For companies, Continuous Transaction Control represents an important novelty, which not only means more attention from the authorities, but also a series of significant advantages and an opportunity to evolve their business towards a digital model that is more transparent, secure, and open to the international market.


Continuous Transaction Control for companies: is it an asset or a “burden”? The answer isn’t obvious.  

At first glance, you might think that Continuous Transaction Control systems are useful only for government authorities who can benefit from an additional tool for monitoring company activities, avoiding incorrect, or worse, fraudulent behavior. 

After all, in a recent post, we listed the main advantages of Continuous Transaction Control for the country system and a very positive picture emerged: 

  1. CTC solutions improve the effectiveness of controls, since all transactions can be monitored at any time, essentially in real time;
  2. Since the control of transactions is essentially contemporaneous with the moment in which they are concluded, the authorities have the enormous advantage of not having to spend resources on lengthy inspection activities to retrieve historical information from even a long time ago;
  3. In general, thanks to a more effective and efficient system of controls, the cost of monitoring and verification activities is considerably lower and, at the same time, allows for a constant increase in tax revenues, combating fraud or evasion.

These reasons alone would be more than enough to push any state to adopt Continuous Transaction Control technologies as soon as possible, but can the same be said when looking at it from a business perspective?


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Continuous Transaction Control favors digitization 

In response to the question above, the answer is yes: Continuous Transaction Control is a formidable tool when it comes to driving digital transformation within companies. This transformation should not only concern the production phase or the customer relationship phase. It should be as transversal as possible, involving all sectors of business activity. Invoicing is undoubtedly one of the most strategic areas of application, since it not only impacts companies internally, but also affects the context where companies operate and the relationships they establish with other public and private entities. In this way, companies end up playing an active part in the digital transformation of the entire country system, helping obtain the benefits we mentioned above. 

Continuous Transaction Control encourages document dematerialization 

Specifically, one aspect of digital transformation that the adoption of Continuous Transaction Control models most encourages is the dematerialization of documentsAfter all, invoicing and all its related procedures traditionally require more paper documents, both during the actual transaction and in the declaration and assessment phases. To this, we must then add all the other documents that are drawn up in the course of daily activities. 

To get an idea of what we’re talking about, just consider that according to some surveys, an Italian employee uses an average of about 70 kilos of paper per year: this corresponds to cutting down 17 trees, the consumption of 440,000 liters of water, the use of 3 barrels of oil, and finally the production of 3m² of waste (Source: Adnkronos). And, as mentioned, a good percentage of the paper used is certainly related to invoicing and other related activities. Furthermore, it must be stressed that using paper media is a considerable cost for companies, which have to deal with various related expense items every year, including the purchase of paper, toner, photocopiers, maintenance, and physical archive space. 

Continuous Transaction Control, by requiring the digitization of transaction data from each company, leads companies to abandon traditional invoicing methods in favor of digital ones. In fact, beyond the CTC model that is implemented, the way information is transferred to central authorities requires the adoption of specific dematerialized forms. 

For example, in the case of the reporting model, which is widespread among all member states of the European Union, specific XML standards are established (as in Spain) or the so-called Standard Audit File for Tax (imposed in Portugal and Poland) introduced by OECD. Similarly, in the clearence model, certain standard communication models are used, such as the ISO20022 Invoice Tax Report, even if only as a transmission model, which should be referred to regarding data exchanges between companies and Public Administration. From here, it’s understandable that dematerializing documents just makes sense, and it helps companies efficiently align themselves with the systems implemented by the control authorities. 

However, as we have mentioned in other posts, dematerializing isn’t just about abandoning the paper media used in a company. It’s also about entirely rethinking the internal document processes, which ranges from when a document is created, all the way to when it is archived. Otherwise, you end up with the opposite effect: instead of making internal processes more agile and sustainable, you inevitably create friction between the use of documents in digital format and a document management system that is still tied to analog procedures and timescales, with all the inefficiencies that can easily be imagined. 

Continuous Transaction Control protects companies  

Another interesting advantage of implementing Continuous Transaction Control systems is that it makes managing relations with central control authorities more efficient. In addition, given the number of deadlines to be met and the deadlines themselves, the issue of compliance is so sensitive for any company. That’s why companies often have internal teams with the specific role of ensuring the fulfillment of these obligations. 

