Manufacturers Can’t Escape The Impacts of eInvoicing

Gustavo Jimenez
June 21, 2018

As eInvoicing mandates sweep across Latin America, manufacturing is arguably the single most affected sector. With requirements impacting IT, finance, shipping, inventory management, inbound receiving and other business processes, eInvoicing greatly impacts the supply chain and manufacturers’ bottom lines.

If not managed properly, eInvoicing could prevent trucks from distributing goods or force buyers to refuse shipments, all of which can bring business to a screeching halt. In many Latin American countries, eInvoices act as a bill of lading. This means that manufacturers are unable to fulfill orders unless an invoice is valid and physically present with the shipment.

Brazil eInvoicing Benchmark: From Manufacturer to Final Destination

Brazil has some of the most complex shipping requirements in the world. The country continues to introduce increasingly cumbersome, technology-driven tracking and reporting initiatives. Manufacturers in Brazil must adhere to the following regulations:

  1. All shipments must be accompanied by commercial transport (CTe) and manifest (MDFe / Manifestacao do Destinatario) documents.
  2. Buyers must match inbound shipments to the government-approved eInvoice, which ensures receipt and accuracy of the shipment.
  3. Brazil-ID, which employs radio frequency identification (RFID) technology to track goods from the warehouse to the final destination.
  4. Detailed inventory tracking as specified by Bloco K. These reports include production and manufacturing information related to the usage of raw materials and components, including ICMS and IPI collected, inventory and stock movement, finished products manufactured, components lost during the process, third party manufacturing information and more.
  5. Under NFe 4.0, companies subject to sanitary regulations or recall cases, as well as those that produce agricultural pesticides, veterinary products, dental products, medicines, beverages, bottled waters and food packaging, must report the date of manufacture, expiration date, batch number and quantity. By knowing how products move throughout the supply chain – from farm or origination to consumers – authorities can easily track down recalled, contaminated or illegal goods, and minimize the resources needed to conduct inspections and curb the use of illegitimate transit services.

The risk of inaccurate or incomplete eInvoices is too great for manufacturers to trivialize, potentially shutting down operations for days when goods are unable to be shipped or received because of non-compliance.

As evident from Brazil’s evolving eInvoicing regulations, the entire supply chain is impacted by disruptive VAT regulations. That’s why it’s important for companies not only to involve tax, finance and IT teams, but also logistics and operations as changes are made to invoicing and financial processes in Brazil and other Latin American nations. Doing so will ensure that invoices are transmitted seamlessly and accurately from the start, supporting outbound shipping and operations.

Benefits of eInvoicing Realized in Inbound Logistics

Because mandated eInvoicing standardizes information among buyers and suppliers, these regulations can result in significant benefits for companies that implement a strategic, proactive approach to compliance. Since governments require eInvoices to accompany all shipments, they are easily verifiable upon receipt. Instead of a time-consuming, manual inventory management and data entry process that many companies use, eInvoicing enables companies to manage inbound logistics with a single scan-and-click process. Companies can reap significant rewards from this standardization and automation, reducing inbound receiving costs by up to 40 percent and increasing employee productivity by up to 50 percent.

Take Action

As more and more Latin American countries expand eInvoicing requirements, it’s important for manufacturers to understand how inaccuracies or mistakes will hamper the supply chain, and the benefits they can derive from the new standardized, automated processes. To stay on top of these changes, subscribe to our blog.

Author
Gustavo Jimenez
Gustavo is Sovos’ Product Marketing Manager for eInvoicing solutions.

Relevant Posts

New York Implements Economic Nexus by Resuscitating 1980’s Law

When New York first passed its law defining what constitutes a “vendor” subject to collecting sales tax in the 1980’s, the idea of online shopping sounded like science fiction. In retrospect, NY may have effectively enacted the first “economic nexus” law when they drafted their definition of “vendor” to include a person who regularly or […]

Read More
IRS Uses Unprecedented Methods to Enforce ACA Reporting Penalties

With recent enforcement measures, the IRS has offered definitive proof that the Affordable Care Act (ACA) is still alive and that the agency plans to strictly enforce ACA reporting. Last spring, the agency issued Letter 226J to Applicable Large Employers (ALEs) that failed to cover 95 percent of employees. ALEs are companies with 50 or […]

Read More
Government Shutdown Will Not Move IRS 1099 Reporting Deadlines

UPDATE (Jan. 8): Reporting season is moving forward according to plan. The IRS has announced that it will process tax returns on schedule and without delays. While the agency will clarify its contingency plan in the coming days, organizations should proceed as planned with 1099 reporting and other seasonal filings. The IRS will recall a […]

Read More
4 Big Post-Wayfair State Sales Tax Developments to Watch 2019

The South Dakota v. Wayfair decision last June has created a lot of angst for indirect tax professionals and the businesses they work so hard to protect from the burdens of sales and use tax filing. Six months later as we begin the new year, that angst has not gotten any lighter. Any federal legislative […]

Read More
The 5 Biggest Stories in Indirect Tax Compliance 2018

2018 was a volatile year in indirect tax compliance for tax, finance and IT professionals worldwide. With an increase in globalization and tax gaps surpassing tens of billions in some countries, it’s not surprising that one of the biggest challenges governments are addressing is revenue collection. Like enterprises, governments are creating new, technology-driven processes to […]

Read More