When I mention Nota Fiscal, companies are often looking at the Account Receivable side of the operations due to the impact on Shipping and customer payments. However, there are many advantages that should and can be obtained in the Procure to Pay process. Often organizations explain to our teams that inbound validation is still manual. If so, you are missing a huge opportunity to lower costs, lower risks and increase efficiencies.
With the 3.10 changes required in Brazil by December, it is a good time to look at the Inbound Account Payable process requirements and the options you have.
- NFe Goods documents must be validated by the receiver.
- CTe – Freight Documents must also be validated for all types of transportation, now including Road and Multi-Modal.
- MDFe – Used as an aggregation document for a truck load with multiple CT-e, and used by companies doing their own shipments or by trucking contractors not affiliated with a larger third party logistics company
- Service invoices – still managed at the city level, not state or federal and each city can have different requirements.
- Manifestacao do Destinatario: Manifest of reception is required in certain industries such as Oil & Gas and the state of Rio Grande del Sul for invoices over 100,000 Reais. They are automated messages back to the SEFAZ confirming the awareness of a supplier NF-e and the accuracy of the goods received. One of key benefits of voluntarily doing the Destinatario is you can utilize the process to download the XML from the government if your supplier doesn’t send it to you or it is lost in space. Additionally, once accepted, the supplier can no longer cancel or change the message. There are limitations on how often you can use this and in which regions. But an interesting concept arises – the Brazil government could be the Supplier e-Invoicing network in Brazil. This concept already works at the Web Service activated cities, where you as a buyer can use a web service to download all the service invoices registered to you at a specific city.
Account Payable Options:
- Okay to Deduct – what the government requires you to do
- You should be collecting the XML Nota Fiscal from your suppliers, validating they are accurate and registered, and archiving them for 5 years. The average penalty for not having the XML during an audit varies by state, but the penalty averages 500 Reais per XML.
- You should be collecting the CTe (as of December 2013) and MDFe (2014), validating they are accurate and registered, and archiving them for 5 years.
- Okay to Pay – what you should be doing if you have decent volume of inbound invoices
- Remember that your supplier must make the XML available to you, and a PDF replica of the exact XML version called a DANFe is on the truck that will arrive at your warehouse
- Leading companies are asking for the XML to be sent as soon as the truck leaves the warehouse. They can then bounce the XML up against the Purchase Order. And if there are issues, they can inform the supplier. Remember, if the XML is wrong in any way – the standard process in Brazil is to turn the truck around. You should not accept goods that have an inaccurate Nota Fiscal – if you do, the liability is now on you to get your supplier to adjust the XML via cancel/resend update version or correct via a registered CCe or Credit Note.
- This step not only helps from an audit perspective, it also helps to lower the cost of Inbound Receiving and invoice processing. There is no data entry of the DANFe at the warehouse.
5 Part Solution Requirements: If you solution doesn’t cover these 5 functional concepts or only covers 1 or 2 pieces, you are most likely wasting money, time and setting yourself up for an audit.
- Business Partner XML collection and response messages (In Brazil, NFe is most commonly exchanged via email. If a solution provider tells you they are going to charge your supplier – ask them for what as by law the supplier must make the XML available to you)
- Validation – integration with Federal, State and City web services (ensure you ask whether this is your provider or if they resell a local provider). Support and audit trails are critical as the fines can be in the millions for violations.
- Data integration – ensure your provider integrates directly into the SAP system. I have seen organizations manually print invoices out of a portal and hand enter them into SAP? This is a complete waste of money and opens to door to fraud.
- MIGO (physical goods posting to PO) Coordination — this is a critical area in order to save money. Your solution provider should be able to (inside of the SAP ERP) utilize the DANFe to trigger the MIGO match to the purchase order.
- MIRO – (posting of Invoice – fiscal data). There are many requirements for MIRO posting as there are many different scenarios to consider, so ensure your vendor is not just PO Backed. You will most likely need a subset. Also, look to see your customization leves (i.e. ZMIRO) as this will affect project implementations
- Purchase Order Backed
- Non-PO Backed Scenarios including:
- MM: Subcontract Manufacturing
- MM: Movement – multiple types of transactions
- MM: VL32N Automation
- SD: Consignment Sales
- SD: Sales Returns
- NFE Writer Automation
It is not enough just to collect the XML and validate — you need to drive the process through your SAP system if you want to gain efficiency and avoid audits.
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