The Total Economic Impact™ Of Avalara

Managed Returns Savings

Evidence and data. Before adopting Avalara Managed Returns, interviewees’ organizations were responsible for preparing, filing, and remitting sales tax returns internally or through third-party firms. These processes required finance and accounting teams to compile jurisdiction-level reports, validate figures, submit filings to multiple states, track deadlines, manage payments, and respond to state notices. As organizations expanded into additional states or experienced transaction growth, the effort required to manage returns increased disproportionately, often consuming weeks of staff time each month and increasing the risk of missed filings, late payments, and penalties.

By shifting sales tax returns preparation and filing to Avalara Managed Returns, interviewees’ organizations significantly reduced the ongoing labor required to remain compliant. Interviewees described moving from manual, spreadsheet-driven workflows or reliance on external accounting firms to a model where returns were prepared and filed automatically on their behalf. Avalara eliminated the need to generate jurisdiction-specific reports, monitor filing calendars, and manually submit returns, while also ensuring filings were completed on time by default. In addition, Avalara handled notices and follow-up with taxing authorities, further reducing internal effort during audits or compliance reviews.

• Interviewees emphasized improved timeliness and reliability of filings. The tax manager at a manufacturing firm noted: “Returns were never missed, returns were never late, and Avalara always defaults to filing returns when they are due. We can always amend if we need to fix something, but you’re better off paying it and submitting it on time than getting a fine and penalty, so that was tremendous for us.”

• The lead financial analyst at a biotech firm highlighted that automation removed the need to “generate the reports on our side and then manually file them with the state for ourselves, saving a half day of work each month.”

These improvements translated into measurable productivity gains and cost avoidance. Interviewees’ organizations reduced time spent on compliance reporting from up to a full week per cycle to minimal ongoing effort, effectively eliminating the need for manual intervention in return preparation. In addition, they avoided recurring penalty costs associated with late or inaccurate filings. The lead financial analyst at a biotech firm estimated that automation helped avoid approximately $8,000 to $10,000 in late fees and interest annually.

As a result, these organizations realized meaningful labor savings, avoided incremental hiring as compliance scope expanded, and improved consistency and reliability in their returns process. Several interviewees emphasized that Managed Returns effectively removed sales tax filing from their monthly close activities altogether, allowing finance leaders and accounting staff to redirect time toward higher-value initiatives.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• A senior tax manager files 400 returns per year. They spend 600 hours per year streamlining, collecting the necessary documentation, and filing returns in the prior environment. Their average fully burdened hourly rate is $96.

• Avalara saves 95% of their effort and reduces the time spent on managing and filing tax returns to 30 hours per year.

• Of the time saved from deploying Avalara, Forrester conservatively estimates that 80% is recaptured for work on other tasks and initiatives, which is therefore included in the benefit calculation.

Risks. The benefit of streamlining tax filing labor savings will vary based on:

• The internal personnel that support filing tax returns and their respective salaries.

• The size and scale of the organization.

• How likely different employees are to dedicate recaptured time savings back into additional work.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $93,000.

Streamlined Sales Tax Program Savings

Evidence and data. The SST program is a multistate initiative that allows qualified businesses to use certified providers (such as Avalara) to calculate, file, and remit sales tax. Interviewees’ organizations were therefore eligible to participate in the SST program and consequently reduced or eliminated costs associated with sales tax calculation, filing, and remittance in 24 participating states (plus Pennsylvania, which operates a separate state-administered compliance program offering similar benefits). In addition, interviewees who leveraged Avalara to manage SST-qualified transactions and returns said they avoided third-party service fees and internal labor required to prepare and submit returns, resulting in ongoing measurable per-transaction and per-return cost savings.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization saves $6,900 due to its participation in the SST program. It saves 50% of filing costs by avoiding fees in 24 states.

• The composite files 50% of its returns via the SST program at a cost of $56 per return, saving $11,200 annually.

Risks. The benefit from tax-related savings will vary based on:

• The number of returns filed.

