SAP in Latin America: Top 10 Implementation Challenges

Gustavo Jimenez
December 6, 2018

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:

1. Consistency

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.

2. Customizations

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.

3. Shipping

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.

4. Billing

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.

5. Receiving

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.

8. Maintenance

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.

9. Updates

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.

10. Support

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.

Take Action

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.

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