ITR TP Forum: Stakeholders hail the benefits of operational TP
Firms will improve their forecasts if they adopt operational transfer prices, according to panellists RTI‘s Global Transfer Pricing Forum USA in New York yesterday September 21st.
“Having this OTP down will allow you to improve your forecasts. With your data, you will be able to tell your own story,” said Troy Siegfried, director of global TP at manufacturing company FMC Corporation, during a panel.
Siegfried encountered an issue in Asia where products were discontinued due to TP issues and it took a long time for items to be released. This presented a risk to the business as it could have impacted sales.
“Not only will your CFO be visiting, but your CEO will be too,” he said.
However, OTP could have minimized this risk, according to Siegfried.
Although OTP is about managing data, processes, and governance through the use of technology, all of these features can help companies get better insights into their operations.
During the panel, Thoihen Heisnam, director of global TP at real estate company CBRE, said it was crucial to have a “good governance structure around the processes” so that all stakeholders have clear visibility on their responsibilities.
Technology plays an important role in automating these processes and ensuring their smooth implementation, according to Heisnam.
In short, the panel found that companies need to implement technology to improve their use of data.
Michelle Velez, executive director of tax at manufacturing company ITT, echoed Heisnam’s thoughts, saying that unless companies have “an army of tax people,” they should start thinking about technology.
Two years ago, his company adopted a technology solution and spent a year and a half working with the team. By the time ITT fully implemented it, however, the company had stopped using it.
Later, his company spoke to the finance team and agreed to switch to another supplier. Now that the technology is implemented effectively, data processing has become a different ballgame.
” It’s day and night. The time I used to spend sending files and consolidating data – now it all happens so easily and quickly,” Velez explained.
“Now I spent time analyzing the data instead of consolidating it,” she added.
Siegfried echoed Velez’s thoughts, stating that while the technology can be expensive, the benefits of OTP would recoup the expense.
Technology can be seen as a solution to TP’s workload for many companies, and panelists reiterated the important people aspect of TP.
Danny McVeigh, TP East manager at consultancy Crowe, said while the technology had many benefits, the “human process was very critical”.
Companies therefore need to think outside the box when recruiting the right skills to implement technology.
As Siegfried noted, “Data is an important concept, but you will always have data. It’s a matter of consistency.
ITR The Global TP Forum took place on September 21 in New York and hosted over 100 attendees to discuss pressing tax and TP issues.