a cfo’s guide to einvoicing in latin america · a cfo’s guide to einvoicing in latin america...

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© 2015 PayStream Advisors, Inc | www.paystreamadvisors.com | [email protected]

A CFO’s guide to eInvoicing in Latin AmericaPart 1: Brazil, Chile, and Mexico

Q3 2014 | Featuring insights on...

» Mandates for Transactions of Goods and Services

» Human Resources Regulations

» Entering the Latin American Market

» Leading Solution Providers

InvoicewareInternational

Q3 2014 © 2015 PayStream Advisors, Inc | www.paystreamadvisors.com | [email protected]

Introduction 3An Overview of eInvoicing in Brazil 4An Overview of eInvoicing in Chile 9An Overview of eInvoicing in Mexico 12How to Approach eInvoicing in Latin America: 15Invoiceware International 16Glossary and Appendix 21About PayStream Advisors 23

Contents


Imagine that every B2B transaction your company made in the US must be filed, stamped, and archived for review by the IRS using their online portal. Imagine that, as a seller, you couldn’t ship any goods without first reporting the sale of goods to the IRS and getting a stamp of approval. Furthermore, that stamp must be physically attached to the goods until it arrives at its destination. Now imagine that, as a buyer, you had to keep a record of every transaction for 5 years. Envision that instead of filing your taxes in the spring and consolidating your books at the end of your fiscal year, you had to do it monthly, weekly, or even daily. Finally, imagine that you have one week to comply with these regulations or you will likely face fines so large, they will put you under and you may even go to prison.

Fortunately, in the US, this is unlikely ever to happen. Although you may not agree with the way taxes are levied on businesses in the US, the burden of compliance is fairly minimal compared to other systems. In Latin America, this is far from the case, as Latin American countries have implemented Value Added Tax structures. For an explanation of how the VAT differs from a sales tax, please see the Appendix. The problem with VAT is that, historically, it has been very difficult to enforce and there have been many ways to evade taxation. To remedy tax evasion, the sale of black market goods, and lost revenues, federal and state governments of Latin America (LatAm) have utilized modern technology to implement an eInvoicing network. Some have gone so far as to mandate that all B2B transactions go through the government’s eInvoicing compliance network. In this manner, they have effectively locked down B2B transaction visibility and eliminated tax evasion.

As one might assume, with these mandates come complicated compliance procedures. While local entities were fed these changes one by one over the course of several years, for a company looking to move operations to a LatAm country, establishing a compliant operation can seem like a daunting task. As such, PayStream Advisors has set out to create a high-level guide to eInvoicing in Latin America. This report is the first in a series that will clarify requirements for conducting business in Latin America for CFOs—starting with Brazil, Chile, and Mexico.

Introduction


Considering Latin American (LatAm) tax and compliance requirements, Brazil exhibits the most complex and dynamic system by far. It mandates a complicated, exhaustive list of eInvoicing requirements, and has done so longer than any other Latin American nation. Other Latin American countries countries have often modeled their tax reporting and eInvoicing system after Brazil’s successful model. For these reasons, this educational guide will start with Brazil before moving on to Mexico and Chile.

An electronic invoice in Brazil is called a Nota Fiscal (NFe), a system started in 2007. It is important to realize—especially for Americans, who often consider eInvoicing to be an AP only function—that all transactions and every corresponding invoice must be sent through the government’s eInvoicing network. All domestic invoices, whether B2B or B2G, are mandated to be sent through the Brazilian tax authority, SEFAZ. Furthermore, B2C invoices are expected to be mandated sometime in 2015. Nota Fiscal started in 2007 from an electronic perspective. eInvoicing in Latin America generally starts with Folios. Folios are monthly batch transactions reported to the government for tax compliance and audit purposes. From there, the government typically mandates real-time invoice validation prior to shipment. The next step in the process requires the buyer to validate goods receipt. Finally, logistics providers must validate invoices and confirm what they transport. Until recently, real-time invoice validation has largely been a requirement only for B2B & B2G transactions, but starting in 2014, Brazil will roll out B2C (Business to Consumer) requirements. Once a LatAm tax authority has fully regulated the VAT structure with compliance regulations and fail-safes, they generally move on to the two other major forms of income they receive: payroll and income tax. Brazil has addresses these income sources with a program called eSocial, which will be discussed later.

