ITW Saves Hundreds of Hours with Bloomberg Tax Fixed Assets
A Change of Fixed Assets Management Software Pays Off
- Reduce year-end review of fixed assets data from more than 100 business units
- Streamline asset additions and transfers
- Standardize data and processes across business units
- Saved 400 hours of effort to review fixed assets data at year end
- Cut year-end review by three weeks
- Gained more time to conduct CapEx studies to optimize tax savings for new assets
Founded in 1912, Illinois Tool Works (ITW) is one of the world’s leading diversified manufacturers. The company’s products and solutions are at work all over the world, in deep-sea oil rigs, aerospace technology, bridges and wind turbines, healthcare, the spaces in which we live and work, the cars we drive, and the mobile devices we rely on.
With operations in 57 countries that employ more than 50,000 people, ITW has more than 100 independent business units, each managing thousands of fixed assets. However, the software the company was using to manage its fixed assets simply couldn’t handle the volume and complexity inherent in ITW’s vast business model.
Delaying Instead of Automating Fixed Assets Review and Tax Reporting
While each ITW business unit is responsible for entering and managing both GAAP and tax data for fixed assets, it’s the corporate tax department at ITW that is responsible for tax reporting. “Because fixed assets are a highly visible area within the tax department and the company in general, it was mandated that all business units use the same fixed assets management software,” says Brandon April, federal tax manager at ITW.
One of the company’s key issues was that each business unit had its own instance of the legacy software, meaning that data wasn’t centralized across the company. Adding further complexity, not all business units were running the same version of the software. Also, the software didn’t support transferring assets from one business unit to another—which happens frequently within ITW.
As a result, at year end, the corporate tax team would receive hundreds of copies of the fixed assets databases from across the company to review, which took months to complete. “By the time the reviews were completed, so much time had passed that the units couldn’t simply upload those changes back to their databases. Instead they had to make changes manually within their systems,” says Mr. April.
The fixed assets software system that ITW was using simply couldn’t serve the needs of the business. “We started looking into other systems that could streamline our process.”
Turning to a Centralized, Cloud-Based Fixed Assets Solution
ITW decided to replace its legacy fixed assets system with a new cloud-based solution that would meet the requirements for each business unit as well as the corporate tax department. The new solution needed to help ITW achieve a number of business goals, including:
- Every business unit would be using the same system, which would always be the most up-to-date version
- All the fixed assets data would be in one, centralized location, easily accessible by the corporate tax department
- ITW could standardize the data and processes across all of its business units
After researching available software products on the market, ITW chose Fixed Assets from Bloomberg Tax. “[Bloomberg Tax] Fixed Assets was, by far, the easiest system to use while offering all the functionality we were looking for,” says Mr. April.
ITW worked with Bloomberg Tax Professional Services to help it convert the fixed assets data from its previous system to the new Fixed Assets system. “[Bloomberg Tax] Professional Services converted the 30 largest databases and then helped us refine our processes to convert the remaining data quickly and easily,” continues Mr. April. Bloomberg Tax Professional Services also helped ITW train 300 users on the new software.
Shaving Three Weeks off the Year-End Review
The first year after deploying Bloomberg Tax Fixed Assets, ITW completed the year-end review in record time. “We saved 400 hours of effort and completed our review three weeks sooner than the previous year,” says Mr. April. Because the data is now centralized and available in real time, the corporate tax team can now periodically review tax books throughout the year to further streamline and accelerate the year-end process.
An unexpected benefit was the reduction in return-to-provision adjustment. "In years past, our return-to-provision adjustments were several million dollars," adds Mr. April. "With [Bloomberg Tax] Fixed Assets, the adjustments were less than one million."
Easing Additions and Transfers Across the Company
The previous fixed assets system made it difficult and tedious to transfer assets from one business unit to another—something that happens frequently within ITW. "When we had transfers, the numbers never seemed to match up," explains Mr. April. "The pain our company used to go through managing fixed assets was ridiculous, but with [Bloomberg Tax] Fixed Assets everyone is extremely happy."
Asset additions were also a challenge to manage because many of the accounting staff in the business units weren’t as knowledgeable about tax rules as they were about GAAP rules. "[Bloomberg Tax] Fixed Assets lets our business units add and transfer assets easily and accurately," says Mr. April. "It’s all automated so the GAAP-oriented folks in the business units no longer even have to look at the tax books."
Gaining More Time for Strategic Work
Now that Bloomberg Tax Fixed Assets has streamlined the year-end fixed assets review process, the corporate tax team has more time to conduct CapEx studies that look at new assets placed into service and verify that the tax life is correct.
"In the past, it was such a long and drawn-out process to get the information we needed for CapEx studies that we weren’t able to do them nearly as often as we wanted," says Mr. April. "Now, with [Bloomberg Tax] Fixed Assets, the process is streamlined and we can conduct studies with real-time data, which lets us ask better questions." All of which is good for the company’s tax department as well as the company’s bottom line.Download PDF