• The size, scope, and location of the entities filing tax returns.

• The cost per transaction and the filing cost per return.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $38,000.

VAT Reporting Savings

Evidence and data. Interviewees with complex, multi-country operations reported significant efficiency gains and cost reductions associated with automating VAT returns and reporting using Avalara.

Before investing in Avalara, customers relied on fragmented, manual processes and external consultants to manage VAT compliance across jurisdictions. These processes required extracting transaction data from ERP systems, coordinating with country-specific representatives, and reviewing manually prepared reports before filing. A European tax accountant in the manufacturing/distribution industry explained: “I would manually download all the invoices … and send them over to the consultants. … They’d prepare [the reports]; … it was tough to track everything.” The same interviewee noted that their organization spent more than $500,000 annually on European consultants and external agencies to support VAT compliance activities before automation. After deploying Avalara, they reduced the spend on external consultants by almost 60%.

After implementing Avalara VAT Reporting, interviewees said they centralized and automated VAT reporting workflows, reducing reliance on external consultants and significantly lowering manual effort. The platform automatically applied country-specific rules (e.g., place of supply, delivery, and importer rules), generated reconciled reports, and enabled users to review and submit filings within a unified interface.

In addition to cost savings, interviewees’ organizations realized substantial productivity gains. Before Avalara, VAT reporting required three to four working days per reporting cycle, depending on jurisdictional complexity and reporting frequency (e.g., monthly, quarterly, or bi-monthly filings, as well as additional obligations such as Intrastat and European Sales Listing reporting). With Avalara, reporting preparation was reduced to approximately a half-day or less, as the solution automated data extraction, classification, and reconciliation.

Finally, automation improved accuracy and reduced reconciliation effort. Previously, interviewees’ organizations relied heavily on Excel-based calculations and manual filtering, increasing the likelihood of errors and requiring additional time to validate results. With Avalara, automated rule application and system-generated reports reduced manual intervention and simplified compliance across countries, enabling tax teams to manage increasing geographic complexity without proportional increases in effort.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite does business in one European country and has 12 VAT compliance cycles per year.

• Before Avalara, it took 30 hours per cycle to complete the work for the filings.

• After Avalara, the composite saves 90% of the time it took to complete the filing work.

• The average fully burdened hourly rate for a senior tax manager is $96 per hour.

• Of the time saved from deploying Avalara, Forrester conservatively estimates that 80% is recaptured for work on other tasks and initiatives, which is therefore included in the benefit calculation.

Risks. The benefit from VAT reporting will vary based on:

• The number of compliance cycles a company experiences.

• The internal personnel who support VAT reporting and their respective salaries.

• The size and scale of the organization.

• How likely different employees are to dedicate recaptured effort savings back into additional work.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $53,000.

Use Tax Savings

Evidence and data. Interviewees reported reduced effort and improved accuracy in use tax compliance after implementing Avalara’s AvaTax for Accounts Payable capabilities. Before using Avalara, they manually reviewed purchase transactions to determine taxability, which required significant effort and introduced the risk of error. The lead financial analyst at a biotech firm explained: “Avalara helped us with the calculation of our use tax and filings. Before, we pulled all our purchase invoices and manually calculated which were taxable and which were nontaxable. With the implementation of the Accounts Payable module from AvaTax, we were able to let it run on its own, eliminating all the manual filtering and determining which use tax we need to pay. We were spending up to two days every month to reconcile the use tax portion.”

This manual process required employees to analyze large volumes of purchase data, apply tax rules for each transaction, and perform periodic reconciliations to ensure accuracy. Additionally, teams conducted ongoing self-audits to identify any missing taxes on vendor invoices and to verify whether purchases were taxable. After implementing Avalara, interviewees’ organizations were able to automate the identification of taxable purchases and the calculation and accrual of use tax. Interviewees said that automation significantly reduced the time needed to analyze purchases and eliminated the necessity for manual filtering and reconciliation.

