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 […]
SAP in Latin America: Top 10 Implementation Challenges
Mandated e-invoicing and tax reporting requirements in Latin America make SAP implementations in this region more complex than anywhere else in the world. Here, we examine the Top 10 Hurdles to Implementing SAP in Latin America:
Consistency between transactional invoices and accounting reports is essential. Any slight discrepancy triggers audits and fines, which is why it’s so critical to maintain compliance within SAP, despite its challenges.
Each country has different requirements that must be reflected in your ERP implementation. For example, Chile doesn’t allow decimal points, and in Brazil and Mexico, reporting is based on the calendar year – not your fiscal year.
The ability to ship is tied to the e-invoice in many countries. Proper contingency systems must be in place to ensure your business can continue to run smoothly in the event of any issues.
Government data requirements and processes can lead to billing challenges. Many countries require specific processes for cancellations and credits, and also require certain fields and formatting.
Inbound receiving processes must include verification of the purchase order, invoice and materials received. However, this is an opportunity to automate processes and lower the costs of receiving – eliminating data entry with a simple scan and click process.
6. Accounts Payable
The government-approved XML invoice is the only invoice of record. PDFs should not be used for payments, as the XML is the version the government will use to determine tax liability.
7. Tax Reporting
Accurate VAT reporting is a process; not something that can be solved with OSS notes. For example, Mexico’s polizas report requires each individual pay stub, expense, etc., to be tied to the journal entry – a practice not common in many accounting departments.
SAP doesn’t provide standard compliance solutions across Latin America, but local and third-party solutions remove SAP as the system of record, leaving companies with multiple support calls required in the event of an issue.
In less than two years, Latin America has seen seven new countries implement e-invoicing and reporting requirements, and these mandates affect an increasing number of business processes, meaning the updates are never done.
Many companies underestimate the sup-port needed to maintain compliance internally, requiring up to 11 full-time staff to maintain compliance, adjust processes, verify accuracy and address any issues.
Despite these challenges, it’s imperative that compliance is managed wholly within your ERP – housing data and reports elsewhere only adds challenges in the form of the discrepancies and errors that trigger audits and fines. That’s why choosing the right compliance solution is such a critical decision.
Sovos keeps organizations ahead by offering the first complete solution for modern tax. With more than two decades of experience with SAP, Sovos has built its solutions to make sure tax doesn’t disrupt ERP initiatives.
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