For financial executives new to Latin American business-to-government requirements, it may be tempting to write off compliance as a local issue to be managed by local IT and accounting teams. However, this approach leaves companies vulnerable to severe penalties and operational disruptions that can be felt throughout global companies.
In our new whitepaper, Business-to-Government Financial Regulations Intensify Tax Risks: What Finance Teams Need to Know to Maximize Tax Deductions and Increase Cash Flow, Sovos examines why global finance teams need to be invested in Latin American compliance, including the risks of:
- Fines and penalties that directly impact the bottom line
- Operational shut downs, disrupting supply chains, manufacturing and distribution
- Government audits
- Imposed tax adjustments and corresponding delinquency interest
- Increased transparency into potential corruption, opening the door for Foreign Corrupt Practices Act (FCPA) violations
The report further defines how a proactive strategy not only ensures compliance, but can result in operational efficiencies that ultimately save companies millions. For example, corporations can use the required e-invoices to simplify the inbound receiving process, turning hours of manual data entry into a single scan and click process. Those who have done so are realizing cost savings of up to 40 percent while increasing employee productivity by up to 50 percent.
As financial executives examine compliance solutions and realize that the gaps in their existing ERPs leave their companies at risk for audits, it’s important to look for options that streamline reporting and cash flow while giving global transparency into Latin American compliance (many systems require data maintenance outside of the ERP – risking discrepancies, and worse, manipulation). Key questions to ask include:
- Does this approach ensure accurate tax reporting and IVA credits?
- Will we have complete, accessible financial trails in case of an audit?
- Does the solution identify missed deductions?
- Can we lower costs associated with inbound receiving, accounts payable, accounts receivable and accounting?
- How does this approach affect our working capital?
- Are we still able to use SAP as the single system of record?
For a look at the fines some of the largest multinational companies operating in Latin America have faced, as well as a breakdown of the potential penalties by country, tips to streamline compliance and an explanation of the hidden benefits of these financial regulations, download the full report here.
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