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Connected Supply Chains Drive Complex VAT Compliance
As cloud-connected technology has become more ubiquitous across the supply chain, sophisticated executives can use the data gleaned from these devices to better understand where their supply chain is operating effectively – and where there is room for improvement – including in VAT compliance.
Increased transparency into how the various links in their chain fit together allow forward-looking companies to find redundancies, bottlenecks and other impediments that undermine production and, ultimately, profitability.
In recent years, companies have moved to greater automate their factories from design to delivery, connecting elements of their assembly lines with the cloud to create a contiguous end-to-end digital ledger that allows for greater analysis. Records of current inventory, material shortages, stoppages and more can be scrutinized using sophisticated AI and machine learning techniques to find enhanced efficiencies, and these files can be sent electronically to department heads, executives and vendors in real time.
The rise of data-driven manufacturing processes presents an opportunity for savvy supply chain and operations executives who now have more resources available to them than generations before, or even their predecessors just a few years ago. However, a fully-connected supply chain is a powerful resource for more than just operations and supply chain departments. Data-driven manufacturing processes also provide greater transparency for tax and finance executives, and facilitate compliance with today’s increasingly complex eInvoicing, eAccounting and eLedger requirements.
These professionals can leverage greater visibility into the supply chain to track inventory as it is created, used and moved with greater accuracy for compliance, particularly in countries with VAT systems and stringent reporting laws.
Compliance Advantages of a Connected Supply Chain
For manufacturers with a global footprint, VAT compliance is a major challenge. Regulations are complex and carry tough penalties for violations, including fines and operational delays, which can negatively impact the bottom line. In addition, tax laws vary not only from country to country but also at the local and regional levels.
In the most complex environments, governments are requiring detailed supply chain data. For example, in Brazil, manufacturers must use radio frequency identification (RFID) trackers to track goods from the warehouse to their final destination. And by January 2019, companies will need to comply with Bloco K — requiring new reports, internal tracking and documentation processes for inventory.
Because of this, multinational companies need solutions that work at the speed of business. Connected supply chains facilitate this new era of inventory tracking and reporting.
In Latin America and Europe, mandated e-invoicing and VAT reporting requirements can be addressed more easily through automated devices connected with Sovos’ Intelligent Compliance Cloud. This solution offers comprehensive reporting within existing systems of record while reducing audit risks and improving cash flow.
To learn more about Sovos’ cloud-based manufacturing VAT compliance solutions, contact one of our product experts.
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