01 November 2014

Latin American E-Invoicing

Steve Sprague - Invoiceware International

75 | posts 177,328 | views 0 | comments

Electronic invoicing

A discussion and guidance on the path to full scale adoption of electronic invoicing by corporates, goverments, SME's and consumers, creating savings up to € 60 billion in 2020. With a focus on: trends, business models, processes, technology, and legal issues.

Mexico eInvoicing - Inbound Validation is Required

11 July 2012  |  2380 views  |  0

One of the top questions that comes up in virtually every Mexico e-Invoicing meeting is: Do I really need to do the inbound validation of invoices?  

Many companies think that they don't have to do the inbound validations; however, this oversight can lead to jail time and heavy fines. 

There reality is that if you must validate inbound supplier invoices if you are using those invoices for the purposes of deductions of tax credits.  It is directly on the Mexico SAT website:

http://www.sat.gob.mx/sitio_internet/asistencia_contribuyente/principiantes/comprobantes_fiscales/66_19068.html

So it is not a technical enforcement that should be driving decisions.  Instead it should be a fiscal decision.  In Mexico, you pay taxes to the government based on the net difference (i.e. the tax you charge your customers minus the tax that you pay your suppliers). 

Value added tax collected from clients
-Value added tax paid to suppliers
= Payable IVA 

If you are deducting these tax payments on your fiscal books, then not validating every single inbound invoice is just lighting the fuse of a "audit bomb" and then throwing acclerant onto the flame.

We have seen Mexico over the last 12 months move more towards the Brazil NFe model on the outbound invoices; whereby; the approvals are required prior to the truck leaving a warehouse.  We also expect to see similar mandated legislations in a more formal technical design in coming months for inbound processing.  However, this is not a plausible excuse to wait on the implementation of inbound validation.  You should start this asap.

In Mexico with v.3.2, your suppliers must make the XML invoice available to you.  This is traditionally done via e-mail. But many companies are looking at EDI communication as well as upload portals to simplify their process of collection.  Once you have this XML, you can validate the signatures, certain values, and post returned validation signatures in your system of record. This will ensure, when/if you are ever audited, that all of the invoices and all of the tax deductions you are taking are from only valid and government approved invoices.  The process is not difficult, but too many companies are putting their fiscal manager and controllers at risk of criminal penalities.  These can all be avoided with a short 4-6 week project.  Make sure you understand the realities of both the technical requirements as well as the fiscal requirements -- they are not separate issues anymore.

 

TagsRisk & regulationPost-trade & ops

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Steve

Why e-invoicing mandates are good for business

14 October 2014  |  1333 views  |  0  |  Recommends 0 TagsTransaction bankingGroupElectronic invoicing

Economic Growth in Latin America On the Rise

08 October 2014  |  1046 views  |  0  |  Recommends 0 TagsRisk & regulationGroupElectronic invoicing

Bitcoin use on the rise in Latin America

26 September 2014  |  2758 views  |  0  |  Recommends 0 TagsPaymentsGroupElectronic invoicing

Latin America - E-Invoicing Doesn't Stop Economic Growth

26 September 2014  |  3696 views  |  0  |  Recommends 0 TagsRisk & regulationGroupElectronic invoicing

Supply chain finance takes hold in Latin America

09 September 2014  |  1356 views  |  1  |  Recommends 0 TagsTransaction bankingGroupElectronic invoicing
name

Steve Sprague

job title

VP Product Strategy

company name

Invoiceware International

member since

2012

location

Marietta

Summary profile See full profile »
Steve Sprague has been working in the electronic invoicing and middleware integration space for o...

Steve's expertise

What Steve reads
Steve writes about

Who is commenting on Steve's posts

Chris Principe
Tom Sohal