Automatically identifying transactions and accruing use tax appropriately can significantly reduce the need for manual reviews. This approach led interviewees to experience measurable productivity improvements and financial benefits. For instance, the time required each month to analyze purchase transactions and calculate use tax decreased, eliminating up to two days of work. Teams reduced the time spent on reconciliation and self-audit activities while improving the accuracy of determining taxable purchases and applying use tax rules. Moreover, interviewees’ organizations can now more easily identify instances of overpaid or underpaid use tax amounts, thereby improving financial management.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• Senior tax managers spend 50 hours per month filing use tax returns before deploying Avalara AvaTax for Accounts Payable. Their average fully burdened hourly rate is $96.

• Avalara saves 90% of their effort and reduces the number of hours per month to five.

• Of the time saved from deploying Avalara, Forrester conservatively estimates that 80% is recaptured for work on other tasks and initiatives, which is therefore included in the benefit calculation.

• For the $300 million dollar composite organization, Forrester estimates purchasing spend of 70% of total annual revenue. Approximately 15% of that spend is taxable with a blended use tax rate of 7.5%.

• The error rate for use tax obligation is 12% and the composite recoups 30% of overpayments.

Risks. The benefit from use tax-related savings will vary based on:

• The number of hours spent managing and filing use tax.

• The size, scope, and industry of the organization, as some industries traditionally purchase more goods.

• The use tax rates.

• The error rate for overpayments and the amount of overpayment able to be recaptured.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $267,000.

Tax Exemption Certificates Labor Savings

Evidence and data. Interviewees said that Avalara Exemption Certificate Management (ECM) reduced labor by moving exemption certificate administration out of fragmented, document-by-document workflows into a centralized, exception-based process. Before automation, teams manually requested certificates, verified dates and exemption numbers, uploaded documentation into customer records, and corrected invoices when expired or missing certificates resulted in tax being incorrectly applied. Several interviewees described exemption certificate renewals as a recurring multi-month effort that required customer outreach, follow-up communications, manual uploads, and manual validation, often supplemented by temporary resources during peak renewal periods.

Interviewees also highlighted the value of Avalara’s AI-enabled exemption certificate management functionality. Rather than manually reviewing, keying, and indexing exemption certificates, interviewees said they forwarded documents into Avalara, where AI then extracted certificate details, identified relevant customer information, populated required fields, and prepared records for validation. Interviewees described the process as shifting from manual data entry to a simple review-and-confirm workflow, reducing certificate processing time to less than 2 minutes per document while improving consistency and reducing administrative effort.

Interviewees said their tax teams could redirect effort away from routine certificate management toward higher-value compliance and advisor activities due to ECM providing a centralized repository for certificate capture, storage, monitoring, and retrieval. They noted that the AI-powered extraction helped their organizations keep records current with less manual effort. And rather than conducting broad renewal campaigns, their teams used expiration reporting to identify certificates near renewal, automate outreach, and focus only on exceptions that require intervention.

Finally, interviewees linked ECM to faster audit response and stronger documentation controls. Instead of reconstructing support from multiple systems or searching historical files, teams could retrieve certificates and supporting records directly from the platform. Although their organizations still maintained oversight of certificate quality and exemption decisions, interviewees said that AI-assisted capture and centralized certificate management materially reduced the administrative burden of supporting exempt transactions and lowered the risk that missing, incomplete, or expired documentation would create compliance exposure during an audit.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization processes 100 net-new exemption certificates for a total of 2,600 by Year 3.

• Before Avalara, 50% of the certificates were filed with errors, and it takes 35 minutes to correct each one.

• Avalara reduces the number of certificates filed with errors by 95%.

• In the previous environment, it takes an accounts receivable specialist 1 hour to collect, manage, correct errors, and file an exemption certificate. With Avalara, this effort decreases to 2 minutes.

• Forrester assumes an 80% productivity recapture rate for this benefit as not all accounts receivable specialist time savings will be redirected toward productive work.

Risks. The benefit from tax exemption certification labor savings will vary based on:

• The number of tax exemption certificates that companies collect and the number of net-new tax-exempt customers companies gain each year.

