The Top 10 Compliance Mistakes in LATAM

Gustavo Jiménez
June 8, 2018

In order for businesses in Latin America to reduce their risks of fines, penalties and operational disruptions, it’s imperative to understand and manage the ever-changing eInvoicing and VAT reporting mandates sweeping throughout the region. While proactive compliance can improve operational efficiency, streamline processes and increase cash flow, many companies do not have strategic processes in place to combat common compliance mistakes.

Below are the top 10 compliance errors that are costing companies time and money.

  1. Failing to identify their ERPs as compliance system of record – Companies often use multiple solutions because ERPs alone do not offer business-to-government compliance without multiple third-party add-ons. This creates a support nightmare, as discrepancies between the corporate system of record, external systems and what is reported to the government create huge tax and audit risks.
  2. Not automatically importing supplier XML into the ERP – Companies need to identify a system that can automatically import invoices into the system of record as government-approved documents. In doing so, there will be a verifiable trail in the event of an audit.
  3. Utilizing manual data entry – Systems that require companies to manually enter data are not only inefficient and time-consuming but also extremely risky, as errors as small as typos can lead to unnecessary fines.
  4. Overlooking reconciliation – As a result of new reporting requirements, it’s crucial businesses sync their daily data with the reports submitted at the end of the month or specific filing period. For many companies, however, data used for transactional reporting is separate from systems that produce summary VAT returns. This makes reconciliation and determining the source of truth difficult.
  5. Failing to maintain archives – Companies should utilize a solution that seamlessly maintains XML archives and records. Failing to do so results in extra work to validate compliance documents and tax calculations in the event of an audit. In most cases, it also violates eInvoicing and eAccounting regulations, resulting in additional fines and penalties.
  6. Attempting to manually manage inbound receiving – A manual, paper-based receiving process not only requires significant internal resources, it also increases the risk of error. This process can and should be automated to improve efficiencies and ensure accuracy.
  7. Underestimating the pace of change – Compliance mandates are continually updated. With more business processes affected, including accounting, operations and human resources, your solution must be able to keep up with the continual changes.
  8. Overlooking maintenance and support costs – Managing compliance internally requires up to 11 full-time staff, including personnel to monitor and manage regulation updates, middleware issues and ERP, as well as developers, financial analysts and more. Couple this with the hard IT costs associated with change management, and compliance easily total six figures – per country!
  9. Not having a contingency plan – In many countries, government-approved documents are needed to ship legally. Built-in back up processes are required to ensure there are no disruptions to your business operations and that you can always ship and receive goods.
  10. Failing to work with solution providers that offer local language support teams – Compliance in itself is a huge undertaking, but imagine not having access to a local support team that speaks your language. This could make sorting out issues an even bigger nightmare for companies in Latin America.

Take Action

To avoid making these common compliance mistakes, businesses in Latin America must work with a solution provider that offers a strategic and proactive approach to compliance management. Download our Definitive Guide to Latin American Compliance to learn how you can improve efficiency, lower costs and optimize your cash flow.

Sign up for Email Updates

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

Author

Gustavo Jiménez

Gustavo Jimenez is the Product Marketing Manager for Sovos’ e-invoicing solutions and is based in Atlanta. Gustavo is responsible for go-to-market strategy for Sovos LatAm e-invoicing solutions in countries with existing and upcoming mandates. He has more than five years of experience in e-invoicing, middleware integrations, and regulatory research. He works closely with the product management and development team as well as sales and marketing to facilitate compliance process transformations for Sovos clients. Prior to joining Sovos, Gustavo was responsible for marketing activities and strategy at Invoiceware International, a leading e-invoicing solution for businesses with operations in Latin America. He focused on the go-to-market strategy of their solutions as well as communications with the LatAm market about regulatory changes and new solutions.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

ShipCompliant United States
May 28, 2020
Ask Alex: Your Bev Alc Compliance Questions Answered (May 2020)

  Do you have questions about the rules, regulations, and compliance requirements of the beverage alcohol industry? This series, Ask Alex, is a perfect opportunity to get those pressing questions answered straight from one of the industry’s regulation and market experts, Alex Koral, Senior Regulation Counsel, Sovos ShipCompliant.  To take advantage of this opportunity and […]

E-Invoicing Compliance EMEA
May 28, 2020
Turkey’s Transition Conditions for E-ledger

On October 19, 2019, the Turkish Revenue Administration (TRA) published a communique making the e-ledger application mandatory for e-invoice users, companies subject to an independent audit, and companies identified by the Presidency to have poor tax compliance.  The e-ledger application enables businesses to create the legally mandated general journals and ledgers and submit e-ledger summary […]

ShipCompliant United States
May 27, 2020
How Technology Partnerships Improve DtC Compliance

To be an expert, one has a specialty. Ours is beverage alcohol compliance. Since compliance sits at the heart of operations, being connected at every step helps our customers focus on their business instead spending countless hours on manual processes. Compliance is challenging, but we make it easier with a large and robust network of […]

EMEA IPT Tax Compliance
May 26, 2020
Why IPT Reporting is so Complex for Insurers

Accurately calculating insurance premium tax (IPT) for reporting can be complex.  And the ramifications of getting it wrong can be far reaching from impacting profit margins to unwelcome audits, fines and damage to your company’s reputation in the market and with customers. Calculation methods When I speak to customers about how they calculate insurance premium […]

EMEA Tax Compliance VAT & Fiscal Reporting
May 26, 2020
The Future of VAT in Northern Ireland

As negotiations to determine the future relationship between the EU and UK beyond the end of the transition period resume, after a COVID-19 initiated pause, it’s worth taking a moment to review some of the anticipated VAT implications of Brexit, and in particular the impact on Northern Ireland. Prior to the UK leaving the EU, […]