Jay Lee from Avalara throws light on the latest buzzword for 2021 “compliance” and the upcoming Fintech revolution that we might see.
Lee brings more than two decades of marketing and business management experience to Avalara. He has overseen B2B strategic marketing and business development teams at some of the world’s most recognizable companies including GE and American Express, and comes to Avalara from PayPal, where he served as the global head of marketing for the company’s Business Financing Solutions division. Prior to PayPal, Lee served as chief marketing officer for Swift Financial (acquired by PayPal), where he was responsible for developing the go-to-market and product strategy to fundamentally increase decision and funding speed for small business loans.
1. Tell us about your role at Avalara?
I am the chief marketing officer at Avalara where I oversee our company’s global marketing strategy and execution. In my role, I lead all aspects of marketing, including brand, customer, partner, prospect, demand gen, mar-tech, and marketing analytics to drive business growth through customer acquisition.
2. Can you tell us about your journey in this industry?
I actually started my career as a systems engineer working in the technology department of an investment bank. My role involved managing system uptime, performance, and capacity planning. Eventually, I found myself taking on the role of product manager tasked with developing the entire go-to-market strategy for a fintech product I was helping develop.
It was during that project that I began transitioning into a more formal marketing role and found myself loving the direct impact on customers I could have through marketing. From framing messaging to developing the go-to-market strategy, I found that I enjoyed putting myself in the shoes of the customer and asking the question, “what’s in it for me?”
3. How have technological advances in automation affected the accounting and finance industry, and what changes are yet to come?
The accounting and finance industry has been in a state of disruption from technology for quite a long time – and I think that the disruption is gaining speed and impact as time passes.
In the beginning, technological advances were as simple as putting manual processes online (statements, payments, reporting, etc.). Over time, the advances evolved into enabling transactions and commerce across new channels, giving control over data back to customers, and using advanced analytics to reduce risk and fraud. The changes we’re most certainly going to see next involve crypto and decentralized finance. The fact that governments around the world are considering new legislation to manage digital currency and creating their own national crypto currencies mean that more change is coming.
4. Trade Treaty Support and Trade Restriction Management are the two new features added to Avalara’s cross-border commerce solution. Tell us how these features add to cross-border eCommerce Growth?
Cross-border ecommerce is growing rapidly as more consumers shop online, and more businesses take advantage of the speed and ease of selling their products online. According to IDC, by 2022, cross-border ecommerce is expected to account for more than 15% of the world’s online retail market. eMarketer estimates that the global online retail market will grow to $5.7 trillion by 2022.
To enable businesses to effectively participate in cross-border ecommerce, Avalara’s cross-border solution is designed to simplify duties and cross-border tariffs, which can be a roadblock for many sellers trying to expand internationally. When used with Avalara’s cross-border solution, Trade Treaty Support and Trade Restrictions Management can help enable cross-border ecommerce growth by reducing costs, avoiding delays, and streamlining manual processes.
Trade Treaty Support allows sellers to apply existing treaty agreements between countries to reduce costs for customers and uses automation to reduce the amount of time needed to maintain and apply treaties to each transaction.
Trade Restrictions Management helps international sellers know what government restrictions are in place when selling goods across borders to reduce additional costs and delays created by parcels being stopped at the border.
All of these capabilities are here to make cross-border commerce more frictionless as if you were selling within the same country. It is incredibly disruptive to business and customers when things go wrong or are held up by customs delays that could have been avoided with proper cross-border compliance.
5. How do you think businesses are being empowered with tax automation?
Typically, business do not do their due diligence on tax implications as they are developing their growth plans. Most businesses consider the market size, solution fit, operating expense investment, etc. – but tax implications are probably the last items to be reviewed, let alone part of a business case.
There are numerous ways businesses are empowered with tax automation that make the above dynamic less of an issue. Some of the top ways include:
1. Reducing compliance risk – Tax automation takes the complex nature of transaction tax rates and rule and simplifies it for businesses. By reducing the need for manual management, businesses reduce their compliance risk by minimizing opportunity for human error.
2. Driving efficiency – Like any type of automation, tax automation enables businesses to be more efficient. Managing tax manually takes critical personnel time away from other high-priority tasks. By automating a complex task that provides little value to the business itself, businesses can increase efficiency across their teams and prioritize expertise for mission critical projects.
3. Reducing blockers to growth – As businesses grow, so do their tax obligations. With tax automation, businesses can reduce blockers to growth by having a readily scalable solution that can expand to address new tax obligations as businesses grow into new channels, geographies, and tax types.
6. Avalara recently announced Avalara for Accountants. How does it make tax compliance practice easier for accountants?
Avalara for Accountants provides accounting professionals access to the same Avalara cloud technology used to process millions of sales tax returns and remit billions of dollars each year. By streamlining their sales tax compliance practice – from sales tax returns preparation and filing to license management and expert sales tax advice – accountants can scale their practices and meet the increasingly complex compliance needs of clients.