In Brazil, 99 percent of the country is eInvoice-compliant. There are three core types of invoices: invoices for goods, handled with web services at the state/federal level; invoices for services, processed on the city level; and invoices for transportation services, fiscal documents generated by third-party logistics companies linked to the movement of goods and the seller’s invoice.

An Overview of eInvoicing in Brazil


eInvoicing for Goods

A graphic representation of the basic eInvoicing workflow for most goods in Brazil is featured below. As a supplier, a company would register with SEFAZ using their tax ID number. SEFAZ would issue them both a public and private identifier key and a Certifying Entity Digital Certificate. At that point, the supplier has the necessary credentials from the tax authority to sell and ship goods within Brazil. When a buyer places an order, the supplier can log in to their accounting system (ERP), process the order, and load the goods onto a truck to be ready for shipment. During this time, that ERP has created an NFe. The supplier must relay the NFe to the SEFAZ, which entails: mapping the ERP format to a government XML, signing the document with the private and public keys, and transmitting it to the appropriate web service (state or federal). The government then signs the document, gives it a time stamp and unique authorization code, and sends it back to the supplier.

Brazil NFE Process Flow for Goods

Buyer

Customs

SEFAZ

Signed XML Submitted For Approval

Goods are Shipped

Digital CertificateIssued

2

1

Official nFE Sent

3

5

4

Customs Approval

DANFE Checked

Buyer ValidatesGoods AreExpected

Buyer Received Goods; Tax Value Validated

6

7 8

Supplier

Carr ier


The signed XML will then need to be stored in the supplier’s ERP and printed out by the supplier to accompany the goods on the truck or other shipping vessel. This PDF printout is called the DANFE. The DANFE basically acts as a bill of lading; it contains all the information about the purchase, supplier, buyer, tax information, quantity, barcodes, etc. Once the DANFE is on board, the truck can leave the warehouse, and the supplier will send the buyer the NFe XML, usually by email. The DANFE is essential because Brazil has customs stations on each state’s border to check DANFE legitimacy, similar to weigh stations in the US. If there is an error with the DANFE, or if it is missing, the goods will be confiscated and the supplier will face hefty fines. Brazil has implemented this procedure in order to eliminate tax evasion and the transport of illegal or black market goods.

Because the invoice acts as a bill of lading, eInvoicing not only affects the Accounts Payable process, it also affects inbound receiving. Buyers are hesitant to hastily accept inbound shipments because the moment they accept the shipment, they are responsible for the tax liabilities of what’s on the DANFE, regardless of what may or may not be on the truck. Therefore, at this point they will either accept the shipment, request a modified DANFE (i.e. accepting 90 out of 100 widgets because 10 were damaged), or send it back. In the most extreme cases, the truck will be parked until the XML can be validated by the buyer. In this instance, through a process called “gating,” the truck will not be allowed onto the buyer’s property, or in some cases, to be unloaded, until the buyer can verify that the goods are supposed to have arrived and the DANFE and NFe are in proper order. Although this may seem too precautious by American standards, the penalties for not properly following SEFAZ’s regulations can result in exorbitant fines totaling millions of dollars. The SEFAZ’s penalties average 500 reais ($225) for each XML that is not correct or missing at audit, and up to 150% of the value of the taxes on the invoice if they consider it fraudulent. This can result in billions of dollars in penalties for Fortune 500 multinationals operating in Brazil if they fail to comply with regulations.

eInvoicing for Services in Brazil

The process for services is quite different from the process for goods in Brazil. Services are processed on the city or local level. A supplier submits their invoice to the local tax authority and forwards it to the buyer. In larger cities, this process is fully online, and therefore, fully automated. In this manner, the city acts as an eInvoicing network. For smaller to medium-sized cities, the supplier submits the invoice to the network and the buyer retrieves the invoice through standard manual extraction methods. In many smaller municipalities, the process is entirely manual. On the outbound side, the supplier will only have to submit invoices to their own city, meaning they will have very few tax IDs. However, on the inbound side, the buyer will


need to integrate with every city or municipality in which they are sourcing services. This creates a significant burden for multinationals that contract throughout Brazil for various services.