• The percentage of certificates filed with errors in the prior environment.

• The internal personnel who support ECM and their respective salaries.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $203,000.

Audit Preparation Efficiency And Avoided Penalties Savings

Evidence and data. Beyond filing compliance, interviewees emphasized reduced audit exposure and downstream financial risk from incorrect tax calculations, particularly given the complexity of tax rate management across jurisdictions. Before Avalara, manual rate maintenance created significant audit risk. The tax manager in the manufacturing industry explained: “There are over 13,000 tax rates. … If you’re trying to maintain that manually, … it’s never going to be current, and it’s never going to be correct.” They noted that this inaccuracy could translate directly into material audit liabilities: “You could be talking $60,000 to $80,000 that no longer had to come out of our pocket because we mischarged.”

This interviewee also shared that the impact extended to audit cycle efficiency, particularly through improved documentation and certificate management. Before Avalara, exemption certificates were often unorganized and difficult to retrieve, significantly prolonging audits. After implementing Avalara’s ECM capabilities, the tax manager in the manufacturing industry said that audit timelines decreased substantially: “Our shortest audit we completed with Avalara was three months. … It’s night and day.”

Other interviewees reinforced that Avalara improved audit defensibility and reduced findings by ensuring accurate calculation and documentation at the transaction level. For example, the CFO at the medical device manufacturing organization noted that prior manual processes resulted in errors and audit adjustments: “There were wrong rates, there were wrong calculations. … We had back taxes, penalties, fines, and interest from when we did not have Avalara.” In contrast, this interviewee said that after adopting Avalara, audit findings were minimal and primarily limited to isolated configuration issues rather than systemic calculation errors. They noted, “The only things they found wrong once we adopted Avalara were that we had exempted some customers that shouldn’t be exempt.”

Finally, interviewees emphasized that centralized, traceable audit records significantly reduced audit preparation time, enabling their organizations to respond quickly to auditor requests. In one case, responding to a large audit request that would have taken weeks manually was completed in hours with Avalara. The director of operations excellence at the sports equipment manufacturing organization said, “If I had to go in and try to figure those transactions out myself, it would have taken me weeks. … I was able to get through the list in under half a day.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization experiences four audits per year.

• Before Avalara, a senior tax manager needs 40 hours per audit for audit preparation; after Avalara, they need 4 hours. This is a 90% improvement.

• The average fully burdened hourly rate for a senior tax manager is $96.

• No software or solution will have the ability to eliminate all penalties; however, because of Avalara’s record centralization and automatic tax calculations, the composite organization avoids one penalty per year due to its compliance.

• The average penalty fee for noncompliance is $32,500.

• There is a chance of an audit occurring once every three years, represented in the model by 33% per year.

Risks. The benefit of audit preparation efficiency and avoided penalties savings will vary based on:

• The number of compliance audits each year.

• The internal personnel who prepare audits and their respective salaries.

• The number of penalties companies must pay each year and the number of penalties they avoid each year.

• Penalty fees, which range from $10,000 to more than $1 million depending on their severity. Organizations that have a history of noncompliance may see more severe penalties than others.

• The support an organization has from external personnel during the audit process. Despite having appropriate software in place, some organizations may still opt to have external personnel support during the audit process.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $52,000.

Tax Research Labor Savings

Evidence and data. Before adopting Avalara Tax Research, interviewees’ organizations relied on either manual approaches or expensive third-party resources to answer taxability questions and interpret jurisdiction‑specific rules. Finance and operations leaders described researching tax treatment by navigating individual state and local Department of Revenue websites, reviewing statutes and rulings, and comparing inconsistent guidance across jurisdictions. These activities were often performed reactively — triggered by customer disputes, internal questions, or audit inquiries — and required significant time from senior staff with specialized knowledge. As transaction complexity increased, especially across states and counties, tax research became increasingly burdensome and difficult to scale.

