Spend Matters welcomes this guest article by Steve Sprague, vice president of product strategy at Invoiceware International, however the viewpoints contained within are solely those of the author and do not necessarily represent those of the Spend Matters team.
Multinationals operating in both Europe and Latin America may be tempted to use their European e-invoicing networks to manage Latin American compliance. However, these systems do not go far enough to meet the complexities of Latin American business-to-government regulations. In fact, many of these mandates have made traditional e-invoicing networks unnecessary in Latin America, as governments – such as Brazil’s SEFAZ – are offering invoice access directly from the government servers.
Unlike European countries, where buyers set up and maintain e-invoicing networks and then must recruit and onboard their suppliers to use the system, the burden is on the suppliers in Latin America, eliminating the need for a traditional e-invoicing system. Let’s examine the Latin American regulatory requirements that make European models irrelevant in this region.
- By law, a supplier has to send XML e-invoices to all of its customers. Buyer-centric e-invoicing portals that are unique to each corporation are cumbersome and unnecessary in this environment where the government sets the standard format.
- The ability to ship is contingent on government-approved e-invoices in Latin America. Invoices often act as a bill of lading and must accompany shipments, requiring real-time support in the case of printing or transmission issues. With 48-hour standard response times common among traditional e-invoicing portals, companies could face operational shut downs using these methods.
- Under Latin American mandates, XML invoices must be submitted to the government sequentially. Any discrepancies in numbering triggers automated checks, and traditional e-invoicing networks don’t comply with such sequencing as suppliers will only be sending a small portion of their invoices through a buyer-centric network.
- European e-invoicing models charge transaction fees or a percent of an invoice value for transmission. In Latin America, governments not only provide but require transmission as part of the compliance system. Some countries, like Brazil, are even taking their portals a step further, acting as a full e-invoicing network where buyers and suppliers can download archived invoices free of charge.
- E-invoicing in Latin America is tied directly to a company’s tax obligations – governments consider XML documents as the single source of truth when it comes to taxes calculations. With such importance riding on e-invoicing accuracy, the compliance process should be managed directly from corporate accounting systems – not multiple third-party solutions that increase the risk of errors, audits and fines.
With such regulations commonplace in Latin America, traditional buyer-side e-invoicing networks are insufficient to manage compliance, especially as they don’t solve the ultimate tax reporting issues. Instead, multinationals operating in Latin America should look for a compliance solution that integrates with their existing ERP for a single system of record and provides real-time support, eliminating errors that can result in costly fines and penalties.