Manufacturing companies implement ERP systems to centralize operations, streamline processes, and reduce reliance on spreadsheets. These systems do a great job managing core functions like production, inventory, and financials. But as you go further away from the actual production of the product, the story is different. Sales tax is a good example.
Many ERP systems struggle to keep up with ongoing tax changes. As states adjust rates, rules, and nexus laws, tax compliance becomes a moving target. If your ERP setup isn’t designed to adapt, you may be spending more time on compliance than necessary or exposing your business to risk without realizing it.
In 2018, the South Dakota v. Wayfair, Inc. decision gave states the power to require out-of-state sellers to collect and remit sales tax. Since then, nearly every state with a sales tax has adopted economic nexus laws. The thresholds differ by state, and they change periodically. For companies selling into multiple states, this creates a patchwork of requirements that can be hard to track.
ERP systems are not immune to this challenge. In fact, many rely on ZIP code-based rate tables, which can result in inaccurate tax calculations. ZIP codes don't always align cleanly with tax jurisdictions, and local rate changes may not be reflected without a manual update. Teams often need to upload new rate tables, adjust tax codes, and verify exemptions manually, especially during order entry.
The end result? A growing risk of errors, missed updates, and compliance gaps.
When tax setup in your ERP isn't automated, problems tend to appear in two places: the sales order process and during filing. Order entry often requires staff to apply the correct tax table manually. If someone selects the wrong one or doesn't know the local taxability rules for a product or service, incorrect tax is charged. That can frustrate customers and create reconciliation issues down the line.
On the filing side, tax teams may spend hours pulling data, reconciling invoices, and checking that the right amounts were collected. This process becomes even more time-consuming when managing exemption certificates, especially if they are tracked manually or stored in separate systems.
All of this adds up. Businesses that handle tax manually report spending a significant amount of time maintaining rate tables, researching state laws, and correcting past returns. The risk isn't just inefficiency; it’s noncompliance and audit exposure.
"Keeping up" with tax changes isn't just about rate tables. It means having a system that can do the following:
If your current ERP setup doesn’t support those needs, your compliance process may be more reactive than it should be.
Today’s top ERP systems, including Infor ERP, can integrate with tax engines that automate compliance. These integrations are designed to work with your ERP’s existing workflows, not around them.
Avalara’s AvaTax, for example, provides rooftop-level address validation and real-time tax calculation using geolocation data. This reduces reliance on ZIP codes and ensures taxes are calculated correctly for every transaction. Exemption certificate tracking, product taxability rules, and audit reporting are also supported, and all updates are delivered in real time through the cloud.
This kind of automation can significantly reduce internal workload and improve accuracy, especially for companies doing business in multiple states or managing a wide range of products.
ERP systems are essential for managing complex manufacturing operations, but many fall short when it comes to sales tax. It’s part of the reason we choose to partner (on behalf of our clients) with companies like Avalara.
If your current process relies heavily on manual updates, spreadsheets, or basic tax logic, it may be time to assess whether your ERP is still meeting your compliance needs.
Tax laws change frequently. If your systems can’t adapt just as quickly, the burden of staying compliant falls on your team. And that’s a risk worth avoiding.