Webinar: Shared Services - Latin America best practices for electronic invoicing

INVOICEWARE INTERNATIONAL © 2013

Confidential

Invoiceware InternationalThe Leader in Latin America eInvoicing Compliance

Lower Total Cost of Ownership• One Platform, multiple countries – Brazil, Mexico,

Argentina, Chile• Minimal Internal Resources• Simplified Architecture• Fixed, Predictable Cost Today & Through Changes

Production Support• Invoiceware a phone call away for day to day calls• English, Spanish or Portuguese• End to End Support – including SAP issues

Change Management• Ongoing Changes Included (including both software &

consulting)• Local teams work with the governments (i.e. SEFAZ, SAT, AFIP, SII)

• Remove dependency on Internal Resources to keep system updated


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Latin America eInvoicingUnderstanding the Basic Differences to other Regions of the World

Different Types of Countries Mandated electronic invoicing

Brazil Mexico Argentina

Expanding Countries Chile Guatemala, Uruguay, Costa Rica Colombia

Domestic versus Cross Border• Domestic equals VAT tax and is subject to country

mandates• Cross Border is predominately paper

Mandates Constantly Evolve• Can change 3-4 times per year as the tax regulations

evolve• Average multinational spends 2600 hours a year

managing Brazil issues versus an avg. of 80 hours a year in other countries


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Latin America e-Invoicing Gov’t Mandates Eliminate Common Roadblocks

Government in LATAM• Mandates the use of electronic invoices• Mandates that supplier must make e-Invoice available to Buyer• Mandates the Format of the Invoice• Requirement of Supplier Invoice: Approved and Accompany the Truck

• Increases accuracy of what was ordered, shipped and invoiced• Invoice can arrive even before the Goods

Paper Invoices Supplier Rollout Multiple Formats Accuracy Timing

X X X X X


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How to Approach Latin AmericaGovernment Compliance vs. Commercial Compliance

Compliance - Okay to Deduct Avoid ~$250 fine per invalid invoice The e-Invoice received must match the e-Invoice previously

registered with the Tax Authority. Valid invoice = Okay to Deduct VAT on remittances to

Government.

Account Payables Efficiency – Okay to Pay If PO backed, does invoice = PO = Goods Receipt? If not PO backed, does commodity manager or buyer approve? Have the Goods Arrived and been processed?

Working Capital Optimization Inability to optimize cash flow (e.g., Missed Discounts) Liquidity concerns for supplier operations Short-term investment of Cash



Mexico eInvoicingCompliance Update

December 31, 2013 CFD is Repealed There is NO “Grandfather” clause –

everyone must switch Includes all current CFD Users CBB (paper) allowed only for companies >

$250K Peso (~20K US Dollars)



Mexico e-Invoicing: Mandated Inbound ValidationCountry Moves to CFDI

Mexico SAT - Real-Time Compliance Mandates• Real time integration – legacy was a batch process• Invoices must be registered and approved before being sent• Printed CFDI is also a valid, legal invoice, XML must be archived for 5 Years• CFDI may be received electronically in advance. Must be validated as authentic before payment.• Each outbound e-Invoicing solution must also provide for inbound validation as well• IMPORTANT: Step 6 – You do not want to pay invalid invoices – Audit Risk & You Assume Tax Issue

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Real-Time E-InvoicingBaseline Compliance Process Sets the Stage for Straight Through Processing

Brazil Real-Time Compliance Mandates• Real time integration with Brazilian Tax Authority (SEFAZ)• For Accounts Payable – Goods Nota Fiscal, Service Invoices at City Level & CTe - Transporation • NF-e received electronically by recipient in advance. Must be validated and any returns accounted

for via “return order process”• SEFAZ does not validate your taxes in real time but they do data-mine to check later• Brazilian companies are responsible for accurate taxes of their suppliers as well

Paper

Electronic

Inbound A/P

• Paper not authoritative for compliance

• Suppliers must provide XML electronically

• Step 6 (required) sets up opportunity for automated matching & “straight-though” processing.

