AP and VAT Remittance Issues Ahead as Mexico CFDI Usage Becomes Mandatory

Scott Lewin
April 3, 2013

In my last post, I discussed expected changes as the Mexican government continues to implement and push the usage of CFDI. I wanted to expand upon the potential issues facing Procurement and Accounts Payable users and managers as I feel it is an underestimated issue.

As discussed, 90% of invoices in Mexico today still fall under the legacy regime of CFD which has a completely business process. And today, many companies still use manual data entry to comply with the inbound validations which are mandatory. Remember, the government announced on Dec 28, 2012 that the validated invoice XML structure of the CFDI must be archived for a period of at least 5 years. This XML will be used as the single version of the truth for auditors when reviewing VAT tax discrepancies.

So herein lies the problem — when the government sunsets the old CFD process, an organization could see their inbound CFDI volume double if not triple. There is no way that manual processes will be able to keep up with the increased load so automation is going to be necessary. Here are some recommendations in the short term for AP managers or Shared Service managers looking at Mexico eInvoicing.

  1. Ensure you’re compliant with the Dec. 28 2012 legislation for XML validation and archiving today. Many companies are not doing this process properly, and you need to be sure to get compliant regardless of CBB, CFD or CFDI invoices.
  2. Understand the volume of CFD versus CFDI you are receiving today and will be receiving in the future as the government changes.
  3. Understand how you are proving validations of the inbound documents – many PACs in Mexico still have very basic validations that don’t cover all requirements.
  4. Go beyond the “okay to deduct” which is the government validations of the comprobante and look into the “okay to pay” processes which will ultimately streamline your Inbound Receiving and Payables process. There is the government mandate; and then there is the improvement in efficiency of using the government mandates to streamline your operations.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Scott Lewin

Gain timely insight and important up to the minute information about the current legislative changes in Latin America, including Brazil Nota Fiscal, Mexico CFDI, Argentina AFIP and Chile DTE. Learn how these changes affect your operations, your finances and also your Information Technology teams.
Share This Post

EMEA IPT
September 18, 2019
Three Key Steps to Apply IPT on New Lines of Business

In the increasingly complex world of IPT, understanding, assessing and applying the right taxes to new insurance products can be a challenge for insurers when complying with fragmented regulations. As new risks continue to emerge, so do new insurance products. But how can insurers ensure insurance premium tax (IPT) is correctly applied? The three questions […]

EMEA VAT & Fiscal Reporting
September 17, 2019
Why Storage of Electronic Invoices in the EU Gets Complicated Quickly

It’s very possible that US companies are breaking laws governing storage of electronic invoices in the European Union without realizing they’re putting themselves at risk for financial penalties.  The EU is an entity that, as the Brexit debate has shown, can frustrate and baffle its own citizens. In the US, the EU is frequently misunderstood. […]

Tax Information Reporting United States
September 16, 2019
6 Reasons You Should Attend the 2019 GCS Intelligent Reporting Summit

The tax information reporting event of the year is coming in October! Sovos will present the 2019 GCS Intelligent Reporting Summit in San Antonio Oct. 28-30. You can’t afford to miss it! Here’s why:  NEW! Unclaimed Property Regulations: De-mystify unclaimed property reporting and learn how to protect your company from risk you might not even […]

Tax Information Reporting United States
September 13, 2019
California AB5 Gig Economy Bill will Affect Tax Reporting, But How?

California Governor Gavin Newsom is poised to sign into law a bill that would recategorize gig economy workers such as ride-share drivers from being independent workers to full-time employees.  The bill, California AB5, could have a profound impact on tax withholding and information reporting at state levels, with other states closely monitoring California’s activity. It […]

Sales & Use Tax United States
September 12, 2019
New Sales Tax Laws Require Ecommerce Retailers to Step up Cyber Monday 2019 Preparations

5 steps ecommerce retailers should take to prepare for Cyber Monday 2019 Retailers with ecommerce channels have a lot to gain during Cyber Monday or Cyber Week in 2019. According to BlackFriday.com, Cyber Monday spending is anticipated to grow 20% this year, with consumers spending nearly $9.5 billion online. Cyber Monday also falls on December […]