When the pandemic began in early 2020, manufacturers and many other B2B sellers had to digitize their businesses overnight. Workers were sent home to work remotely, and sales shifted from in-person to online. All of this change happened quickly and, in some cases, haphazardly.

Fast forward two years, and B2B e-commerce is booming, with no sign of slowing. In fact, 75% of B2B procurement spending is expected to happen via online marketplaces within the next five years. This is great news for manufacturers that have embraced e-commerce, but it also puts pressure on businesses to optimize their digital strategies for the long term.

At the same time, tax-compliance complexity has skyrocketed. Manufacturers selling direct-to-consumer online now face expansive remote sales tax obligations. They must also be able to manage exemption certificate collection and other documentation in real-time for tax-exempt e-commerce transactions.

As B2B sellers expand online and look to optimize their digital strategies, incorporating tax into digital transformation will be key. Here are some ways automating compliance can help create long-term success:

Reducing Audit Liability and Penalties 

Despite their best efforts to comply with statutory sales and use tax requirements, many companies fail to address risks proactively. They assume that audit risk is nominal and can be addressed at a later date. 

Even without the pandemic and any new tax issues it might spark, the manufacturing industry is a tough one for compliance. It tends to be a prime target for auditors, and extensive audits can lead to financial penalties that create an undue burden on businesses, especially in the midst of uncertain market conditions.

Automation is critical for manufacturers selling online with a lot of exempt transactions. A solid exemption certificate management system, which manages different exemption certificates with different expiration dates in different states, reduces errors as online transactions happen anytime.

By focusing on automating compliance, manufacturers can ensure the effective management of tax-exempt sales across channels. For manufacturers, automation is all about preparation. One of its most appealing functions is the ability to provide a consistent, documented and predictable process, which is exactly what regulators and examiners want to see from businesses.

Additionally, manufacturers who sell direct-to-consumer because of the convenience of e-commerce open themselves up to new sales tax rules. Economic nexus comes into play when manufacturers cut out intermediaries and sell directly to consumers, becoming retailers as well as producers. 

While selling directly to consumers is popular and beneficial to manufacturers, it opens the door for more obligations with respect to tax compliance. Automation tools that integrate seamlessly into a manufacturer's accounting and e-commerce systems can provide 100% accuracy, and guarantee that calculations meet the latest rules, rates and boundaries.

The Transaction and Post-Purchase Journey 

The rise of B2B e-commerce has prompted more manufacturers to drop the middleman and go directly to customers. Digital transactions have to happen in real time, so if one piece of the process is incorrect, the entire transaction and post-purchase experience could be jeopardized. In addition, checkout must be seamless on the front and back end. Customers are one step closer to confirming a purchase when their payment information is securely provided.

But what happens after a customer clicks on “Buy Now” is also an integral part of the customer experience, and shapes the post-purchase journey. By embracing automation, manufacturers can lean on tools such as artificial intelligence and machine learning to streamline logistics and reduce costs. Customer loyalty can be fostered with product setup and ongoing support, as well as programs that encourage customer evangelization.

A solid exemption certificate management system doesn’t just benefit manufacturers; it also can impact customer experience. For example, if a company with exempt buyers doesn’t have an easy way to upload exemption documentation, that makes for a clunky buying experience. A proper digital strategy that relies on an exemption certificate management system creates a better purchasing process for customers, in addition to reducing headaches for sellers.

Tax data varies widely by location, product type and channel, so having the same tax system integrated across channels gives added visibility between disparate points of the transaction. Greater access to sales tax content and data is the key for manufacturers to unlock business insights they need to confidently make decisions about their tax-compliance strategy.

Manufacturers can capitalize on greater data visibility by accessing research to analyze and make decisions about tax compliance, determine taxability for their products, classify items with appropriate tax categories and codes, and assess and estimate potential sales tax obligations.

By embracing automation for greater tax data visibility, manufacturers can expand into new countries and markets while knowing that their tax compliance is taken care of. Businesses can scale with technology that enables further growth of B2B e-commerce, while staying on top of compliance obligations.

As we turn the corner on two years of the pandemic, manufacturers should be evaluating where their digital strategies have taken them these past few years. By focusing on automating compliance, businesses can avoid audit penalties, continue to improve their customer experience, and ensure greater tax data visibility in the post-pandemic world.

Silvia Aguirre is vice president of certificate management with Avalara.