How to maintain telecom tax compliance using a subscription billing platform

The Telecommunications industry is one of the most heavily taxed service industries.

In countries such as the United States, providers have to keep on top of Federal, State, and District taxes, plus other fees that they are responsible for collecting and submitting. As a result, managing tax compliance can add significant resource time to a Telecommunications company’s billing operations.

Furthermore, some of the most common errors that Telecommunications companies make are the following:

  • Inaccurate bundling taxation
  • Customer location misattribution
  • Usage-rating miscalculations
  • Failing to adapt to tax law changes

Therefore it is imperative to have a powerful subscription billing platform that integrates with a taxation solution that automates the applying of accurate tax rates, collection, compliance and reporting, in order that these issues can be mitigated

Bundle and tax accurately

When it comes to Telecommunications, no one customer invoice is the same. It can often involve complex configurations of bundles that include multiple product line items with their own unique terms and billing cycles. In amongst the complexity, Telecommunications providers have to ensure that the accurate tax rates are applied to these line items.

Taxes Drone

With a tax-integrated billing platform, the tax rates can be accurately pulled and applied to a particular product or service line item automatically, based on its categorization. This becomes particularly handy when a company is dealing with a large volume of usage-based, variable charges when the ultimate invoice charges can vary dramatically from month-to-month. Taxes can be calculated and applied in real time to these usage charges, ensuring accuracy to the very last decimal point.

Maintain accurate customer records

Customer data integrity is paramount when it comes to Telecommunications taxation. It is imperative that the customer’s geographical location is accurately tagged. Furthermore, if there are customers with multiple departments that are in different geographical locations and individually billed,  it is critical that a billing system can manage these hierarchies and recognize the geographical location at hand, in order to accurately compute the invoice data.

Recognizing the importance of maintaining customer data integrity, many of the newer billing platforms on the market have a fully integrated CRM solution, in order to help businesses maintain their customer records to the highest of standards. This way, when the platform creates an invoice for a particular customer, it can pull the geographical metadata and apply the relevant tax codes to the charges.

Automate usage-rating

So what does usage-rating have to do with taxation? A lot.

Usage metering is the way of computing charges based on actual usage of any service. The service usage unit can be in any form such as storage kilobytes, MB, GB, calls, minutes, licenses, features, software usage, data, messages sent, bandwidth etc. Ultimately, this usage is tracked and then calculates the relevant charges on the customer invoice. Furthermore, due to the sheer volume that gets computed daily, usage is batch uploaded.

However, this usage-rating process is only effective if it’s coupled with accurate taxation calculation. By using a billing platform with both its own usage-rating engine and integrated tax engine, Telecommunications businesses can ensure that once huge volumes of CRD files are batch uploaded and read, the platform can automatically recognize the product category, pull the relevant tax codes and apply the relevant taxation percentages to the charges in real time. This shaves down a significant amount of manual processing time to calculate invoice charges, and also ensures the ultimate accuracy.

Keep on top of tax law changes

Taxation law is dynamic and constantly shifting. Moreover with so many nuances across geographical regions, it makes it nearly impossible to be able to monitor these changes and ensure that they are implemented across your billing operations. Furthermore, it’s a non-value added activity having to manually update taxes, compile and file reports, when your valuable resources could instead be spent on driving the revenue line.

Through an advanced billing solution that has a tax integrator, taxes can be automatically updated as taxation law changes over time. Furthermore, the integrator can take care of the reporting obligations to ensure there are no pending business audit risks.

The great news is that there are many powerful external taxation engines in the market such as SureTax, Avalara, CSI Compliance solutions.

In fact OneBill integrates seamlessly with all of these solutions. Discover how OneBill can help you to stay on top of telecom taxation compliance.

By JK Chelladurai