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NFE EventsBi-Directional Process Orchestration with SEFAZ as the Mediator Between Parties

SEFAZ Solution – Two Way Process Orchestration via NFE “events”• NFE is acknowledged by the receiving CNPJ through event posted back to SEFAZ. • NFE must be acknowledged within 180 days initially, and eventually before shipment as phased roll-out progresses. • Greater burden on receiving CNPJ, but many large receiving CNPJ are pushing for these changes to guard against

ghost transactions in the first place.• Solution very similar to EMCS for Alcohol/Tobacco/Energy within Europe

Draft, subject to change



Multiple Local Vendors

VATTax Remittance

Domestic e-invoice &Cross Border

Different e-invoicing provider in each country Complex legislation equals high internal support costs

Domestic Invoices subject to electronic mandates Cross-Border – still predominately paper

Supplier VAT deductible only from gov’t valid invoices Coordination of Credit/Debit notes to adjust gov’t

registered taxes once goods accepted

PO usage on the rise but still low E-invoice formats don’t support “Straight Through

Processing” – need ability to append data

Common Challenges for Multinationals

PO Usage“STP” Capability

SupplierCollaboration

Master Data & Onboarding Requirements Payment Status, PO Append, Dispute

Management, Supply Chain Finance



Regional Compliance Multi-Country Support Domestic Buyer Side

Mandates: • Brazil – NFe, NFS, CTe,

MDFe• Mexico• Chile• Argentina

Guaranteed e-invoice Compliance

Automation & Workflow Purchase Order & Goods

Receipt Matching Line Item Matching for Tax

Rate Issues –to request need for Credit/Debit

Data Append: Suppliers add PO & Other Matching Info to Invoice (i.e. Mexico Addenda)

Comprehensive Support Electronic In Country

Mandates Cross-Border & In Country

Paper (CloudScan)

No supplier fees to inhibit adoption

Onboarding and & Master Data Collection for Supplier Management

Supply Chain Finance

Partnership with TradeshiftRegional Latin America Shared Services Platform

Tradeshift Business CloudConnecting companies, creating value and empowering business

Electronic Invoicing & Data

Capture

Workflow

Financial Services

Enterprise Management

• There are no barriers to join, all companies can sign up and start sending business documents for free.

• Buyers and sellers can interact and collaborate in real-time.

A rapidly growing eco-system of applications supporting electronic invoice presentment and payment (EIPP) processes.

Companies can extend business processes onto Tradeshift by installing or building their own apps.

Capturing both Electronic & Paper Invoices

ERP

Scanned & PDF invoices Validated e-Invoice

Onboarding

Learns invoice formats automatically

Advanced heuristics with machine learning and discovery abilities to recognize and remember new invoice formats.

Exceptional data quality, validated by suppliers

Exceptions flagged by the Business Firewall. Suppliers corrects the exceptions and sign-off on the conversion prior to submission.

First step to e-Invoicing

It’s an onboarding tool to convert PDF and paper senders to submit electronically.

Tradeshift is Configurable…

Entities

Entities are legal business units and are the way in which we model enterprises on

Tradeshift

1Validation rules

The rules that define what is required on a document in order to optimize processing - are typically branch and supplier group

specific.

3Supplier groups

Predefined groups of suppliers, who have

similar characteristics regarding the way in

which they send documents

2

…Global

...and Extensible

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Connect with all trading partners via

one common business platform

Deliver business documents

electronically into ERP system

Automate business processes

Future-proof new business needs



Regional Compliance Multi-Country Support Domestic Buyer Side

Mandates: • Brazil – NFe, NFS, CTe,

MDFe• Mexico• Chile• Argentina

Guaranteed e-invoice Compliance

Automation & Workflow Purchase Order & Goods

Receipt Matching Line Item Matching for Tax

Rate Issues –to request need for Credit/Debit

Data Append: Suppliers add PO & Other Matching Info to Invoice (i.e. Mexico Addenda)

Comprehensive Support Electronic In Country

Mandates Cross-Border & In Country

Paper (CloudScan)

No supplier fees to inhibit adoption

Onboarding and & Master Data Collection for Supplier Management

Supply Chain Finance

Invoiceware & TradeshiftRegional Latin America Shared Services Platform