Challenges of e-Invoicing in Mexico and LATAM countries

e-invoicing

Electronic invoicing for taxpayers is becoming a mandatory issue for companies throughout the world. The latest study on E-Invoicing/E-Billing International Market Overview & Forecast from Billentis calculates a volume of e-invoices exchanged that could reach 36 billion in 2017.

Countries across the American continent have been at the forefront in use of this technology for years, with Mexico and Brazil being the countries with the most advanced e-Invoicing legislations. Tax authorities within Central and South America are looking up to these models and adapting them to their own fiscal models, like those of Costa Rica and Colombia. However, in the United States e-invoicing is still in the initial stages of development in comparison to countries in Latin America and Europe.

Mexico has become a global e-invoicing leader through establishing a system which has influenced e-invoicing compliance on an international level. The Mexican CFDI has experienced updates since 2014 designed to ensure a better user experience, and to solve incidents that are detected over time with the application of this system.

This year, the CFDI will undergo a major evolution (VIDEO), introducing a new version 3.3 which will come into force on December 1, 2017. The new version includes changes in structure, data format, data features and data pools/catalogues, as well as in validations and calculation rules.

The update to version 1.2 of the Payroll Complement and the use of the Payment Receipt Complement, will also become mandatory this year, beginning December 1, 2017. México’s Tax Administration Service (SAT) also announced updates regarding the Foreign Trade Complement, where version 1.0 and 1.1 will coexist during 2017.

Globalization, the expansion of markets and legislative changes around the world means that companies are increasingly interconnected, and require secure and reliable communications to roll out international e-Invoicing projects.

Now that e-invoicing is extending to all continents, a main obstacle for multinational companies is to comply to these new systems. This is why EDICOM has developed a global electronic invoice platform that adapts to different e-invoice models that exist in the world and to the legislation currently in force in each country. This way companies need only one platform to operate in any market, allowing them to continue working from their centralized management system.

Would you like to know more? Download our free Expert Analysis on e-Invoicing in Latin America (available in English, Spanish, Portuguese).

How can TIERs comply with MMOG/LE practices?

MMOG

In sectors like the automotive industry, that utilize methodologies like Just-in-Time manufacturing, efficiency and control of the supply chain becomes a priority. For this reason, more brands require their suppliers to comply with MMOG/LE (Materials Management Operations Guidelines / Logistics Evaluation) practices. However, in Brazil, many TIERs still do not know how to meet this demand of their customers.

What is MMOG / LE? 

MMOG/LE is a set of good practices defined by ODETTE and AIAG, the two most important regulatory entities in the automotive sector, which aim to improve the performance of manufacturing, purchasing and logistics processes to reduce economic costs.

It is a self-assessment tool that allows TIERs to know their weaknesses and improve them. In total, it audits 206 logistical criteria, related to work organization, the interface with the supplier and customer, production capacity and other areas.

According to the score obtained in these practices, the TIER is classified as level A (when it defined as world class), level B (if it is deficient in 2 or more criteria) or level C (when it is deficient in 1 or more critical aspects of high impact).

Renault, Ford, Chrysler, Peugeot or Volvo are some of the major automotive brands that already require their suppliers in Brazil to comply with MMOG/LE practices to guarantee shorter production times and more precise deliveries.

Solutions to meet MMOG/LE 

Successful completion of the MMOG/LE evaluation requires fluid communication between partners and a high volume of data exchange in real time (from CAD files to commercial messages). Therefore, EDI is presented as an essential solution for companies in the sector. It is no coincidence that this technology was born linked to the automotive industry as early as the 1970s.

Today, communication between major brands and their TIER I partners are carried out in most cases electronically through EDI. However, in the case of lower level providers, who must also comply with MMOG/LE practices, this tool is not so widespread in Brazil.

Meanwhile, the goal is for EDI to be massively expanded among all partners in the supply chain, regardless of their size. In fact, the most recent version of this audit, known as Global MMOG/Lev4, is already extending electronic data interchange to smaller suppliers.

For companies that don’t have EDI, the MMOG/LE evaluations can occur with these solutions that optimize communication and logistics.

  • Business@Mail. This is a platform designed by EDICOM that integrates with the manufacturer’s EDI solution. Each time it creates a document (invoices, orders, PDF, etc.) addressed to a supplier without EDI, it is automatically published in a secure web portal.

The TIER receives a notice and can access the information in Business@Mail by way of a username and password. In this way, the confidentiality of the data is guaranteed. The manufacturer has access to process traceability and it is not necessary to duplicate the work using other parallel methods such as electronic mail. This makes communication more efficient for both.

  • Partner Web Portal. The sending of information by suppliers without EDI occurs through different means such as email, fax and paper. This prevents manufacturers from automating the integration of messages with the management system and requires a longer management time.

Partner Web Portal is a solution for TIERs without EDI to be securely connected to send delivery schedules, dispatch notices or other basic transactions. The platform acts as an EDI solution that automatically integrates these messages into the manufacturer’s management system.

The advantages of MMOG/LE 

Although the implementation of the MMOG/LE practices requires an initial investment by manufacturers and suppliers, it has been proven to produce significant logistical improvements. In fact, optimization increases annually, even after more than 3 years.  Among the main advantages are the reduction of stock, the reduction of economic costs and a greater precision in delivery.

EDI Academy – How to Send Electronic Documents to Partners Without an EDI Solution?

EDI Academy BusinessMail

Previous articles for EDI Academy talked about the advantages of electronic document exchange between different partners in a business relationship. But what happens when the recipient doesn’t have an EDI platform? Should we go back to traditional delivery methods? Fortunately, this common problem has a solution and it’s called Business@Mail.