Maintaining Compliance with Downed Servers

Since eInvoicing in Brazil is mandatory and suppliers cannot ship without a signed XML document to physically attach to their shipment via a DANFE, contingency is a major issue, as it is well-known that the Internet in Brazil is not highly reliable. There are two basic types of contingency when shipping: On Network Contingency and On-Premise Contingency. On Network contingency is a back-up web service (provided by SEFAZ) for when the main SEFAZ server becomes overloaded and shuts down. Until recently, SEFAZ let a supplier choose when to use these backup servers, but recently, the rules have changed and SEFAZ dictates when backup servers may be used. This is typically a moot point when operating in the country’s larger business centers like Brasília or São Paulo, but those operating in smaller cities find themselves using this service more often than they would like. On-Premise contingency is a process for when the Internet is down. It involves a provisional DANFE printed on specialized paper. This provisional document explains that the Internet is down and backup servers don’t work, and it allows suppliers to ship without a registered and signed XML from SEFAZ. Technically, documents must be reconciled within 24 hours of the Internet and servers coming online, but generally, reconciliation within 7 days is acceptable and won’t result in a penalty.

Logistics Compliance

The movement of goods throughout Brazil is largely accomplished by ground transportation. There are two document types for logistics, depending on an organization’s business process. The first document, a CTe, is necessary if a third-party logistics provider (3PL) is being used to ship goods. A CTe is a commercial transport document that is an aggregate of a shipment. Shippers are responsible for CTe validation with the SEFAZ before shipment, and must archive these documents for 5 years. However, it is not uncommon for large companies to purchase their own trucks and hire contracted drivers. Since in this case there is no 3PL, a CTe would not be necessary. In these instances, the SEFAZ has mandated that an MDFe, or manifest document, be included with each shipment. These documents help the SEFAZ protect against illegal goods, enforce tax rates, and protect smaller startup businesses. For instance, the documents show a point of departure and origin so a truck can’t go through an unnecessary state to receive a lower tax rate.


Reporting to the SEFAZ

The SEFAZ requires that all businesses submit monthly SPED reports. These reports are basically self-audits; the SEFAZ will match these reports with the aggregation of invoices they have on file. Every files must match 100 percent and if they don’t, an investigation will ensue that will likely result in fines for the business. These reports include tax compliance, transactions, transportation documents, and will soon include eSocial records.

eSocial

eSocial is a project of the Brazilian federal government that will collect labor, social security, income tax, and fiscal information related to employment practices. An employer must transmit all information referring to their labor force online, and all labor events must be transmitted in real time. Government entities such as the Federal Revenue Department (Receita Federal), the Social Security Institute/ Ministry of Social Welfare (INSS/MPS), and the Ministry of Labor and Employment (MTE) will have unrestricted access to this information. This information includes individual files for each employee regarding hiring, contract details, warnings, suspensions, earnings, benefits, and terminations. The eSocial project is expected to be mandated in 2015 and stands to tighten Brazil’s control on another leg of government revenue and expenditures: income and payroll tax, and social welfare.

Brazil Overview

For a foreign multinational, moving operations into the Brazilian market can appear daunting. Decades of tax evasion, corruption, and a steady flow of black market goods have led to a necessary need for full transparency. Although the negatives to operating in Brazil have by now undoubtedly become evident, there are significant positives as well. US companies often struggle to get suppliers onboarded with eInvoicing networks, spending countless dollars on bloated AP departments. In Brazil, the government mandates that all of your suppliers comply, significantly shrinking the size and cost of an organization’s AP department abroad. The cost of inbound receiving at a warehouse is also lowered because the logistics process is tied to an invoice. Finding the right consultant, solution provider, or combination of the two is essential to achieve successful assimilation.