Many of the products included in Avalara for Accountants are typically handled in a manual fashion. In fact, Avalara did a study earlier this year that found that 54% of accountants consider it “highly important” to adopt technology and workflows “for a more online or ‘virtual’ environment.” Now, accountants have solutions that add scale and reduce complexity of managing their customers compliance needs. Accountants can become bionic and handle more customer accounts in a broader array of services.
7. How is Avalara Content Generation for POS enabling retailers with physical location to manage complex sales tax calculations at the point of sale?
Businesses that operate brick-and-mortar stores, freestanding kiosks or carts, and mobile locations are subject to a wide range of challenges when it comes to their sales tax compliance. As more consumers embrace flexible shopping options like buy online pickup in store (BOPIS), retailers offering omnichannel experiences need the ability to manage tax across online and in-person channels.
Many brick-and-mortar businesses still rely on static lists of tax rates and rules. However, many of these businesses also have locations across multiple jurisdictions, possess expansive product catalogs, and manage POS systems at every checkout lane. Because product catalogs grow and change frequently, businesses continuously add locations in new jurisdictions, and tax rates and rules constantly change, manual management of tax content creates audit liability and risks poor customer experience if taxes are calculated incorrectly.
Avalara Content Generation for POS helps businesses simplify tax calculations at the point of sale by updating tax content as rates and rules change and providing self-service features that allow users to control how and when they want their tax content.
8. Ecommerce world is continuously evolving. What are some trends that impacted tax compliance?
Ecommerce adoption exploded over the past year as the pandemic halted many in-person transactions and pushed more commerce online. In fact, according to Salesforce, global digital commerce year-over-year grew by 58% in the first quarter of 2021. This growth in ecommerce had a direct impact on tax compliance obligations for businesses of all sizes due to remote tax laws.
Known as economic nexus, remote sales tax laws in the U.S. heavily impact businesses with online sales because they require sellers to pay sales tax based on the location of the customer, even if the business isn’t physically present in the state. Today, 44 of the 45 states with sales tax in the U.S. have remote sales tax laws. Businesses might think that the Wayfair ruling that happened in 2018 was a one and done event. But, in fact, states continue to develop or refine their remote seller laws. Florida enacted their remote seller tax laws on July 1st, 2021, and Missouri – the last holdout state – will enact their laws in 2023.
As ecommerce has evolved and accelerated, many businesses have faced significant tax compliance impacts as their online footprint has grown. For example, a retailer that only sold from a storefront in South Carolina could now have sales tax obligations in 43 others states if they meet each state’s collection requirements.
Ecommerce acceleration has not only increased the potential jurisdictions businesses may have to pay sales tax, but it’s also created more complexity as businesses must be able to understand the varying rates and rules by state and accurately calculate the tax for each transaction in real-time.
9. What advice would you like to give to the upcoming business and startups?
For up-and-coming businesses and startups, their to-do list is long and everchanging, so focusing on tax compliance certainly isn’t top priority. However, at Avalara we see firsthand just how much of an inhibitor tax can be if it’s not addressed correctly from the very beginning.
We have many prospective customers who come to us, not knowing their real tax obligations only to find that it was far more expansive than they thought – with large obligations and voluntary disclosure agreements (VDA) that they must present to the states. These VDA’s are costly and time-consuming but perhaps even more importantly, is that tax and compliance are components of commerce that are really beginning to affect the customer experience. Savvy buyers know when you are using accurate tax rates or removing potential hurdles to cross-border commerce. And, as a startup company – a successful exit strategy requires that you have no unknown tax liabilities.
Similar to other core systems use you to run your business (payroll, banking, etc.) automated tax compliance is a must have and no longer something that you should consider doing without if you want to have a solid foundation for seamless growth.
10. How has the pandemic redefined the capabilities of tax automation and its space in the corporate world?
The pandemic created several fundamental shifts in the fabric of commerce and regulatory obligations along with a rise in adoption of cloud-based infrastructure and increase pressure to drive ROI. All of these changes combined to create significant tailwinds for tax automation adoption as businesses realized that they needed technology to keep pace.
In addition to the pandemic-driven acceleration of ecommerce that I detailed earlier, many businesses realized the value of cloud-based finance solutions to automate manual functions that provided little benefit to the bottom line, like tax compliance, as they looked for ways to drive ROI and efficiency across their operations.
As the pandemic took hold, Avalara partnered with Zuora to survey finance leaders on the impact of the pandemic on finance functions. One of the key findings was that nearly half of finance leaders believed finance automation technology, including tax compliance software, helped their business navigate the changes created by the pandemic.
With more businesses selling across multiple channels and still seeking ways to optimize processes, tax automation has become critical for businesses that want to create a technological foundation that can weather further disruptions and enable ongoing growth.