SAP eInvoicing – Latin America Proves that eInvoicing can be Successful
The goals of eliminating tax evasion and black market goods has definitely been achieved through the mandatory enforcement of electronic invoicing by Latin American governments. For example, Brazil has processed more than 4.5 Billion electronic invoices from more than 800,000 plus registered tax payers. The general benefits include:
- Companies no longer have to type invoices, once the system can be adapted to export digital information from the received document, avoiding the need of hiring someone exclusively for this task and also reducing the chances of having typos and errors
- Reduction of the printing costs
- Incentive to e-commerce practices and to the usage of new technologies
- Reduction of storage costs, once the documents would be stored in digital files
- Reduction of tax evasion in the Billions annually due to the enforcement of electronic invoices
Based on the data, we can even go beyond the general benefits as we see specific advances in the following business processes:
- Accounts Receivable Benefits – Customers are expecting these electronic invoices as they require them in order to reconcile their taxes. Because end customers, including consumers, are incented to demand an electronic invoice there is a reduction in lost/incorrect invoices which results in shrinking Days Sales Outstanding.
- Accounts Payable Benefits — Companies can simplify their payables process in these countries. Because the government mandates the invoice format, companies can take advantage of this standardization. Many of our customers are implementing our eInvoicing Dashboards that automatically evaluate whether the invoice is legally valid along with comparing the document against the commercial backing documents such as the purchase order or goods receipt. This allows the payables department to focus only on the exceptions.
- Logistics (Receiving) – Since the invoice must be printed and put on the truck prior to your supplier releasing the truck and since the supplier typically will make that XML Invoice available to you prior to the truck arriving, an organization can take advantage of a single scan/click receiving process.
- Cash Management – This will be the next large advantage due to the enforcement of not only the outbound AR invoice, but also the validation of the inbound AP invoices. Treasurers are constantly looking for better ways to view their cash positions. Since the government is standardizing the flow of invoices, we will see the growth of Supply Chain Financing for supplier bases. You have already seen these initiatives from Petrobras in Brazil where they are working with the local banks to inject more than 3 Billion Real into their supplier base for working capital financing through 2014.