Chile is a unique participant in the electronic invoicing environment within Latin America. In large part, Chile pioneered the eInvoicing process. They implemented a system that allows companies to follow a set of procedures if they wish to switch from paper to electronic processes. Although those procedures are mandatory if a company wishes to invoice electronically, until recently it has been optional to switch from paper. Chile has now made the move to mandate eInvoicing. Starting November 1, 2014, all companies earning more than 100,000 UF in a revenue year must invoice electronically. Smaller organizations will be mandated with a rollout over the next three years. In many ways, Chile and the Chilean tax authorities, the SII, have managed to streamline a process that in other countries is quite complicated.

eInvoicing in Chile

As in other LatAm countries, the eInvoicing process for a supplier in Chile requires extensive documentation. The first set of documents connected to an order is the Bill of Lading documents (Despachos). These are registered in advance of shipping and before an invoice is created, and they contain all the information a standard eInvoice would contain: a description of goods, quantities, the sender and receiver, and the method of shipment. Once the government receives the Despacho, they send an email to confirm and approve the other shipment documents, granting the supplier permission to ship. Although this process is technically necessary, not all companies start with a Despacho. Much like in Brazil, a document must accompany the truck. Organizations can either trigger the process through a Despacho, which is recommended based on the laws, or they can put the invoice on the truck to accompany the goods.

Chile’s trading process involves packets of invoices with unique identifiers (folios). The government disburses these folio packets with pre-assigned numbers, and it is up to a business to manage their own folios across their ERP system. Folios are used for nearly every type of transaction document, from the bill of lading, credit and debit notes, and purchasing invoices, to tax exemption and importation invoices. Collectively, these are called DTEs (Documentos Tributarios Electronicos). A graphic representation of the eInvoice process in Chile is featured on the next page.

An Overview of eInvoicing in Chile


Chile Process Flow for Goods

Buyer

SII

Order Sent

Shipment Sent

RequestTo Ship

2

1

4

SupplierAcceptance & Tax Validation

- or -Error Reconciliation

* Supplier must request folio authorization and recieve folio packets

5ShipmentApproved

3

*

A key differentiator between Chile and Brazil is what happens once an invoice is submitted to the SII. When you register for folios with the SII, you also register your email, which is the typical way of distributing the XML among trading partners. The SII keeps this information in a master database. Once an invoice is submitted, the government responds with a positive message (meaning it’s okay to ship), a negative message (meaning you cannot ship), or positive message with exceptions (meaning it’s okay to ship, but certain things need to be changed on the invoice). From that point, it is the supplier’s job to relay the approved invoice to the buyer. The onus is then on the buyer to report errors to an invoice. If there is an error, they have 8 days to reply to the SII with a negative message relaying the mistake. Otherwise, it is assumed that the buyer accepts and approves the shipment, and that they claim fiscal liability for the goods. If an error is reported after 8 days, the supplier can no longer cancel the invoice—they can only adjust it via a credit or debit note through the SII server, referencing the original invoice and any adjustments to tax obligations. This unique procedure streamlines the AP process throughout the country, effectively helping the Chilean government become a true eInvoicing network.

Chile Readiness Declaration & Acceptance

To participate in this eInvoicing network, the SII requires organizations to register with the government, acquire folios, and certify their process through end to end testing. Businesses can self-certify, hire third-party


providers to process their DTEs using the providers’ certification, or operate under a combination of both. The acceptance process of the SII has seven requirements. An organization must:

1. Request folio certification

2. Implement a folio management solution (likely an ERP)

3. Have the ability to archive documents in a repository for 6 years

4. Have the ability to send documents to the SII

5. Have the ability to receive inbound documents (and respond with confirmation or rejection)

6. Reconcile Libros at each month’s end and match DTEs sent daily

7. Have certifiable contingency processes available

Most third-party DTE providers in Chili are processors and will only handle requirements 4, 5, and sometimes 3 and 6. However, the SII requires an organization’s compliance with all seven requirements to meet eInvoicing mandates, and organizations must declare readiness in these capacities either on their own or using a third party. For many smaller companies, using a third party provider of DTE processing is sometimes the most viable option. However, when a third party aids in the processing without certifying the organization independently along the way, the company is reliant on the third party’s audit trail. Solely relying on the provider’s system and data can lead to issues during an audit, often resulting in heavy fines and trouble from the SII. It is often best to self-certify, even for processes for which a business uses a third-party’s services. When a company self-certifies, only the supplier and buyer’s tax IDs are on the invoice, leaving a smaller audit trail; if an audit does come, the business will be prepared to meet it head-on.

