Latin America compliance is more complex than ever before, changing month to month, country by country. As such, companies are at a crossroad when it comes to einvoicing requirements in Latin America – should they build a system internally or leverage an existing solution? And if they decide to purchase a solution, is a local or regional provider best?
To help guide this decision, let’s look at the key issues that companies will face in selecting a solution.
Compliance MUST Be Managed Through Your ERP.
Maintaining all of your invoicing and reporting records through your ERP is critical for avoiding errors and minimizing audit risks. Creating or leveraging bolt-on solutions that house data outside of your ERP increases the risk of discrepancies and manipulation – opening up audit and tax risks.
Yet, ERP Systems Don’t Support All Einvoicing Requirements in Latin America.
ERP systems focus on having a place for the data, rather than the process of exchanging the data and the workflows required to manage the day-to-day discrepancies. That means critical issues to Latin American compliance, such as PDF generation, government validations, printing, distribution and collection, are ignored.
Global ERP Implementations Are Always Customized.
ERPs are always configured and customized to each company’s business processes. This is the benefit of systems like SAP and Oracle. However, this same flexibility in initial deployment creates upgrade problems in an environment of constant change. ERPs typically address Latin American compliance requirements through standardized code releases for the masses. Hundreds of support notes are not uncommon, leaving companies with major implementation challenges, each and every time a country changes their laws.
Requirements Are Ever-Changing.
E-invoicing and e-accounting legislation is often updated on at least an annual basis, but can be even more frequent. Since many ERP Centers of Excellence run an (N-1) upgrade strategy, their compliance measures are outdated with these consistently changing mandates.
For companies choosing to build their own solutions, frequent changes mean continual work to keep their systems compliant, taking a significant investment of internal resources. (Take a look at our examination of the staffing required here.)
Mandates Affect All Areas of Operations.
Managing internal compliance requires staff assistance from developers, finance teams and more. In addition, Latin American compliance impacts payroll, receiving, accounting, supply chain and logistics teams, which creates multiple integration needs in areas that ERPs alone don’t support.
The Consequences of Errors Are Significant.
Tax penalties and fines for errors are just the beginning. Mistakes and discrepancies can trigger larger audits that compound the costs. Plus, because many countries require an accurate, approved XML e-invoice to accompany shipments, mistakes can shut down entire operations. With the complexities inherent in building a compliance solution, these risks increase with the multitude of opportunities for errors.
Companies need a solution that’s nimble enough to integrate within their ERP, shift with the constant regulatory changes and offer strong contingency systems. Building a solution internally is complex – and growing increasingly so – requiring multiple personnel and constant monitoring and updates, taking them away from critical business functions and innovation. Local solutions often operate outside of an enterprise’s ERP, and companies typically need to utilize multiple local solutions for comprehensive compliance.
Instead, companies should choose a proactive solution that integrates cross-region and cross-division; a solution that has compliance at its core – meaning you’ll never miss an update or opportunity.
To learn more about our distinctive approach to compliance in Latin America, contact us.
The post Should Enterprises Build or Buy a Latin American Compliance Solution? appeared first on Sovos Compliance.
About the Author
Steve Sprague's electronic invoicing and middleware integration expertise stems from nearly twenty years of experience in the industry. As General Manager of Invoiceware by Sovos, Mr. Sprague manages global messaging, product strategy and field enablement which has led to the firm’s double-digit revenue/sales growth in the last three years.More Content by Steve Sprague