What is Business @ Mail?

Business@Mail is a service designed by EDICOM that allows sending electronic invoices and other documents, structured or not, to partners who do not have a technological solution to receive files.

Its operation is very simple. The issuer performs the necessary electronic transactions from its B2B EDI solution just as it does in the usual way. Automatically, the platform detects that the receiver of this data does not have an EDI platform and publishes them securely in the portal Business@Mail.

Next the recipient receives a notification that he or she has received documents that have not been consulted yet. From then on, the recipient can access the documents by connecting to the web portal using the username and password set beforehand.

In order to have greater control over the delivery of the document, the issuer periodically receives updates about the status of the documents sent to its partner. There are four possible statuses:

  • Confirmation that data has been published
  • Notification to recipient
  • Documents processed / consulted by the recipient
  • Documents not addressed by the recipient

What are the advantages of Business@Mail?

The main advantage of Business@Mail is that it allows companies 100% electronic communication regardless of the technological level of their partners. This avoids the heterogeneity of digital and paper documents, which entails complicated management and hinders the ability to store information correctly.

However, this is not the only benefit of Business@Mail. Its use also offers these advantages:

  • Immediacy and security. The documents are published on the web portal instantly and maintain all the security guarantees of any EDI relationship, which is something that would be lost when using email or physical documents.
  • Traceability. The issuer controls the information that it sent to its partner at all times.
  • Electronic storage. The files are stored in the solution for as long as the law requires and is controlled with an advanced electronic signature. In the case of invoices, for example, this prevents printing and physical storage, as they remain available for consultation at any time with the same legal validity as a paper document.
  • Publication of all types of data. Business @ Mail is prepared to send documents in four formats: standardized with a digital signature, structured without a signature, graphics (pdf, jpg, etc.) and mixed (standardized with a digitally signed pdf).
  • Free for the receiver. This service has no cost to recipients, which is especially important for the small partners as well as partners who cannot afford to use an EDI solution.

Mexico’s Tax Administration Has Published New Guidelines Regarding the Online Digital Tax Document

Facilidades CFDI SAT

Mexico’s tax administration is continuing with its policy to improve electronic invoicing as well as the online digital tax document. These improvements stem from the tax administration’s conversations with key actors involved in the digital transformation of the country such as entrepreneurs, accountants, system developers and providers that are authorized and certified.

For more information, download this infographic about changes taking place with the online digital tax document in 2017 and visit cfdi.edicomgroup.com.

After communicating the implementation of the new version (3.3) of the online digital tax document and the incorporation of the updates for some of its complements, the tax administration has now published some guidelines that will affect taxpayers in the next few months. They are as follows:

  • The first of these guidelines directly affects the mandatory use of version 3.3 and the migration to the new schema. Version 3.3 will go into effect on July 1, 2017, however, version 3.2 may continue to be used to issue invoices until November 30, 2017. As of December 1, 2017, the only version valid for issuing electronic invoices will be version 3.3.
  • As for the payment receipt complement, it will be optional as of July 1, 2017, but only with version 3.3 of the electronic invoice and it will be mandatory starting on December 1, 2017.
  • Finally, the approval process for the cancellation of electronic invoices will take effect on January 1, 2018.




All of the improvements being made by the tax administration are aimed at improving data quality and increasing ease of use for taxpayers. Nearly 90% of taxpayers have already migrated to version 3.3 of the online digital tax documents. With its online digital tax document platform, EDICOM provides solutions for all types of businesses for simplifying and automating the task of sending and receiving online digital tax documents such as a receipts portal, a Vendor portal, CFDI payroll and Addendum Service.

Related News

The Tax Administration has Published a Transitional Mechanism for the Foreign Trade Complements

Manage Payment Advances with the New Version (3.3) of the Online Digital Tax Document

Costa Rica Can Issue Electronic Invoices in Dollars

The tax administration in Costa Rica has modified some parts of resolution No. DGT-R-25-2017, including issuing e-invoices in a currency other than the national currency as well as issuing invoices in other languages with their respective translations.

Electronic invoices in Costa Rica can now be issued in a currency other than the national currency, for example, in US dollars. Until now, the resolution stated that invoices could be issued only in colones. This will be beneficial to Costa Rican taxpayers who depend on foreign operations in other currencies.

The resolution indicates that the total and the subtotal of the invoice can be expressed in national or foreign currency and also the value of the services, the value of the goods and the net sale price. It is imperative that electronic documents issued in a foreign currency indicate the currency in which the transaction was performed.

Regarding the language of invoices, the resolution states, “Electronic documents must be expressed in the Spanish language. However, they may be written in a different language, in which case, if required by the tax administration, their respective translation must be provided in the Spanish language.”

A System With Huge Advantages

Costa Rica is very close to implementing the electronic invoice. On February 14th, Costa Rica began an electronic invoice pilot project that included large taxpayers and aims to make the use of this system widespread in the country.

The expansion of the e-invoice in Costa Rica will benefit both for the public sector and the private sector. The tax administration will be able to improve fiscal control and reduce evasion since all commercial operations will be declared in real time. The electronic invoice has direct advantages for taxpayers as well. With this system, economic costs are minimized due to reduced paper usage, printing, mailing and physical storage. In addition, it is a technology that opens the door to e-commerce and internationalization.

Companies that use the electronic invoice can grow outside of their country and they can make technological advances in other areas. We recommend that you download our whitepaper “The Electronic Invoice in LATAM” to know all the details about e-invoicing and to discover how it can affect your business.