Contingency

In Chile, paper contingency is in place if the web servers and eInvoicing system shut down. With paper contingency, the supplier may optionally register for a unique set of “paper” folios per DTE type. These predefined forms can be used in the event of technical issues; however, the paper folios must also be reported in the monthly Libros reports if utilized.


Like all countries in Latin America, Mexico has its own version of the eInvoicing process. However, a key differentiator is the way in which the Mexican tax authority, the SAT, has outsourced the process to various third parties called PACs. PACs are registered to provide government signatures of eInvoices (CFDIs) on behalf of the government, but they are generally not eInvoicing providers and do not provide a network. PACs sign CFDIs on behalf of the government, keep a record of the tax value for the CFDI, and then transmit the stamped document back to the supplier. Some PAC providers also handle the management and transmission of invoices, but this is a separate service that is not regulated by the SAT.

The sale and shipment of any good within Mexico must be attached to an invoice with a PAC-provided government stamp. The law states that CFDI stamping does not have to be done in real time. Instead, starting from the creation of an invoice within an ERP, a business has 72 hours to have a PAC register the tax value of that invoice, even if it has already shipped. However, many businesses will tell you that it is common for trucks that do not have a stamped CFDI onboard to be confiscated by rogue SAT officials. Due to this unpredictability, Mexico should be treated as a real-time eInvoicing environment.

An Overview of eInvoicing in Mexico


Mexico CFDI Process Flow For Goods

SAT

CFDI Submitted

StampRecieved

Goods Shipped

2

1

3

Receipt ofGoods Validated

4

BuyerSupplier

Tax AmountReported

5

PAC

Compliance and Complications

Since the only thing the SAT actually requires is that businesses register tax values using a third party, it may seem that the Mexican eInvoice system is much simpler than that of Chile and Brazil. In many ways, it is, but upon closer inspection, actual compliance with the SAT’s mandates is quite complicated. This is a result of a key flaw within a CFDI—it is built into two separate parts that work inefficiently together and weaken the invoicing process. The first part of a CFDI is the actual XML, called the comprobante. The XML contains information that the government cares about such as the tax ID of the sender, tax ID of receiver, line items, prices and associated taxes. It does not support fields for any other information, such as purchase order numbers or surcharges, that are key pieces of data to complete the Accounts Payable approval process. For these details, there is a second part of the CFDI called the addenda, where all other relevant information is transmitted. Unfortunately, there is no standardized format for the addenda, nor is it regulated or reported. Often, large buyers require customized addenda from their suppliers, forcing them to jump through hoops to make the buyer’s AP process smoother. For instance, because


three-way matching is not easily automated due to gaps in the XML and the ability to send partial shipments, some large corporations send a goods receipt number back to the supplier after the goods have arrived, requiring them to put that number into the addenda and resend it prior to processing it for payment.

Contingency

Another key difference between Mexico and other Latin American countries is the lack of a government-supported contingency process. If a PAC cannot connect to the government, they cannot issue a stamp, and are therefore shut down. Considering the impact on closing your books at the end of a month or quarter, not to mention the potential shipping issues, this can pose a huge problem for businesses. Some solution providers connect to several PACs in order to have multiple back-up processors when their preferred PAC provider shuts down.

In short, the Mexican eInvoice system is designed to meet government needs and ensure tax collection, rather than to enhance a corporation’s business process. When the government originally implemented a system of tax record, they left business process gaps that were to be solved by the flexibility of the addenda, and this has led to an enormous amount of obstacles and complications for the country’s trade industry. Although analysts agree that change is imminent, it is important to consider the system’s current shortcomings when choosing an eInvoicing solution in Mexico.


