Shared Services Critical Role in Latin American Compliance
Multinationals operating in Latin America are often surprised by the depth and complexities of business-to-government mandates pervasive in this region. From e-invoicing to e-accounting and now to shipping and human resources, governments in Latin America are entrenched in everyday business operations. Certainly companies can choose to see these regulations as a hindrance, but smart shared services departments can also leverage the required processes to enhance their operations.
When it comes to shared services in Latin America, automation should be the name of the game in countries with mandated e-invoicing. While we typically recommend that any company processing more than 500 inbound XML e-invoices per month move to automation, the benefits go well beyond the reduction of manual processing and staffing efficiency. Here’s a look at some of the additional process and risk reduction benefits of optimizing and automating shared services.
- Procurement: By automating the match between purchase orders and the invoice, companies ensure accuracy – eliminating manual research and validations.
- Inbound receiving: In many countries, a copy of the e-invoice must accompany shipments, making the validation of goods received and inbound receiving a simple scan-and-click process.
- Accounts payable: The validations mentioned above streamline the accounts payable process, allowing AP teams to focus on errors and exceptions, and helping to ensure tax accuracy.
- Supply chain risk reduction: Because of the significant penalties and fines, companies may turn shipments around at their gates if the accompanying e-invoice is missing, invalid or contains an error. With automation, validations can occur before the goods arrive, eliminating the risk of shipment delays and refusals.
- Reduced audit risk: Manual procedures increase the risk of errors, and therefore audits. By automating approvals and integrating e-invoicing processes directly within your ERP, companies reduce the risk of discrepancies that trigger audits and fines.
- Tax accuracy: The whole point of business-to-government mandates is to help governments ensure that they are receiving accurate tax payments. Automated shared services processes ensure that tax reports match invoices, and that tax payments are accurate.
- Archiving: Latin American countries have strict mandates for how long companies must archive e-invoice and accounting records. Automating this processes ensures that records are available and accessible in the event of an audit.
The risks of not automating processes in Latin America are heavy – not just in terms of fines and penalties, but in business disruptions as well. The effects of shared services processes in this region ripple throughout company’s operations, meaning that optimization in this region needs to be a priority.