As we have seen in Part 1 and Part 2 of this series, e-invoicing has produced great benefits for governments in terms of tax collection and streamlining its own control processes, for which they have implemented mechanisms that companies must comply with, ranging from the simple to the complex. For both buyers and suppliers, this represents a new technological challenge — especially for companies with operations in multiple Latin American countries.
Companies that do business in Latin America have had to accelerate the process of preparing to comply with government regulations, especially where e-invoicing has become mandatory. In this article, we discuss supplier readiness needs for doing business in Latin America, what support is available to organizations from Latin American e-invoicing solution providers and some advantages to performing e-invoicing within a supplier network or an integrated P2P solution.
Supplier Readiness in Latin America
Putting aside the fiscal requirements that each company must meet to become a registered and valid organization for tax administrations in each Latin American country, a supplier’s readiness for e-invoicing depends on each country’s regulations, which vary significantly from country to country. In the case of Latin America, this implies that organizations must know in detail the regulations per country, what is required to fulfill them and which stakeholders need to be involved.
As mentioned in Part 2 of this series, in order to be compliant with government e-invoicing regulations, some countries will require validating an e-invoice with the tax administration before issuing it. Others require companies to stamp e-invoices with official digital signatures and bar codes, and still others even require companies to attach official transportation documents to the e-invoice or link the e-invoices to an e-fiscal reporting function.
The important part to note here is that to perform e-invoicing properly and in compliance within each Latin America country, a large percentage (if not all) of the organizations will likely need the support of a third-party technology or service solution provider, even small companies that issue one invoice a month.
How to Be Ready
Supplier organizational readiness and e-invoicing in Latin America requires an enormous effort. Once organizations become aware of this challenge, the recommended next step is to incorporate a technological solution or service that supports the full process, regardless of its complexity.
Whether the organization requires e-invoice validation, a stamped electronic signature, the ability to flip a purchase order or create the invoice from scratch, the solution provider should be able to do it. The supplier organization should only worry about sending the purchase order to be invoiced or simply sending the invoice data to the solution provider to complete the full e-invoicing process in compliance with all internal requirements and government regulations. The supplier organization should have all of the documentation and permits that the tax administrations require to operate in each country.
In the case of organizations with operations in more than one Latin American country, procurement groups may consider whether one or more solution providers are required to support the e-invoicing process. The best option, however, is usually the simplest one, and finding one provider that supports the full e-invoicing process in any Latin American country will always be better.
The big advantage for companies operating in Latin America is that there are already providers who can support them in performing the full e-invoicing process, although not all providers offer the same level of service, integration with business systems or reach in terms of the number of countries the solution can cover. Some providers are local, some can cover a couple of countries and some may cover e-invoicing operation in all Latin American countries. A detailed analysis of the solution provider capabilities needs to be done to match the organization's requirements.
E-Invoicing Solutions in LATAM
In Latin America countries, small and medium-sized organizations use standalone e-invoicing solutions or service providers that conform to the government regulations and compliance needs of the e-invoice and send it (XML) to the corresponding buyer organization or back to them.
For large or global organizations that require more corporate capabilities (e.g., invoice capturing options, collaboration mechanisms, invoice matching processes, all type of corporate and government compliance, mobile features, the incorporation of payments and financing options, strong analytics, and the integration with procurement and back-end systems), these types of standalone solutions may not prove the best choice. Instead, buying organizations may wish to investigate supplier networks and P2P suite solutions with Latin American e-invoicing capabilities.
E-invoicing is a critical process for buyers and suppliers operating in Latin America. The agility and resources needed to keep organizations in compliance with local regulations requires significant research, as well as the support of technology solutions. The risks of not doing e-invoicing correctly in Latin America escalate from a hefty fine all the way to jail time for those responsible for a violation. It’s something you simply can’t afford to ignore.
Your e-invoicing solution should help you to:
- Improve your performance in capturing, processing, workflows and collaborations
- Optimize and improve of cash flow and working capital based on your company’s e-invoicing practice
- Improve data management and accuracy
- Accomplish an automated invoice processing with zero touch
- Reduce the cost to process and invoice
- Reduce the invoice approval process, automate all invoicing approval workflows and manage company-specific business rules for invoicing and payment processes
- Reduce the percentage of invoices rejected
- Pay invoices on time with measurement of this performance
- Increase the number of invoices processed
- Locate all invoices lost status and location
- Reduce the time to handle errors or exceptions
- Have real time analytics at a line detail level
- Have predictive analytics based on invoicing data (forecast and If scenarios)
- Perform invoice audit trails