By implementing Avalara Tax Research, interviewees’ organizations centralized access to taxability rules, rulings, and explanations within a single platform. Interviewees emphasized that Tax Research significantly reduced the time required to interpret sales and use tax treatment by jurisdiction and enabled faster, more consistent responses to internal teams and customers. Instead of researching rules state by state, users could quickly identify relevant guidance and, in some cases, share supporting documentation directly with customers or stakeholders to resolve disputes.

• The director of operations excellence in the sports equipment manufacturing industry said: “The overall relationship with Avalara is easy. They’re quick to respond with some of the Avalara tax research. We also get tax advice so we can work with their tax experts, and if we have a question, they get back to us within 24 hours, which is incredible. They provide rulings and give us everything we need as a business to understand why a decision was made, which has been great. Before Avalara, we would have gone to our external tax experts and waited for them to respond, since we all know how consultants work. It’s on their own time. We could have very angry customers wanting to know why they were taxed, what they were taxed on. Being able to answer those questions quickly helps your customer relationships.”

• Interviewees described how Avalara’s AI-powered tax research capabilities helped them quickly access authoritative tax guidance without relying on external consultants or escalating questions to specialized tax experts. The European tax accountant in the manufacturing and distribution industry described using Avalara’s AI-enabled agent (Avi) to answer complex VAT questions, explaining, “If I’m confused what the VAT supply rules are for this country, I just ask [Avi] and it’ll just give me an answer and the link.”

In addition to labor savings, Avalara Tax Research improved confidence in tax decision‑making. Interviewees noted that having documented, authoritative guidance readily available reduced reliance on individual judgment and lowered the risk of inconsistent tax treatment across similar transactions. Although their organizations continued to escalate complex or novel scenarios when necessary, Tax Research materially reduced the volume of routine inquiries and the time required to resolve them, allowing senior staff to focus on higher‑value activities.

The European tax accountant described an example where access to Avalara’s tax research expertise and compliance guidance reduced uncertainty when entering new markets. Avalara helped accelerate the organization’s international expansion by providing timely guidance on country-specific tax and compliance requirements. Rather than engaging external agencies and waiting weeks for legal and tax reviews, the organization was able to receive authoritative guidance directly from Avalara within days. This allowed the company to quickly determine where additional registration or compliance activities were required and move forward with confidence. As a result, the European tax accountant said, “It made life easy and for that reason we launched seven markets in one month, where before I would have started with one or two countries, and it would have taken months of back and forth with external agencies and our legal department.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• One senior tax manager spends 20 hours per month on tax research in the prior environment. Their average fully burdened hourly rate is $96.

• Avalara saves 90% of their effort and reduces the tax research time per month to 2 hours.

• Forrester assumes an 80% productivity recapture rate for this benefit, as not all senior tax manager time will be reinvested into productive work.

Risks. The benefit of tax research labor savings will vary based on:

• The internal personnel supporting tax research efforts and their respective salaries.

• How likely different employees are to dedicate recaptured effort savings back into additional work.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $35,000.

1099 And W-9-Related Third-Party Spending Savings

Evidence and data. Before adopting Avalara’s 1099 filing capabilities, interviewees’ organizations relied on manual, fragmented processes to prepare, manage, and submit 1099 and W-9 forms. Finance and accounting teams managed 1099 reporting using disparate spreadsheets, paper forms, and ad hoc workflows. During peak year-end filing periods, their organizations frequently engaged external accountants or third-party service providers to bridge capability gaps. These stopgap measures required internal staff to compile vendor data, validate information, generate forms, and manage submissions — a time-consuming cycle that introduced compliance risk and proved difficult to scale.

By adopting Avalara’s 1099 filing solution, interviewees’ organizations reduced or eliminated their reliance on third-party providers and manual processes for annual 1099 compliance. Interviewees noted that Avalara streamlined the end-to-end 1099 workflow, from data preparation through submission. This internal consolidation eradicated the need for external support, lowering the out-of-pocket costs associated with outsourced filing services.

