Latin America Shared Services – Top 5 Issues when evaluating AP einvoicing
To successfully implement Account Payable E-invoicing or Shared Services in Latin America, you will need a regional solution approach that is addressing the issues, culture and technical requirements. There are a lot of companies that will claim electronic invoicing compliance through some signing partners, but it is important to understand the real issues to successfully adopt a Shared Service strategy in Latin America.
Mexico, Brazil, Argentina and Chile are more than a digital signature. If your provider says that they have partnered with a local provider, you should ask what this means. For example, many times this just covers the digital signature requirements. And well this is great, it only covers about 10% of the issue. Below I describe the top 5 issues to figure out if a vendor is serious about solving your Latin America requirements or just providing a signature service to show some form of compliance in the region.
- Are they investing in the region or are they just partnering with compliance partners? Electronic invoicing is an end to end business process that is real-time and can affect your logistics, your SAP configuration and your tax remittances to the government. Ask to understand the investment actually being made in the region to support the business requirements. You will quickly understand if this is just a partnership on the surface of if they are taking such an important region seriously. As an example of what you want to see, take a look at the article Pete Loughlin wrote on Mexico – purchasinginsight.com/electronic-invoici…
- Cross-Border and Domestic In Country electronic invoices — while countries like Brazil and Mexico force electronic invoicing in the country, foreign invoices are still predominately paper. If you are looking at a Shared Service project your provider will need to address both the in country issues as well as cross border issues: there was an interesting article by Jason Busch of Spend Matters on a new solution approach to paper — spendmatters.com/2012/03/08/tradeshift-i…
- You need workflow automation that is tightly integrated to the ERP system — in countries like Brazil you are responsible for the tax issues of your supplier. For example: if you purchase goods in Brazil and you receive the goods off the truck, you are responsible for accepting the taxes registered on that Nota Fiscal. If they are wrong, you either have to “Return” the whole truck and file a Return Nota Fiscal with the government or accept the NFe as is, and coordinate a Credit/Debit Note with the supplier/government to adjust at a later date. You need deep understand of ERP processes to coordinate with the Purchase Order and Goods Receipt process.
- Charging suppliers to use a network — how can you ask a Brazil supplier to pay to send you an electronic invoice (either a per document fee or even worse a % of spend), especially since the government already makes them create electronic invoices for everyone else. Latin America is unique because E-invoicing is not created by private networks, it was created and is managed by the governments. How can you charge someone to do something they are already doing? There better be some significant advantages to the portal beyond submission and accounting reconciliation issues for the supplier if the provider is charging them a fee – for example, can they send to all of their buyers not just the Hub rolling out the provider, are they offering SCF capabilities in countries like Brazil, are they offering other value added applications? If there is no value, you will find yourself spending a year doing what should take two weeks because you are forcing a business model – well somewhat successful in Europe on a completely different region.
- Can they offer you both inbound compliance as well as outbound electronic invoicing compliance? You should have the option to manage both processes, not just the inbound process. If a group is serious about Latin America E-invoicing compliance, they will ensure that they sell you the entire package and not just half a solution. In the end, the decision may be made by different business units: but the issue of managing contracts, infrastructure, connectivity, integration with the SAP system, etc… should not be doubled because of a vendor choice. These topics should be simplified
As companies start to announce support for electronic invoicing especially around the Mexico and Brazil 2013 changes, ask the questions or you may find yourself weaving your way through multiple loosely coupled partnerships when it comes to support, maintenance and ongoing change management.