Why the New Process for Cancelling E-Invoices in Mexico Matters

Gustavo Jiménez
November 14, 2018

This blog was last updated on January 13, 2020

The changes involved in the new process for cancelling electronic invoices in Mexico are not trivial. There are major ramifications for both accounts payable (AP) and accounts receivable (AR) operations.

The new mandate, which fixes a major gap in Mexico’s e-invoicing policy, is aimed at enabling the SAT, the Mexican tax authority, to recover money lost through unjustified or fraudulent cancellations. For companies doing business in Mexico, it ushers in a host of new functional requirements.

Bringing buyers into the Mexican e-invoicing process

Under the old system, companies could cancel e-invoices unilaterally, without notifying the other parties involved. As such, they could avoid paying some income taxes by hiding revenue. On the other side, meanwhile, customers that paid for the goods or services could not deduct the expense of value-added tax (VAT) paid as they normally would.

The new mandate brings buyers of goods and services directly into the cancellation process. Sellers must send a notification to their clients before cancelling an invoice. In turn, the client must accept or reject the cancellation either via the SAT portal or through an e-invoicing provider within 72 hours. If the client does not respond, the invoice is cancelled.

New risks for companies handling e-invoices in Mexico

For companies doing business in Mexico, the change in the cancellation process requires making sure that e-invoicing solutions are up to the task of compliance. On the AR side, companies need to be sure that they can submit cancelation requests, validate cancellation status and cancel e-invoices within the parameters of the new system. On the AP side, they need to be able to consult, and to approve or deny, cancellation requests.

For AP operations, the ability to approve or deny requests is especially important. This new wrinkle in e-invoicing policy is what enables them to deduct VAT expenses when appropriate, making the new process a potential cashflow issues for organizations. Mishandling cancellation approvals can lead directly to unnecessary costs. AP users need to be able to manage cancellations requests while avoiding the risk of manual error, fines and penalties, and disputes with business partners.

Failure to master e-invoicing cancellations could also leave AR departments exposed to fines and penalties that were less of a risk before the new mandate went into effect. The SAT has further inserted itself into business relationships between buyers and sellers, and companies need to be in compliance in order to keep those relationships, as well as their communication with the government, running smoothly.

Sovos SAP solutions for Mexican e-invoice cancellations

The eCancellations SAP Framework from Sovos enables companies to manage the new cancellation process in Mexico within their SAP environments, ensuring they are in compliance with the SAT. The framework, native to SAP, also enables companies to streamline AR and AP processes, saving time and money. With eCancellations, users can manage all of their cancellations on both sides of the ledger within SAP, maintaining SAP as the single source of truth for e-invoicing data.

Take Action

Discover more about the new mandate for cancelling e-invoices in Mexico in this comprehensive guide to the new process.

Sign up for Email Updates

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

Author

Gustavo Jiménez

Gustavo Jimenez is the Product Marketing Manager for Sovos’ e-invoicing solutions and is based in Atlanta. Gustavo is responsible for go-to-market strategy for Sovos LatAm e-invoicing solutions in countries with existing and upcoming mandates. He has more than five years of experience in e-invoicing, middleware integrations, and regulatory research. He works closely with the product management and development team as well as sales and marketing to facilitate compliance process transformations for Sovos clients. Prior to joining Sovos, Gustavo was responsible for marketing activities and strategy at Invoiceware International, a leading e-invoicing solution for businesses with operations in Latin America. He focused on the go-to-market strategy of their solutions as well as communications with the LatAm market about regulatory changes and new solutions.
Share this post

North America Sales & Use Tax
February 6, 2025
The Tariff and Sales Tax Mishmash – Untying the Mess

This blog was last updated on February 6, 2025 Talk of tariffs dominates the current news cycle with some commentators suggesting that tariffs will spell disaster for our economy while others say the exact opposite. We’ve seen the stock market sometimes fluctuate as tariffs are announced but later suspended, leaving us to wonder whether an […]

retailer dtc wine shipping
North America ShipCompliant
February 6, 2025
Retailer DtC Wine Shipping: The Time Has Come

This blog was last updated on February 6, 2025 By Tom Wark, Executive Director, National Association of Wine Retailers We are often reminded by the media and those in the wine industry—as well as by wine enthusiasts—that the three-tier system of alcohol distribution in most states hinders consumer access to the expansive number of wines […]

Montana 1099-DA
North America Tax Information Reporting
February 5, 2025
State Filing Alert: Montana’s New 1099-DA Requirements for Crypto Brokers

This blog was last updated on February 5, 2025 Reporting digital asset transactions on Form 1099-DA just got a little more complicated. For 2025 transactions, crypto brokers that file Form 1099-DA with the IRS will be required to file the 1099-DA with the State of Montana. This makes Montana the first state to introduce a […]

North America ShipCompliant
January 23, 2025
DtC Wine Shipping in 2024: A Year-in-Review

This blog was last updated on January 28, 2025 The direct-to-consumer (DtC) wine shipping channel faced a storm of challenges in 2024, navigating some of the toughest market conditions in over a decade. As inflation tightened wallets and consumer behaviors shifted, the industry recorded its steepest declines in shipment volume and value since the inception […]

Form 1099-DA Crypto Transactions
North America Tax Information Reporting
January 21, 2025
What is Form 1099-DA and How Does it Impact Crypto Transactions?

This blog was last updated on January 24, 2025 The IRS has released Form 1099-DA and its accompanying instructions for filing for TY 2025. Form 1099-DA is the newest IRS information return, designed for reporting digital asset proceeds from broker transactions and is required to be filed by brokers managing digital assets such as NFTs […]