For US companies, entering the Latin American market creates a unique set of challenges. Foreign VAT structures, stringent mandates, and hefty penalties for non-compliance mean an organization needs to be fully aware of all requirements and prepared to meet these challenges head-on. In order to avoid a lengthy and costly insertion process, it is essential that companies seek the assistance of consultants and third-party providers that specialize in this field. In choosing a solution, organizations need to ask themselves a series of questions:

» Is this a matter a consultancy can handle or do we need the help of a third-party eInvoicing provider?

» What volume of transactions will we process? » Do we need a solution that has the ability to scale when we grow? » Will we need an on-premise, cloud-based, or hybrid solution? » What countries will we be entering? Do we need a provider that

operates in each of these countries? How will the level of experience in each of these countries affect our decision?

» How will we handle government server shutdowns? Will we need on-premise contingency?

» What sort of language and customer support will we need? » How will our organization keep up with frequent changes to tax

regulations and eInvoicing mandates? » What business processes will we be doing in Latin America? Do we

need a solution that handles Human Resources, Accounts Payable, and Accounts Receivable?

Effectively analyzing the benefits and drawbacks of solutions will ultimately save a company hundreds of thousands, if not millions of dollars, down the line. In an effort to better serve our readership and this largely uncovered area of eInvoicing, PayStream has sought to profile some of the leading solution providers in this space.

How to Approach eInvoicing in Latin America:


Invoiceware International, headquartered in Atlanta, Georgia, and founded in 2011, is a global leader in Latin American (LatAm) eInvoicing and government compliance. Invoiceware’s mission is to provide a Hybrid Cloud service that lowers the overall cost of implementing, monitoring, and maintaining Latin American eInvoicing, HR, and Payroll compliance for multinational corporations. These three words—implementing, monitoring, and maintaining—are key in the company’s business model. Government mandates and eInvoicing systems in LatAm countries are complicated and ever-changing, and Invoiceware’s solutions and services reduce the risk and cost of maintaining compliance across the region. They already have an impressive track record working with some of the world’s largest companies, including Coca-Cola, Philips, Kellogg, and Dupont.

Website www.invoicewareint.comFounded 2011Headquarters Atlanta, GAOther Locations São Paulo, Brazil & Monterrey, MexicoNumber of Customers in Latin America

250 of the Global 2000

Key Clients The Coca-Cola Company, Kellogg, Dupont, Siemens, Philips, Eli Lilly, Brown-Forman, Owens Corning, Sun Chemical, Goodrich, Chemtura, Eastman, Kodak, Intermec, Continental Tires Novus International

Target Verticals Discrete & Process IndustriesPartners / Resellers Tradeshift, VertexTransactions Processed Annually

$70 Billion of invoice volume among 60,000 Latin American business partners

Awards / Recognitions

Supply Chain & Demand Executive – Green Supply Chain Award; Spendmatters – Pros To Know

Solution Overview

Invoiceware’s customers receive several benefits, one of the greatest being the convenience of using only one LatAm platform instead of managing multiple local providers. They also fully integrate into SAP so that

Invoiceware International


customers don’t have to worry about middleware or configuration issues, OSS note applications, or disparate systems during an audit. Their process automation touches key areas—automatic contingency keeps a business’ outbound operations from being shut down, and 3-way matching drastically lowers the cost of processing supplier invoices. They also have a multi-lingual enterprise support service so that a customer need only call one team for any connectivity issue.

Invoiceware’s Hybrid Cloud provides an end-to-end process with the ability to absorb the unique customizations or gaps of each company’s ERP. Often, executive teams depend on cloud providers’ management services for the lower cost of ownership. However, purely cloud-based solutions are deeply tied to the internal ERP processes and require expensive integration and maintenance. Invoiceware’s Hybrid Cloud solution contains some on-premise components and some cloud components, and provides a native integration within the ERP system to the cloud. Their service also eliminates ERP configuration and maintenance issues while gaining the cost savings due to economies of scale of the cloud service.

Non-compliance in LatAm countries can put organizations at risk in many areas of the invoicing process—areas that often translate to the government as tax evasion and bring down harsh tax evasion penalties. Invoiceware maintains their customers’ compliance by keeping up with the constantly-changing government mandated upgrades, updating their customer’s ERP and their own network as part of their service. Invoiceware carefully monitors compliance regulations and covers the transactional requirements of multiple countries, including the CFDI, Nota Fiscal, and the DTE.