Interviewees also said that Avalara significantly reduced the administrative burden and stress associated with the year-end close, emphasizing that automation minimized the risk of manual errors and missed filings. Regardless of form volume, interviewees noted that Avalara successfully transformed a recurring compliance hurdle into a predictable, highly scalable, and lower-cost operation.

The CFO at a medical device manufacturing organization said: “We only have about 10 to 20 1099s to file, and we had been doing it with pen and paper. Once we started using Avalara — boom, boom, boom — and they’re done.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization sends 1099 forms to 800 vendors.

• By handling this transaction with Avalara, the composite saves $57 per form.

Risks. The 1099-related third-party spending savings will vary based on:

• The number of 1099 forms sent out.

• Whether the organization used a third-party resource before Avalara and how much it spent per form.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $96,000.

Avoided Spend On Third-Party Services Or Additional FTEs To Support Tax Management

Evidence and data. Before adopting Avalara, interviewees’ organizations relied heavily either on external accounting firms and consultants or on internal headcount growth to support expanding tax compliance requirements. As they entered new jurisdictions, increased transaction volumes, or added regulatory obligations, tax management complexity increased disproportionately. Interviewees noted that manual processes and fragmented tools made it difficult to scale efficiently, often forcing their organizations to choose between accepting increased compliance risk or investing in additional resources to keep pace.

By implementing Avalara’s automated tax management solutions, interviewees’ organizations reduced their dependence on third‑party service providers and avoided the need to hire incremental full‑time staff. Interviewees described using Avalara to absorb growth in transaction volume, jurisdictional complexity, and compliance scope without increasing internal tax or accounting headcount. Instead of engaging external advisors for routine compliance tasks or adding internal roles to manage expanding workloads, their organizations relied on Avalara’s automation to handle tax calculations, filings, document management, and reporting at scale.

In addition to direct cost avoidance, Avalara enabled interviewees’ organizations to redeploy existing staff more effectively. Interviewees emphasized that automation reduced pressure on senior tax and finance personnel, enabling them to take on broader responsibilities without becoming bottlenecks. Although their organizations continued to leverage external advisors for complex or strategic tax matters, Avalara materially reduced the need for ongoing, operational support from third parties and delayed or eliminated the need for incremental FTEs as their businesses grew. The finance and tax operations leader at an industrial automation organization said: “If we didn’t have Avalara, we would absolutely need another person just to keep up. As we’ve expanded into more states, Avalara has allowed us to scale without hiring additional tax staff.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite uses one consultant or additional FTE dedicated to tax management per year.

• The annual rate for a third-party consultant or FTE is $150,000 per year.

Risks. The avoided spend on third-party services or additional FTEs to support tax management may vary based on:              

• The organization’s previous use of third-party services or additional FTEs.

• The cost of third-party services or the average fully burdened annual salary for an FTE.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $317,000.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Improving confidence and peace of mind. Interviewees consistently described greater confidence in the accuracy and timeliness of tax compliance activities. By automating tax calculation, filing, documentation management, and research, Avalara reduced reliance on individual expertise and minimized concerns about missed deadlines, incorrect rates, or undocumented exemptions. This confidence extended to executive leadership, reducing stress and uncertainty related to tax compliance. The director of operations excellence said: “We’ve actually run into a lot of state sales tax audits this year, all of which we have passed with flying colors. Everything that is being sent out is formatted exactly as it appears in our system. This means that the actual invoice numbers and all relevant address details are included. When questions arise, we can easily locate the requested information in our ERP system, extract it, and forward it to the Department of Revenue as needed.”

• Supporting scalability without organizational strain. Avalara enabled interviewees’ organizations to support growth in transaction volumes, jurisdictions, and regulatory complexity without adding proportional headcount or increasing reliance on external advisors. Interviewees noted that automation allowed their tax and finance teams to absorb additional work without becoming bottlenecks, helping the organization scale more smoothly.

