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.
Despite these challenges, it’s important that compliance is managed wholly within your ERP – housing data and reports elsewhere only adds challenges that can trigger audits and fines. That’s why choosing the right compliance solution is such a critical decision.
Hurdle 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.
Hurdle 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.
Hurdle 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.
Hurdle 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.
Hurdle 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.
Hurdle 6 – Accounts Payable
The government approved output is the only invoice of record. Governments now more than ever in LATAM are driving greater controls making the data integration of AP validation data critical as the government will use the outputs and acknowledgements to determine tax liability.
Hurdle 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.
Hurdle 8 – Maintenance
Compliance in Latin America is highly dynamic and SAP must be the source of truth. Synchronization between compliance solutions and SAP is critical to ensure that transactions and accounts remain consistent as tax requirements evolve. Integration flexibility and solution scalability are key success factors.
Hurdle 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.
Hurdle 10 – Support
Many companies underestimate the support needed to maintain compliance internally, requiring up to 11 full-time staff to maintain compliance, adjust processes, verify accuracy and address any issues.