Let’s Talk: Analytics, Taxes, and Chicken Sandwiches
The Chicken Sandwich War of 2019 was such an emotional firestorm, decorum prevents us from officially weighing in on the suddenly critical debate of which fast-food chain offers the best fried chicken sandwich (but seriously, it’s Chick-fil-A).
We can, however, declare a winner in a different war, this time without the use of tongue-in-cheek parentheticals. In Chick-fil-A’s own private war against the complexities of the U.S. tax code, the Georgia-born chicken empire is emerging victorious — thanks in large part to a juicy analytics solution.
An OG Chicken Empire Stuck in Old School Processes
With more than 2,300 locations across 47 states (and Washington, DC) and a 2018 revenue of more than $10 billion, Chick-fil-A faces the stiff challenge of navigating thousands of sales tax jurisdictions.
Like many companies, Chick-fil-A’s tax department was spending about 80% of its time on data preparation, leaving little room for analysis or validation. A few years ago, Matt Burton, Chick-fil-A’s senior principal team leader of tax technology, inquired if there was a better way for the company to crunch tax data and take advantage of its data.
“I asked, ‘Instead of me having to run a SQL query over and over, is there some tool that would allow other individuals within the tax department to access that data?’” Burton said.
Chick-fil-A uses Alteryx to automate manual processes, put time back in tax professionals’ days, and improve overall business results.
The Secret Recipe
While the real secret recipe is locked up in a safe at company headquarters, we can share Chick-fil-A’s recipe for tax success. It takes three key ingredients (No, not pickles, mayo, and a buttery bun).
1) Blending tax data
Imagine standing at a Chick-fil-A counter and ordering a chocolate milkshake. You watch as the employee places the various ingredients into your cup — then gasp as he informs you that it will take about four hours to blend them all together.
That outcome would be unacceptable to just about any customer. Likewise, the amount of time it took Chick-fil-A’s tax team to prepare and blend 1099 data from various sources was unacceptable to the company’s tax function.
To streamline the process, Chick-fil-A placed Alteryx analytics in the middle of its 1099 workflow. Now they’re able to quickly combine data from various sources — while also identifying components that are in one set and not another, which can alert the team to data errors they might otherwise never find. The platform then automatically formats, validates, and outputs the clean 1099 data onto a fresh spreadsheet.
The process is fast, efficient, and less error-prone than the methods Chick-fil-A used in the past. And the company’s tax team can now use the extra time to look through its data and identify opportunities for cutting costs and growing revenue.
2) Running tax data simulations
Buttery buns and crunchy pickles will only get you so far. To maintain a successful business, Chick-fil-A must make decisions based on reliable, timely data. And that includes the ability to accurately simulate and forecast the tax implications of a decision before it’s made.
3) Deriving analytics from tax data
Data science doesn’t always move as smoothly as a Chick-fil-A drive-thru line. It can be easy to get “stuck in the data” — overwhelmed by the noise and unable to derive the insights you actually need.
Blending data from multiple input files across databases, spreadsheets, and CSVs, Chick-fil-A is able to analyze millions of transactions while automatically and dynamically updating certain parameters every day. The resulting analytics create all sorts of benefits for Chick-fil-A, and one of the most immediate is the ability to identify potential issues before tax returns are filed.
I’ve run out of chicken references, so I’ll end with these hand-pecked results.
In addition to Chick-fil-A’s 1099-K prep time going from 10 hours to 10 seconds, querying daily tax rates — a process which once required a staff of five to six people — is now performed daily by a single individual.
Originally published on Going Concern.
Chick-fil-A employed analytics tools to reduce time spent processing tax data for 1099-Ks from 10 hours to 10 seconds. That means Chick-fil-A’s tax professionals (as will yours, if you follow the company’s example) have way more time to actually look through tax data and discover opportunities to increase revenue, widen margins, and reduce errors.
Tune in to this webinar and see real-life examples on how Chick-fil-A was able to reduce risk, increase value, and better identify tax-saving opportunities with analytics.
Alteryx Chairman and CEO Dean Stoecker shares his insight on the powerful impact of modern analytics technology in tax.