• Enhancing customer experience and responsiveness. Avalara enabled interviewees’ organizations to validate tax treatments quickly and provide authoritative explanations to customers. Interviewees said that without this capability, delayed responses could negatively impact customer relationships and credibility, whereas Avalara allowed their teams to share supporting rulings and explanations quickly. For example, ECM helped improve processes for salespeople trying to validate certificates and interviewees noted that rather than putting the ownership on sales teams to validate exemption certificates with customers, Avalara ensured that all information was filled out before an exemption certificate was submitted. This saved salespeople time and effort as they avoided back-and-forth communication with customers to update their exemption certificates.

• Reducing shipping errors due to address confirmation. Avalara provided the interviewees’ organizations with address validation on all shipments. This reduced the number of shipping errors and returns shipments. The CFO at a medical device manufacturing company elaborated on their experience, sharing, “It has reduced the number of shipments to bad addresses.”

• Gaining access to reliable expertise. Not all organizations can afford to hire a tax expert; by having Avalara’s software in place, interviewees noted that their organizations could partner with Avalara’s internal team to ensure all their compliance requirements were met. For example, they could send any tax notices to Avalara to research and resolve, like the CFO at a medical device manufacturing company, who shared: “Before, I would have had to figure out what needed to be done. Now, Avalara resolves it. They have been a very good partner for us.”

• Improving voluntary disclosure agreement processes. With Avalara’s updated and historical data centrally stored, the interviewees’ businesses proactively approached the state tax authorities to disclose any past noncompliance related to sales tax, income tax, or other state taxes. Avalara ensured that states automatically registered to remit the tax and avoided any misses in tax collection.

Flexibility

Flexibility represents the additional value an organization could realize by using Avalara to support future business initiatives and changing compliance needs. Although these benefits were not included in the quantified financial analysis due to uncertainty in timing and scope, interviewees described several ways Avalara positioned their organizations to adapt more easily over time. There are multiple scenarios in which a customer might implement Avalara products and later realize additional uses and business opportunities, including:

• Ability to expand into new jurisdictions with reduced compliance risk. As organizations expand into new states, add transaction volume, or introduce new business models, tax complexity increases disproportionately. Interviewees noted that Avalara provided a scalable foundation that could support growth without requiring tax process reengineering, additional headcount, or increased reliance on third‑party advisors. This flexibility reduced friction associated with expansion and allowed organizations to pursue growth opportunities with greater confidence. The tax manager in manufacturing said: “As we grow and add more states, Avalara just scales with us. We don’t have to rethink our tax processes or add people every time the business changes — it’s already built to handle that complexity.”

• Opportunity to adopt additional modules and extend automation. Interviewees described expanding their use of Avalara to areas such as AP/use tax automation, 1099 processing, and participation in programs like SST, creating additional efficiency and cost-saving opportunities beyond initial deployment.

• Future efficiency gains through continued automation and AI capabilities. Interviewees said they anticipate future value from evolving capabilities such as automated validation of exemption certificates and further reductions in manual review effort as Avalara enhances its AI-driven functionality. The CFO in medical device manufacturing said: “I’m looking forward to the next level of using AI where it looks at a state’s rules and an exemption certificate and validates whether it meets the state’s rules for exemption. When Avalara gets to that next level on AI with ECM, they will do the validation of the certificate and see if it meets state laws a whole lot better than my people can.”

• Support for ongoing system and ERP transformation. Interviewees said that Avalara’s ability to integrate with multiple ERP and commerce platforms provided flexibility to evolve their core systems without disrupting tax operations, reducing risk associated with future system migrations and digital transformation initiatives. The director of operations excellence in sports equipment manufacturing said: “The ease with which we can connect Avalara to our ERP was the big driver in selecting Avalara. And it just so happens that three ERPs later, the implementation to use Avalara is still literally just a click of a button.”

• Supporting merger and acquisition activities. Some of the interviewees’ organizations acquired other companies. Avalara’s ECM technology created an acquisition letter for the newly acquired customers and requested that they add their appropriate certificates. This eased additional administrative burden on these organizations’ future growth.