Improved Cash Flow Realized from Business-to-Government Compliance

Scott Lewin
August 25, 2015

This blog was last updated on June 27, 2021

In recent weeks, we’ve examined the rapid expansion of business-to-government compliance in countries that rely on VAT tax income. While Latin America is the current hotbed for such legislation, similar mandates are cropping up worldwide as countries prove the effectiveness of financial legislation in maximizing tax revenues. The reach of these mandates is far – affecting sales, procurement and even HR. Though many companies see compliance as cumbersome, there are multiple benefits to the automation required under these mandates – not the least of which is improved cash Proactive companies are using automation to introduce supply chain financing in regions of the world where supply chain stability is critical. flow.

Business-to-government compliance can require extensive changes to accounts receivable and accounts payable processes – but with change, comes opportunity. On the AR side, e-invoicing requirements mean that XML invoices have to be sent to the government and approved before being issued customers and often before goods are shipped. Brazil is even acting as its own e-invoicing network, meaning that customers can easily download invoices from the server, eliminating the distribution burden on AR teams and ensuring that there is never an excuse for a missed invoice.

The real cash flow benefit, however, comes from the impact of business-to-government compliance on AP processes. Because invoices must be available to buyers even before goods arrive, e-invoicing mandates streamline AP approval processes, opening the door for improved cash flow and supply chain financing. Automating the inbound receiving process means that invoices can be deemed “okay to pay” as soon as goods arrive, reducing operational costs and providing greater flexibility over cash flow.

Proactive companies are using this automation to introduce supply chain financing in regions of the world where supply chain stability is critical. Using supply chain financing, corporations can lower the cost of payment processing while providing suppliers with greater access to liquidity, as payment approval windows decrease from weeks to hours. Suppliers have the ability to immediately convert invoices into cash, and can speed up the payment process based on their unique cash flow needs, payment terms and billing cycles.    

With improved cash flow comes increased stability in the emerging markets most inclined to implement business-to-government legislation, ultimately ensuring supply chain effectiveness and making these economies a less risky place to do business.

Sovos offers the only regional supply chain financing solution in Latin America that is integrated into compliance processes. Click here to learn more about how to take advantage of increasing business-to-government legislation to enhance cash flow in emerging markets.

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 […]