21 August 2014

Latin American E-Invoicing

Steve Sprague - Invoiceware International

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Electronic invoicing

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Mexico CFDI eInvoicing - Red Flags to Avoid

19 June 2013  |  2666 views  |  0

So, you have received the news by now. And, most likely the Mexico change is starting to make waves through the organization.  Well, hopefully it is making waves because if it’s not, it surely will come crashing down January 1, 2014.  We estimate that 20% of multinationals or more will struggle to meet the deadline because they will fail to evaluate solutions properly.

And as the reality of this change and size of this change sets in, there will be a mad rush to find solution providers.  The problem is that most companies will look at the wrong problem or think that there is a standard solution from their ERP provider – rest assured this is nothing like CFD.  It is not a simple XML schema or an internal signature that can be managed via a middleware.  You are forced to have 3rd parties involved beyond the ERP system as you need a government signature – and if you miscalculate the implementation, day to day maintenance and change management – you will not be able to ship, collect from customers or ensure you pay your VAT remittances correctly. 

Many companies will put a fire drill together and find a low cost way of doing this as it is not a budgeted project.  However, the low cost solution will only look low cost because they will leave you doing all the work. Getting the "timbre fiscal" and unique IDs through the government providers is not the real problem with CFDI. The real problem is with the ERP configuration and customer specific requirements that you deal with on a daily basis.  

So here are RED FLAGS to be aware of:

If a solution providers says to you:  "Just map your ERP data to this standard file format" -- please raise the flag and start waving. This is the most overlooked issue and the one that will derail your project and create issues with Customer collections and Supplier payments.

Why you ask: it is because there is no such thing as a standard ERP implementation.  No one company has implemented an ERP the same, there are pricing configurations unique to their business, unique internal processes such as payables processing, and unique end customer requests.

  • Classic data extraction issues include but are not limited to:
    • Discounts - there is only one field on the Mexico XML
    • Surcharge
      • The Mexico XML has no field for Surcharge
      • Most customers want this as a line item on the invoice – how do you manage just this one example of an “Extended Attribute”

If a solution providers says to you:  "We support the entire process for electronic invoicing in Mexico” – please ask what “the entire process” means to them as it most likely leaves out the major issues.

  • Most solutions will handle the general compliance, but the main issues are behind the firewall
    • Issues with your unique ERP system
    • Issues with printing the PDF to place on the truck
    • Reconciliation issues – Canceled Invoices, or managing Credit/Debit notes when a supplier invoices has the wrong tax information or pricing on it.
  • Most solutions stop at a “Service Transfer Point” meaning: once they hand the signed file back through the firewall – they are done. In reality, the process isn’t done until it is integrated to SAP and released for Payment. 

If a solution providers says to you: “It is just a local issue, and you don’t need a global project team or support team” – please ask yourself one question: where is my ERP system located?

If it is not in Mexico and it is centralized in the US, Europe or Asia – then it is a global issues.  

If a solution providers says to you: “If you can just wait for a month or two, we will have a solution ready”

  • What does this mean?  Many large organization are going to wait on so called standard solutions because they saw these for CFD.  However, CFD doesn’t have all the process issues of CFDI. 
  • Also, CFDI has been around for more than 18 months -- many companies had to transition in July 2012. How does any credible provider for CFDI not have a solution ready when it has been around for so long?

Ensure you understand the business impact of CFDI, this is one of the largest global changes in electronic invoicing policy since Brazil transitioned to Nota Fiscal 2.0.

 

TagsRisk & regulation

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Steve Sprague

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Invoiceware International

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