Latin America E-Invoicing 2014 Update: Summary of Requirements

Spend Matters welcomes another guest post from Steve Sprague of Invoiceware. This is the last in a five-part series providing an update on Latin America e-invoicing. 

I have written over the past few weeks on the requirements in Brazil, Mexico, Chile, and Argentina. I chose these as they have specific mandates that will have an effect on the Account Payable processes. In today’s post, I’m going to provide a summary of what to look for as you approach these countries -- and Latin America in general -- from the AP and Shared Services perspective:

Country Requirements – Not all countries in Latin America have electronic invoicing initiatives. Many countries are still paper. It is also important to distinguish countries that mandate e-billing versus those that have inbound supplier invoice requirements as well. Here is a quick country overview:

  • Brazil – Mandated for both AR and AP
  • Mexico – Mandated for both AR and AP
  • Chile – Mandated for both AR and AP
  • Argentina – Mandated for AR and adding AP requirements
  • Colombia – currently like the European model; you have similar Trading Partner Agreement requirements
  • Other countries with AR mandates in place or on the horizon in the next 18 months: Guatemala, Ecuador, Uruguay, and Peru. The mandates will be contingent on either in-country revenue or industry type.

How to Approach

Work on mandated countries first. Brazil is by far the most complex, but make sure that Mexico, Chile and Argentina are fully aligned and integrated.

Ensure “Okay To Deduct” – you must receive the XML, validate the XML and archive for 5 to 6 years based on the country laws.

Take advantage of the process – your AP and Inbound Receiving teams can automate much of the 3 Way Match process because of the laws.  I call this “Okay To Pay”. Implement these solutions especially if you have over 1,000 invoices a month in Brazil or Mexico. The cost savings can be huge.

Only after you have focused on the mandated four – then look at rolling out to the other countries. Know that you will have issues with PO usage and will still need solutions for paper.  I recommend staggering the countries based on supplier mandates. You can survey those suppliers in Ecuador as an example, as many will be forced to XML by the government over the next 18 months.

Lastly, make sure to automate the process. I do not recommend staying manual in mandated countries for the following reasons.

  • Staffing Cost Locally and Shared Service– Inbound Receiving – in countries such as Brazil, you can use the PDF representation of the XML that must accompany the supplier trucks to eliminate data entry. You can also fully automate the Goods Receipt process off of these scans. For procurement: you can automate the PO match at the line item level often before the truck arrives. This approval also helps the Inbound Receiving process. For Accounts Payable: have your teams focus on exceptions. Because the government is involved in the process, it is much more time consuming to get an incorrect invoice corrected.
  • Production Risk – Because of the tax impact, in many industries companies will not allow a truck through their gates unless the XML is valid. It can be a common occurrence to turn the truck around. With automation, the PO match to the commercial terms could be done before the truck arrives, eliminating these potential issues.
  • Audit Costs - Controlling/Tax Teams – it is my experience that if there is an issue in the XML. It is often not caught at the inbound receiving process. Instead, wrong information is pushed into the ERP system. This means that your financial teams are constantly reviewing data at closing to ensure everything is correct. In countries where they do a secondary check on the transactional data through the use of aggregated reporting (i.e. SPED in Brazil or Libros in Chile), you cannot afford to have issues. Fines can be as much as 75 to 150 percent of the tax value on the invoice.
  • Cancellations – In Brazil, it is often stated that the invoice from a supplier can be canceled within 24 hours. The reality is that it can upwards of seven days. So in your manual process you are doing secondary checks to ensure you are not deducting taxes from invoices that have been cancelled by suppliers.

So as you look at Latin America from an Account Payable and procurement perspective – recognize that there are many opportunities but many pitfalls. Make sure to partner with experts because all of the requirements will change and evolve. Now that is the one constant in Latin America e-invoicing.

Share on Procurious

First Voice

  1. b+t:

    How will this affexct exports?

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.