In terms of adjustments for updates, the end user is only responsible for participating in end-to-end testing. Invoiceware handles the ERP configuration, the process integration adjustments, and the government web service adjustments. The end user will also never experience downtime due to upgrades, and there is no additional cost for any of the compliance updates.

Invoiceware manages all user authentication, access, logging, and privileges under the governance of their customers’ ERP systems. End users can access the compliance service through unique ERP management consoles, making the ERP the final system of record rather than additional third party servers. All data is encrypted via AES- 256, and the company’s Hybrid Cloud ensures none of the data leaves the multinational data center without encryption or a digital signature, ensuring that a document cannot be altered in any way.


In the actual shipping process, Invoiceware is careful to match supplier XML with the PO before a truck arrives with the shipment. They collect the XML and match it against the line item level data, park the document until the Goods Receipt is ready, and handle the final posting of process documents into the ERP system. They also offer Travel and Expense Management invoice validation.

Brazil Offerings:

In Brazil, Invoiceware supports the Nota Fiscal for goods (Nfe) in all states. They support the end-to-end process of eInvoicing, managing the course through creation, validation, and distribution to customers. They also handle the AP side of the process, receiving invoices from suppliers and validating the proper documents. 120 cities in Brazil are integrated with and maintained by Invoiceware, and from an AP side, they collect directly from cities or the supplier, depending on a city’s capability.

Invoiceware supports inbound Cte validation and MDFe creation and validation; they also support the full process of the Manifestaco do Destinatario.

For Brazil’s upcoming mandated process, eSocial, Invoiceware will support all the required processes and transaction types required for Payroll, HR, and Labor Occurrences. To keep customers on top of changing tax regulations, Invoiceware has product managers that work directly with ENCAT, the technical arm of the Brazilian SEFAZ.

Invoiceware covers all areas of contingency in Brazil. For On Network contingency, they stay up to date and integrated with Brazil’s Virtual Servers – newly introduced with the 2014 mandates. Their Hybrid Cloud solution allows them to offer On-Premise contingency known as a Provisional DANFE. They also offer automatic reconciliation for invoices approved temporarily while in contingency, so controllers are not left trying to figure out if all Nota Fiscal were registered properly at the end of the month.

Chile Offerings:

In Chile, Invoiceware fully supports DTEs, Libros, and the process of multinational Certification. They handle the end-to-end process of Libros filing with the government, and they support inbound and outbound invoicing. They also cover complete folio management within the ERP system.

Invoiceware keeps their clients in compliance with the government by painstakingly certifying their process through all 7 certification functions,


making sure that every DTE has the customer’s tax ID. Chile’s DTE requirements are kept up to date and maintained as part of the solution. They also support on-network and paper contingency in the country.

Mexico Offerings:

In Mexico, Invoiceware provides a multi-PAC network with their own built-in contingency program. If one signing authority is down or lagging, Invoiceware’s multi-switching/multi-PAC model automatically shifts the company to another authority, ensuring their customers’ operations are never shut down. Invoiceware provides solutions for sending invoices, validating supplier invoices, and managing payroll requirements known as Nomina Electronica. Because government mandates are not as ordered as in other LatAm countries, Invoiceware helps Mexican companies keep up with their records to prevent later tax issues, carefully bringing back all relevant data to the customers ERP.

Invoiceware supports full development of Addenda, through the extraction from the ERP systems to the mapping in the Addenda XML segment. All Addenda changes are maintained under Invoiceware’s support.

Reporting

Invoiceware provides government-mandated reporting as part of their solution portfolio, ensuring that all data is aligned from transaction to report for all types of reporting, including Brazil’s SPED and Chile’s Libros. Invoiceware makes all government signing attributes and all XML/PDF files accessible through the customer’s ERP system, and they also manage payroll compliance, such as the Nomina in Mexico and eSocial in Brazil. Transportation requirements, like the Carte Porta in Mexico and Cte/MDFe in Brazil, are also met through Invoiceware.

