are a drag on strategic tasks, constant reporting pressures for an up-to-date version of data, and staff performing manual tasks when they could be doing more value-added work.

What’s the bottom line?

Tax and other corporate functions are balancing priorities and investing their time and resources into actions that provide recurring benefits over the long haul – not just alleviate near term burden. Taking a holistic, digital approach to core legal entity data, such as Entity Ops, can help contribute bottom-line value by, for example:

  • stopping duplicative work across the enterprise, while helping to avoid strings of cross-functional emails to track this core information, saving potentially significant time and effort.
  • reducing the time to provide real-time insights with easily-accessible legal entity data, enabling faster C-suite and business planning for investments and M&A pursuits.
  • significantly reducing the burden on tax staff to manually create org charts, an often tedious task, allowing those resources to shift their focus on more value-added tasks.
  • helping to avoid costly repercussions of cascading reporting errors, such as during a tax audit where mistakes can impact a tax authority’s perception of governance frameworks.

The result is a host of benefits that can cumulate year-after-year – a ‘win-win’ for the entire organization, with tax leading the way.

Entity Ops can create a reliable knowledge base across your enterprise

Entity Ops, a PwC product, is your enterprise’s single truth source for legal entity data for tax, legal, finance, and other in-house professionals. It’s a data management, tracking, sharing and governance powerhouse that turns complex data into simple visualizations. The platform helps solve problems – big and small – and facilitates data-driven decisions, whether it’s for 30 entities across the US or 30,000 across the globe.

Key characteristics:

Multiple needs met. One source of truth.
Developed specifically for tax, corporate secretarial and legal needs, while being easily shared and understood by cross-functional teams.

Endless flexibility. Scales as your business grows.
Can be customized to add and modify as many unique data fields as needed and seamlessly integrate data from other sources and tools.

Powerful analytics. Simple visualizations for reporting.
Interactive charting for easy visualization and robust analysis.

Detailed tracking. Enhances your enterprise-wide governance.
Role-based management and permissions, including a robust entity archive history and audit trail. Helps avoid the cascading effects of inaccurate or outdated data shared across teams.

Scenario modeling. Plan out your future.
As regulations and business priorities change, assess the potential impact that entity changes might have on your business.

Industry-leading features today. Building for tomorrow.
Continuously enhanced by PwC tax and legal technologists and taps into the brain trust of the PwC global network.

Follow us