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The benefits of having high-quality data are widely known. Data fuels better decision making, helps organizations understand their customers, and improves processes and efficiencies.
Within the realms of taxation, requirements from tax officials for digital data have increased worldwide in recent years. Countries now request that businesses electronically submit transactional data with plenty of detail.
Data quality can make or break an enterprise resource planning (ERP) system. Taxpayers looking to overhaul their old systems should turn to data analytics and business intelligence. This is true for small-to-medium sized enterprises, as well as multinational companies.
“From a strategic point of view, business intelligence is important because it allows you to access your data,” said Pennington. “You want to improve your data anyway because it allows you to stay one step ahead of regulatory requirements.”
But why haven't businesses in the tax industry adapted to better data quality practices?
The Four Reasons Why Data Quality suffers in the Tax Industry
Tax organizations often have to wrestle with outdated data that hasn't been digitized yet, which makes it hard to generate accurate reports. As tax officials work on new compliance procedures, the tax industry should turn its attention to improving data quality. Otherwise, we predict these problems will keep happening:
- Data quality will dip even further if left uncorrected: The time taken to fix data errors manually is a wasted opportunity. In the tax industry, for example, data resides in databases managed by different departments like sales, finance, and marketing. This can lead to incorrect records because it's tough to attribute responsibility. Also, when pulling data from various sources you might run into inconsistency issues like duplication or other problems that result from discrepancies between these sources.
- Out-of-date files and reports will continue to compound: Another issue tax professionals face is a lack of access to current data. They often have to work with manually edited files that are old and outdated. When new files and reports are created, the older ones just pile up and remain separated instead of being compiled into one document.
- Proper data management will become practically impossible: It may be hard to believe, but in 2022 we are still relying on spreadsheets and other simplistic data-storing tools. They work fine for day-to-day tasks, however, there is much better technology available that would enable organizations to work more efficiently with greater amounts of data.
- Growing pains of data: The constant influx of data is a common problem for tax organizations. They regularly struggle with collecting, managing, and understanding the value of the data they have.
Why are tax clients more susceptible to fraud?
By using automated processes and technology to store and manage client data, tax offices have unwittingly made it easier for hackers to access this sensitive information. Moreover, it has become more difficult to keep track of everything, leading to an increase in fraud.
Included in those likely security breaches, is email marketing. Many businesses use email as the primary means of communicating with customers, and email messages are often not secure enough to protect customer information. If the tax industry is utilizing email to promote its services or communicate with its clients while simultaneously failing to update and clean its email databases, it may be inadvertently risking the security of other important data.
Finally, human errors can lead to inaccuracies in customer data. Employees in the tax industry may unknowingly enter incorrect information into databases or fail to update existing information when changes occur. This kind of mistake can result in inaccurate reporting and could lead to penalties for businesses that fail to comply with regulations.
Why bad data can make the best technology unsafe
Tax firms have a massive repository of old, potentially outdated data on their hands. When it’s time for these tax firms to get a fresh start and update their processes and technologies, they will be just flooding their new technology with old data causing the same problems and headaches as before and it will also be easier for fraudsters to give false information.
For example, let’s talk about Email Addresses. Old email data can be filled with invalid, outdated, unused email addresses that turn into spam trap emails, bot emails, and disposable emails.
Every business that sends emails has a sender reputation score, quite similar to a credit score. If you are sending to invalid email addresses that never open your email, respond, or mark you as spam this will result in a decline in your email deliverability. Not only will this cause your sender reputation score to suffer, it could consequently stop you from sending emails until it is fixed.
Imagine tax season coming around, and you can't reach any of your clients because of a bad sender reputation or poor deliverability. That would be an even worse headache on top of everything else that tax officials have to deal with.
This is also relevant for postal addresses or telephone numbers. For example, how many people ditched their home line phones years ago in favor of only having mobile? Or how often do people switch up their mobile phone numbers?
“In 2004, more than 90 percent of U.S. adults lived in households that had an operational landline phone - now it’s less than 30 percent. That’s according to data provided by the Centers of Disease Control and Prevention, which has been tracking phone ownership in the U.S. as a by-product of its biannual National Health Interview Survey since 2004.”
According to movebuddha, “roughly 30 million people in the United States move each year.”
Technology and systems are only as good as the data that they receive.
Good data is essential for any business. Here's how you can improve your data and reap the benefits.
The benefits of data quality in the tax industry
Apart from the benefits of timely, efficient, and accurate data, good data quality allows for better strategic tax decisions on a company-wide basis and provides more opportunities for business growth.
More benefits of improved data quality for the tax industry:
- Access to more accurate tax information allows your organization to follow better tax practices and be more transparent.
- Having better data control allows different tax departments to run more efficiently and eliminates duplicates.
- Save money and reduce recovery claims by eliminating data errors.
- With all the data organized in one place, your department is able to set better benchmarks and performance standards.
- By unifying all data points into one view, teams can quickly and easily locate issues in their processes.
How can Webbula improve data quality in the tax industry
There are two ways Webbula can help the tax industry improve its data quality.
- Keep your email lists clean with Webbula Email Hygiene
The first is with our email hygiene technology. The tax industry will not be able to afford deliverability glitches in its email programs during the tax season.
Tax email marketing is no walk in the park with the number of older email addresses that turn into spam traps, email addresses with typos, and disposable addresses supplied by customers, clients, or fraudsters.
In the coming months, the need for communication will be essential for tax season. Tax professionals need to ensure their email data is in tip-top shape in order to keep not only good deliverability but to be able to contact their customers.
- Enhance your database with Webbula Data Appends
According to Kissmetrics, “Businesses lose as much as 20% of revenue due to poor data quality.” And according to Gartner Research, “the average financial impact of poor data quality on organizations is $9.7 million per year.”
This is why filling in the gaps in your database with a solution like Webbula Data Enhancement can help improve data quality issues within your tax organization.
Filling in crucial pieces like postal addresses and phone numbers can help you keep customer data up to date when customers find themselves moving often. Most importantly, Webbula’s Email Hygiene service verifies an email address is valid and safe and provides insight into how active that email address is. Our Data Enhancement service can append the most current email address where email data is unknown or invalid.
Additionally, customer experience and personalization are the future of marketing. Imagine how powerful a demographic append like household income, presence of children, age, marital status, or credit range and more could be to improve audience segmentation and messaging.
To ensure the accuracy of customer data, businesses in the tax industry should focus on strengthening email security and implementing automated processes to reduce the chance of human error. Doing so can help improve data quality and keep both customers’ information and businesses safe.
By taking proactive steps toward improving data quality, businesses in the tax industry can avoid costly mistakes and maintain compliance with regulations.
Talk to Webbula today and let’s start improving your data quality ahead of tax season.
She is the Content Marketing Manager at Webbula. She manages social media, creates eye-catching content, and oversees web design. She's a jill of all trades writing a surplus of 100+ blog articles over three years in the email hygiene and data solutions space.
Webbula is the undisputed industry leader in Email Hygiene, Data Enrichment and Audience Targeting services. Check out webbula.com to see what Webbula has to offer.