Invoiceware’s solution offers mobile access in a number of cases and with many features. There are mobile scanners integrated at the warehouse level, using barcodes on the PDF invoice representation, and mobile printers are utilized for consumer based invoicing. Mobile visibility monitors document status information, giving companies easy access to the workflow and process. Mobility is also being added to the HR & Payroll processes for Nomina and eSocial so that employees can interact with their corporations within these procedures.

Implementation & Pricing

An Invoiceware implementation has a one-time fixed cost that includes implementation, support, and maintenance throughout the ERP


management consoles, integration work, and project management. A fixed annual fee covers the end-to-end support and all the change management through the entire process. Customers will never have to deal with defining a “Service Transfer Point.” This annual fee covers compliance updates to the entire end-to-end system, including the ERP system.

Because the end user experience is native to their ERP system, an organization does not need intensive training to use the Invoiceware solution. Training will teach every end user how to use the system through all scenarios, also showing him or her the process of status updates, telephone support, and the ticketing process.


B2B, B2G, B2C – Business to Business, Business to Government, Business to Consumer

CFDI – Mexican electronic invoice; (Comprobante Fiscal Digital a través de Internet)

Comprobante and Addenda – Two parts of a CFDI, the Comprobante is the taxable fiscal information, the Addenda is everything else (shipping and handling, surcharges, etc.)

CTe – Transporation document that must accompany a shipment in Brazil if using a third-party logistics provider; (Conhecimento de Transporte)

DANFE – PDF representation of a Nota Fiscal that acts as a Brazilian bill of lading document; (Documento Auxiliar da Nota Fiscal Electrônica)

Despacho – Bill of Lading document in Chile

DTEs – Chilean tax documents; (Documento Tributarios Electrónicos)

eSocial – Brazilian project to document and regulate Human Resource operations

Folio – Package of invoices, collection of transactions for a given time period

MDFe – Physical copy of an electronic invoice that must accompany a shipment in Brazil if using one’s own logistics provider; (Manifesto Eletrônico de Documentos)

Nota Fiscal (NFe) – Brazilian electronic Invoice

PAC – Mexican eInvoice tax stamp provider; (Proveedores Autorizados de Certificación)

SAT – Mexican tax authority; (Servicio de Administración Tributaria)

SEFAZ – Brazilian tax authority; (Secretaria de Estado da Fazenda)

SPED – Self-Audit Tax Report (Sistema Publico de escrituracao Digital [Public System of Digital Accounting])

Glossary and Appendix


SII – Chilean tax authority; (Servicio de Impuestos Internos)

UF – Chilean currency for doing business globally. 1 UF = 43 U.S. dollars; (Unidad de Fomento)

VAT – Value Added Tax; See Appendix

XML – Secure electronic document format for eInvoicing

Appendix:

Explanation of Value Added Tax (VAT):

The Value Added Tax (VAT), is a consumption tax used throughout Latin America. It is a tax based on consumption, rather than income—much like the sales tax system used in the United States.

Every time value is added to a product in some way, and that product then changes ownership, the VAT is paid. However, sellers may to claim credits for VAT already paid.

Example:

A manufacturer pays $50 for lumber and nails to make shelves. Once made, these shelves can be sold directly, or incorporated into other products like desks, bookcases, or closet units. If the VAT is 10 percent and the shelves are sold for $100 (before taxes), here is how one would calculate taxes:

The manufacturer pays an input tax on the purchase of the raw materials, so in this example that amount would be $5, (10 percent of $50). In total, the manufacturer pays $55 when purchasing the raw goods from a supplier.

When purchasing a shelf directly, the consumer pays an output tax of $10, or 10 percent of the purchase price of $100. Thus, the consumer pays the manufacturer a total of $110, regardless of whether the purchaser is the final consumer or plans to incorporate the shelves into another product like a bookcase and then resell it.

In total, the tax remitted to the government is $10. After receiving the output tax from the consumer, the manufacturer takes credit for the $5 input tax they received, and pays in $5 to the government. The supplier who sold the lumber and nails to the manufacturer pays in the full $5 input tax they received.


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