Procurement in Brazil: Processes are key to compliance

Steve Sprague
September 7, 2016

We’ve recently discussed the challenges regarding inbound logistics and service invoices in Brazil. Now, let’s turn our focus the another complex aspect of compliance with Brazil’s NFe requirements: procurement and accounts payable. Buying a product or supplies in Brazil is no simple task for a business. Unlike traditional transactions that take place directly between a buyer and seller, the government in Brazil is in the middle of every single transaction in the country. Take a look at the process.

This process presents unique challenges and opportunities to procurement and accounts payable teams, which we can break down into must-dos (per the government requirements) and should-dos (for business efficiencies).

Procurement and AP teams doing business in Brazil must:

  • Collect and validate NFe (e-invoices) from suppliers, indicating that they are approved to deduct
  • Archive NFe for 5 years
  • Link e-invoices to accounting records (SPED reports)

Don’t forget freight! Approval codes from shipping documents must go into SPED reports just like invoices do, and these records must also be archived for 5 years.

Procurement and AP teams doing in business in Brazil should:

  • Validate XML e-invoices against the purchase order before goods arrive to address any issues. (Remember: you should not accept goods that have inaccurate NFe’s, as the liability then transfers to you.)
  • Validate goods received against the e-invoice/purchase order, and immediately mark as okay to pay, as long as there are no issues.
  • Automate the AP process. Link the XML and journal entries within your ERP to eliminate the risk of errors.

While Brazil’s tax authority mandates what information and documents you must submit to verify your tax filings, it doesn’t tell you exactly how to do so. Yet the processes employed are just as important as the actual filings in ensuring that your invoices, tax deductions, and accounting records are accurate. That’s why it’s critical that companies in Brazil focus not just on what they must be doing, but also on automation and process efficiencies in order to reduce the risk of audits, fines and penalties. Check out these success stories to learn how some of our clients are doing just that.

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Steve Sprague

Como director comercial, Steve Sprague dirige la estrategia corporativa, las iniciativas de penetración de mercado y de field enablement para el negocio del impuesto sobre el valor añadido global (GVAT) de la empresa. El estilo de liderazgo de Steve se basa en su convicción de que, para que las organizaciones tengan éxito, deben comprometerse e invertir en los tres pilares estratégicos de la empresa: las personas, las prácticas y los productos.
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