All subjects liable for VAT and Consumer Tax returns must use e-invoicing in Colombia as of January 1 2019, although prior to this date the DIAN will incorporate a group of large-scale taxpayers Continue reading
The company is one of the first to receive this approval after successfully meeting all the technological and financial requirements set out in the regulation Continue reading
The use of electronic data interchange in business transactions has led to the creation of a plethora of different messages over the years. From all of them, today we dedicate this issue of EDI Academy to one of the most relevant, for both suppliers and distributors: the Despatch Advice.
What is 856 ASN?
The 856 ASN designation is the name given to the EDI shipping note message in X12 standard, the language most widely used in the US market. The letters ASN stand for Advance Ship Notice. However, this is not the only terminology used to define waybills or shipping notes. In the EDIFACT standard, widely used in Europe, it is known as DESADV or Despatch Advice.
In any case, all these designations refer to the same concept. The EDI despatch advice message serves to verify that the goods received by the customer match the purchase order. 856 ASN displays the contents of the package and some added shipping information. This includes the order data, item description, product features, packaging type, markings, freight operator information and the layout of the goods within the transport equipment.
One peculiarity of the despatch advice is that it can be as simple or as explicit as required by the business transaction being carried out. For example, a brief version includes reports on the sender of the package, the receiver, delivery time, products shipped broken down line by line and identified with a code (usually EAN, GTIN or SKU) and the quantity of each item.
However, it is also possible to issue a more complete ASN or DESADV, including additional information such as a list of all the products on the pallet with the batch codes, corresponding expiry dates and packaging numbers, among other details. This option is increasingly popular among businesses nowadays, as the traceability is better.
How does the Despatch Advice work?
For a better understanding of how 856 ASN or DESADV work, we’ll explain step by step the communication flow followed by this EDI message:
- The supplier issues the customer (distributor) a despatch advice when the goods are ready for shipping.
- The EDI solution from EDICOM integrates this message into the distributor’s ERP automatically so they can access it easily.
- At a glance, the client compares the despatch advice with the initial purchase order, as both documents are traced and any differences will be obvious. In fact, this confirmation can be performed automatically by the platform.
- If everything is correct, issues a confirmation note to the supplier.
- The warehouses receive the information on the new items due to arrive, so they can plan the loading and storage in advance.
What benefits do we get from the despatch advice?
The use of 856 ASN provides considerable advantages for both suppliers and distributors. On one hand, suppliers improve the goods delivery management process. With this message they are able to announce the shipment to their customers beforehand, but they also have a document endorsing the goods being delivered.
On the other hand, distributors can make their stock controls and incoming order processing more efficient. This is due to total traceability throughout the process, which lets us know when the goods will be sent, when they will arrive and all the details of the shipment.
To these advantages are added the benefits obtained in general from using EDI, ranging from automation to economic cost savings.
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On February 14, Costa Rica is starting up its e-invoicing pilot project, which will include six large taxpayers and plans to spread this system throughout the country. The announcement of the breakthrough comes after the issuing on 7 October of Resolution DGT-R-48 on Authorization for use of e-invoicing and associated electronic documents. In addition, on November 3 the selection criteria for taxpayers required to issue e-invoicing once the pilot plan starts up were also published in the official state gazette.
The Directorate General of Taxation (DGT) has now defined the mandatory features for e-documents. The formats and technical specifications are detailed in the annexes and XML structures listed in the DGT web portal. In addition, the method for delivery, validation and preservation of electronic receipts is also stipulated (mandatory for a 4-year period).
Who will be required to issue e-invoicing in Costa Rica?
For the moment, the DGP has not revealed how migration to e-invoicing will take place, although it is foreseeable that it will be done gradually, in stages, as occurred in practically all the Latin American countries where e-invoicing use is now compulsory. Nevertheless, there is still no definite timeframe. What will be announced on December 15 will be the list of taxpayers required to start issuing e-invoicing from the start of the pilot scheme in February 2017.
In this regard, the DGT selection process will take into account the criteria published in the Gazette on November 3. Among them, the income level and activity sector of the taxpayers. These taxpayers will receive notification by email in the case of large companies, or through the Gazette for smaller taxpayers.
However, taxpayers who are prepared to face this technological leap can apply to join the pilot scheme voluntarily. To do so, they must send an e-mail to email@example.com.
A system with great benefits
The spread of e-invoicing in Costa Rica will bring benefits, both for the public sector and private companies. With this technology, the DGT will be able to improve control and reduce tax evasion, as all the business transactions will be declared in real time. In addition, taxpayers will simplify tax compliance and automate part of their administrative procedures, which will increase productivity and cut economic costs. In fact, the savings from e-invoicing may reach 90% compared to the traditional process on paper.
After six months, Colombia’s tax and customs administration completed its pilot project for electronic invoicing. The country is entering the next stage in the process, which is to make the use of e-invoicing more widespread. Colombia’s tax administration expects that a significant number of taxpayers will be using the e-invoice by 2017.
During the testing phase, which began this past April, 59 businesses from different sectors participated. The objective was to identify improvements that could be made to the billing model proposed by the tax and customs administration before more taxpayers begin using the e-invoice technology.
According to the data provided by the tax and customs administration, 70,000 invoices were issued during the pilot program, which lasted for six months. In general, the tax and customs administration affirms that 84% of the project was carried out successfully. However, Colombia has many challenges to face before expanding the use of the e-invoice.
What are the next steps?
For the moment, the tax and customs administration is expected to certify providers authorized to offer e-invoicing services. These providers have passed all of the system tests and comply with the regulations of Decree 2242. EDICOM is involved in this project and participated in the pilot project as well. EDICOM has successfully passed each of the required tests within the tax administration’s time period. Furthermore, EDICOM is a leader in e-invoicing compliance solutions in other countries such as Mexico.
In regards to mandatory e-invoicing, the tax and customs administration published a list of companies which must begin using the e-invoice during the first phase of the process. Like other Latin American regions, Colombia set a schedule of progressive adaptation while taking the technological and economic development of companies into account.
Why is the use of the e-invoice becoming more widespread?
Today, Colombia doesn’t use the e-invoice as much as other countries. Although the e-invoice has been available since 1995, it is estimated that only 2% of companies in the country utilize it due to the difficulties posed by the current model. The e-invoice expansion project will address this problem by using a more operational billing schema.
This paperless system has already taken place in other countries such as Mexico, Brazil and Chile. With this expansion, the tax and customs administration expects to obtain the same results as the aforementioned countries. The e-invoice will help combat high rates of tax evasion, promote finance mechanisms such as factoring, simplify tax compliance and reduce economic costs.