Missing tax IDs left $9M in exposure

This case involves a leading global SaaS provider, one of the world’s top 50 software companies, serving over 30,000 customers across multiple tax jurisdictions. As the company scaled, gaps in its tax ID collection and validation process became a critical compliance risk.

Roughly 10% of customer tax IDs were either missing or invalid, making it impossible to confidently substantiate B2B status. That exposure raised red flags for local VAT audits and left the business vulnerable to undercollection, interest, and penalties.

Initial internal analysis showed that only 7.5% of unverified customers were being manually reviewed—which was both time consuming and still left significant risk. The result: a potential $9M+ in annual VAT shortfalls, plus audit liability that threatened both reputation and revenue.

Automated validation to close the compliance gap

To eliminate manual effort and risk, the team implemented Fonoa Lookup to validate tax IDs in real time across 25+ countries. This replaced outdated, incomplete internal checks with automated coverage directly linked to local tax authorities.

The rollout enabled the company to:

• Reach 100% verified tax ID coverage, up from about 90%
• Reduce false B2B classifications
• Strengthen their B2B audit substantiation process globally

$30M+ in compliance risk and labor costs avoided

Over a 3-year period, the company expects to avoid more than $30M in combined VAT exposure, audit costs, and manual effort, driven by proactive tax ID validation at scale:

• $26.7M in VAT undercollection exposure tied to missing or invalid tax IDs eliminated
• $2.4M in audit cost savings across high-risk jurisdictions like South Africa
• $957K in labor savings by removing tasks like manual tax ID validation and recovering uncollected VAT after invoices have already been issued
• 9 full-time employees’ worth of work reallocated from manual remediation to higher-value projects, freeing up nearly 20,000 hours over 3 years

By eliminating reactive cleanup and scaling proactive compliance, the business established a sustainable foundation for accurate invoicing and audit readiness worldwide.

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