Top 5 Mistakes During SAP Rollouts To Latin America

Scott Lewin
September 21, 2015

This blog was last updated on January 13, 2020

Over the last few years, I have spoken with many organizations who have implemented SAP ERP across Latin America as well as many that have either canceled the project or have support and change management nightmares on their hands. Here are the top 5 reasons I see projects fall off the rails.

 

  • Thinking that Latin America is similar to European Rollouts — yes there is a similarLearn the top 5 Mistake Made During a SAP Rollout concept of VAT tax; however, the complexity of the tax laws and the pace of change to those laws are often overlooked. I have seen projects that have been underestimated by hundreds of thousands of dollars to millions because the amount of localization requirements and unit testing were underestimated.  In addition, thinking the invoicing process or solution being used in the US or Europe will support the LATAM requirements and processes is a major misconception. 
  • Latin America can easily be moved onto a Financial Shared Service Platform — many companies are looking at consolidating repetitive business processes in centralized groups. And Latin American countries can be transitioned, it is not as simple as just passing an invoice off to a global account payables team.  Because the government is involved in literally every single invoice transaction, this also means that any changes (i.e. Credit/Debit or even product codes) has to be coordinated with the government systems.  For example, in Chile, an AP team has 8 days to approve or reject a supplier e-invoice. After 8 days, this invoice is considered to be locked and can no longer be cancelled by a supplier. Instead, the invoice must be adjusted by the supplier registering a Credit/Debit Note that references the original invoice. 
  • An Invoice In Many Countries Acts as a Bill of Lading – In Brazil for example, one NFe equals one truck – meaning that you would not have an NFe spread out over multiple shipments (i.e. partial shipments). This is because the Invoice (Nota Fiscal in Brazil terms) acts as a bill of lading that allows the legal movement of the goods through out the country. If a truck were ever pulled over, a customs agent, weigh station clerk, or police officer could ask to see the PDF version of the Invoice accompanying the truck, scan the bar code and do a real-time check to ensure the goods on the truck match what was registered with the government. Overlooking the linkage and importance of real-time support equals complete shut downs of your operations. 
  • SAP ERP is not the Financial System of Record — This one always amazes me. A company will spend millions on implementing and training staff, but all of the invoicing and government reporting is left to local providers.  This leads to multiple issues: 
  • Data in your SAP system is often different than the 3rd party reporting system. Why? Because changes are often made to data to ensure the reports that are sent to the government are correct and those changes are done outside of SAP. Isn’t the purpose of implementing SAP to have visibility, governance, and control of your financial data.
  • Violation of the Foreign Corrupt Practices Act — Remember that FCPA doesn’t just cover bribery. The premise of the legislation is all based on executive management having accounting visibility and controls in place to avoid fiscal issues.   
  • MOST IMPORTANT — CONSTANT CHANGE AND SUPPORT — Because Latin America is constantly adjusting their invoice and tax regulations, global consolidations always underestimate the cost of support and change management after go-live. Change affects the SAP Center of Excellence in two ways: 
    • Fire-drills are often the response to change as the requirements only get to the corporate teams once it is too late — expensive resources are pulled off innovation projects and piled on to fix the short term maintenance problem.  This expense on top of new software updates and external subject matter experts runs into the hundreds of thousands of dollars  to millions a year for multinationals with operations in multiple, mandated countries.
    • Global regression testing — as with all ERP vendors, the localization requirements are released for older versions; however, implementing those notes in your customized and highly configured ERP system that may have 35 countries running on the same template is not as simple as just uploading a note or two.  

So if you are embarking on a SAP ERP Rollout to Latin America — ensure you partner with those that have done the implementation before, and make sure you do the cost analysis of the real cost of the rollout — the cost of supporting and managing the pace of change. It is after year 1 that the cost traditionally spike.

To learn more about how to leverage mandates in Latin America, download the Definitive Guide to Ensuring Compliance Across Latin America.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Scott Lewin

Gain timely insight and important up to the minute information about the current legislative changes in Latin America, including Brazil Nota Fiscal, Mexico CFDI, Argentina AFIP and Chile DTE. Learn how these changes affect your operations, your finances and also your Information Technology teams.
Share this post

Hungary Supplemental Insurance Premium Tax
EMEA IPT
July 11, 2022
Extra Profit Tax: An Introduction to Supplemental IPT in Hungary

This blog was last updated on October 28, 2024 Update 7 October 2024 by Edit Buliczka Hungarian Tax Office Updates IPT Declaration Form for 2023 The procedure necessary to correct an underdeclared premium figure in Hungary can be complicated. The complexity of a correction for return form 2320 has become even more challenging. Following a […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
New ViDA Proposal Set for ECOFIN Approval

This blog was last updated on November 1, 2024 The Council of the European Union has released a new proposal regarding the VAT in the Digital Age (ViDA) reform. The proposal aims to modernise and streamline VAT systems across the EU, notably e-invoicing and Continuous Transaction Controls (CTC). Members States will review it on 5 […]

what is peppol
E-Invoicing Compliance North America
October 29, 2024
What it is PEPPOL?

This blog was last updated on October 29, 2024 Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing […]

remote sellers sales tax
North America Sales & Use Tax
October 28, 2024
Will Congress Act to Simplify Remote Seller Sales Tax Collection

This blog was last updated on October 29, 2024 When the United States Supreme Court ruled in 2018, that South Dakota’s law imposing sales tax collection requirements on sellers without in-state physical presence was constitutional, it did not grant states free reign. States are still responsible for ensuring that their sales tax requirements are manageable, […]

dtc shipping laws for craft spirits
North America ShipCompliant
October 23, 2024
Why It’s Time to Reform DtC Shipping Laws for Craft Spirits

This blog was last updated on October 23, 2024 While wine lovers have enjoyed the convenience of direct-to-consumer (DtC) shipping for nearly two decades, the craft spirits market is still not afforded the same access. Outdated and restrictive spirits shipping laws have kept the spirits industry from fully leveraging the benefits of DtC shipping, leaving […]

reporting unclaimed property
North America Unclaimed Property
October 21, 2024
Three Key Reminders for Businesses Reporting Unclaimed Property

This blog was last updated on October 21, 2024 Unclaimed property compliance is one of those legal obligations that often flies under the radar for many businesses, especially smaller ones. However, failing to stay compliant can quickly turn minor oversights into major liabilities. In many cases, the penalties far exceed the value of the property […]