Continuous Transaction Control (CTC) systems increase the ability of the authorities to control the system, and consequently the pressure on firms, as even the smallest irregularities are more easily detected. At the same time, however, the implementation of Continuous Transaction Control technologies provides an opportunity for all operators in any sector to discover and adopt a range of digital solutions that are designed to control and manage all processes related to VAT invoicing and declaration in an automated way (Source: The European Financial Review)

In this way, entire blocks of tasks can be effectively performed by purpose-built platforms, which not only improve the efficiency of these activities, but also ensure better and constant monitoring of corporate compliance. 

Continuous Transaction Control and internal data insight 

The link between Continuous Transaction Control and corporate compliance has an additional advantage that should not be underestimated. Since CTC systems allow companies to automate the management of a significant part of their data, the same technology can also be used for internal data analysisThis can provide very interesting insights into your business. 

On the other hand, if it is true that Continuous Transaction Control systems tend to increase the level of transparency of activities towards the outside world, it is equally true that the same transparency can also benefit the company itself. In addition, real-time control of transactions makes them traceable and consequently facilitates data collection, which becomes a source of immediately accessible information for each part of the organization. Also in this case, however, companies must make an effort to take advantage of the situation: in particular, they may need to make an investment to implement technology solutions based on Artificial Intelligence and machine learning in particular.

These tools are very useful when it comes to managing a large amount of data, reorganizing, classifying, analyzing, archiving, and above all, making them intelligible. From this, you can move on to build certain strategies and above all to organize compliance-related tasks in a functional and efficient way, intervening in advance of any criticalities that may emerge. 

Continuous Transaction Control and international trading 

Not surprisingly, most companies aim to expand their business as far as possible, crossing national borders. In fact, one of the consequences of the hyperdigitalization of the economy and society is that of reducing distances and widening the reference market for each company. However, international transactions often entail some difficulty in terms of invoicing and tax compliance. From this point of view, Continuous Transaction Control represents an instrument of extraordinary simplification, since, in theory, every company that adapts to a CTC system becomes part of a circuit of organizations that share forms, platforms, security standards, and invoicing models. 

From the point of view of the central authorities, the advantages are obvious, but the same is also true for companies who can interact more easily with other players, reducing any compliance risks .And simplification is always a friend to business. 

It should be noted, however, that for this to happen, all countries must adopt Continuous Transaction Control systems in a uniform and consistent manner in order to avoid a multitude of different models and processes. Unfortunately, uniformity of implementation is still a medium-level objective, since up to now the countries have largely acted independently, lacking (at the European level and beyond) binding directives or an “officially preferred” model. 

The International Chamber of Commerce or ICC is a private organization that works to “promote investment, the opening of markets for goods and services, and the free movement of capital.” The ICC has tried to resolve the matter by outlining a list of principles and values that should inspire the implementation of any Continuous Transaction Control system.Among the many values of Continuous Transaction Control identified there is cooperation, comprehensibility, respect for privacy, as well as the principle of least impact and non-discrimination: all of these are very important and relevant, but not very stringent from the point of view of practical implementation when it comes to a high volume of daily transactions.

Still, creating such a network of secure, traceable transactions, both domestic and international, should be a goal for states and companies to pursue, in order to increasingly widen the available market space in which they operate without tax obstacles or compliance risks. For this reason, companies must also do their utmost to carry out positive lobbying activities, putting pressure on national and international institutions and bodies in order to implement all the necessary measures leading to the construction of uniform and shared Continuous Transaction Control models and platforms

Continuous Transaction Control also changes bureaucracy

A very positive consequence of the adoption of Continuous Transaction Control systems is then systematic and can be grasped by adding up what we said above. Thanks to dematerialization, the introduction of interface platforms, and controls that are essentially contemporaneous with the conclusion of the various transactions, it’s expected that, where there are CTC systems, the burden of bureaucracy can be reduced over time.

Digital management, in fact, should simplify procedures and, therefore allow firms to spend fewer resources (both human and financial) to carry out all the required tasks, provided that firms continue to invest in technology so as to keep pace as control systems evolve. It’s clear that implementing such systems is not a foregone conclusion and it’s not without its difficulties. At the same time, it is equally undeniable that this is where the future is headed. Moreover, according to many experts, the main emerging economies and most fully industrialized countries will be engaged in this process at least until 2030, when it is expected that the level of maturity and awareness in the use of these tools will be such that Continuous Transaction Control systems will become the main method of tax assessment both at the national and international level (Source: Fintech Direct)

Every company, therefore, is called upon to do its part so that they aren’t left out of this trend and, above all, so they can take full advantage of the benefits that CTC solutions provide to the entire country system. The challenge is open and there is a lot at stake, but it’s also true that digitization is now an accepted reality in many sectors and this must also be the case when it comes to transaction control.