Spend Matters welcomes another guest post from Steve Sprague of Invoiceware. This is the third in a five-part series providing an update on Latin America e-invoicing.
My last article was on Mexico CFDI. For this week, I wanted to focus on the newest Latin America country to announce their direction of mandating electronic invoicing – Chile! In the recent months, the Chilean tax author, the SII, has been working on the mandates. Initially, Chile was a prescribed country – meaning that if you wanted to do electronic invoicing, you had to do it the government way. With the new laws and further announcements coming in February 2014, companies will become mandated as early as November 2014. The rollout through smaller enterprises will be through 2017, with different revenue tiers dictating who and when. But if you are a large multinational enterprise, Chile electronic invoicing is a reality in 2014. Make sure you start your planning as it is as complex as Brazil – having transactional requirements as well as reporting requirements known as Libros reports.
Here are some key features of the Chilean e-invoicing model.
Folios/Guia de Despacho: The Chilean electronic invoicing model combines elements of the batch-oriented folio scheme used in the old Mexican CFD model along with the real-time communication as found in Brazil and Argentina.
Outbound: Currently, there are 10 types of electronic fiscal documents, referred to collectively as “Documentos Tributarios Electrónicos” or DTE. Each DTE type draws from its own range of government issued document numbers, which are consumed by the company in sequence as each DTE is produced, mapped to the required XML format, and signed with the electronic signature according to the law.
Monthly Reports: At the end of each month, compliance reports (Libros) must be uploaded to the government web site for a business.
Inbound: Customers registered for outbound DTE must be able to receive inbound XML, so it does affect the Accounts Payable team similar to Brazil and Mexico.
Contingency: Paper-based DTE documents are allowed as a contingency measure in case of technical difficulty.
Cancellations: Cancellations are eschewed in favor of separate credit/rebill transactions. If the DTE has been approved, the only remediation is via credit note.
Web Services: These are managed by the government.
Here’s the Accounts Payable’s perspective: Much like Brazil and Mexico, you should view Accounts Payable’s DTE in two phases: Okay to Deduct (what the government requires you to do), and Okay to Pay (what you should be doing if you have a decent volume of inbound invoices).
For the former, you should be collecting the XML from your suppliers, checking that they are accurate and registered, and archiving them for six years. The process can be further complicated by the way the legislation reads for a buyer, as they have eight days to provide an acceptance or denial response – if they do not affirmatively reject or notify the supplier of an issue within that time, then the invoice is presumptively assumed to have been accepted. On the other hand, if the buyer rejects the inbound invoice, then it is up to the supplier to correct it via credit memo as the only means available. There are government web services endpoints that provide for inbound validation. And in the event of a discrepancy between XML and paper DTE, only the XML file will count – if the XML file is invalid, then the entire transaction is invalid, even if the paper DTE was printed correctly. I strongly encourage companies to perform inbound fiscal compliance validation on all inbound DTE.
In regards to Okay to Pay, remember that you are able to gather the electronic XML, and at least in 2014 and 2015 the majority of your larger partners will be forced to transition. Also, if there is a discrepancy against the Purchase Order, the invoice cannot be changed by you, the buyer. It must be adjusted and re-registered by the supplier.
So as you look at Chile from an electronic invoicing perspective, focus on these four best practices:
- Ensure you are collecting, validating, and archiving the XML across all suppliers that have voluntarily prescribed to electronic invoicing or have been forced due to the mandate.
- For the Accounts Payable team, look into the Commercial Compliance. Many companies are collecting supplier invoices, but the data entry is manual. You can automate the full 3-Way Match.
- Make sure you understand what “we are compliant already” means. This is a common statement, but what is the architecture cost? What is the impact to your global ERP system for support and change management?
- If you operate in multiple mandatory countries including Brazil, Mexico, Chile, and Argentina, you should be looking at a regional platform – the cost to support and maintain this changing legislation with multiple local platforms will continue to skyrocket.
Chile is making the move to electronic invoices across the business-to-business community. So make sure you fully understand what is going on and how this will affect you. Most importantly, understand where your company fits into the mandates and deadlines – the first are as early as November 2014.