Learn more about Mexico SAT electronic invoicing and tax reporting requirements.

1. Mexico Electronic Invoicing and Reporting
Requirements
INVOICEWARE INTERNATIONAL
Global Compliance - Simplified

2. INVOICEWARE INTERNATIONAL © 2016
Confidential
Background
 The Mexico SAT, their governmental tax agency, announced
the mandatory transition of all invoices, for companies
generating more than 250,000 pesos in revenue annually,
to CFDI e-invoicing as of January 1, 2014. Organizations
must comply with the CFDI legislation for all outgoing
customer invoices, and validate all incoming supplier XML
 Additionally, payroll (called Nomina Electronica) must be
processed via CFDI
 As of April 3rd 2015, Mexico requires electronic accounting
 Chart of accounts
 Trial Balances
 Journal Entries

3. INVOICEWARE INTERNATIONAL © 2016
Confidential
Tax Authorities Control an End To End Process
Government standardized XML linked to VAT Tax reporting = Real Time Audits
Supplier Registers XML
 Government XML Standard
 Only Legal document
 Registers VAT Tax Obligation
PDF Accompanies Truck
 Copy of Invoice OR
 Signed Shipping Document
depending on country
VAT Tax Linked to XML
 Buyer only able to take VAT tax
credits that are linked to
approval codes in supplier XML
 Errors or corrections are the
buyer’s issue to get fixed

4. INVOICEWARE INTERNATIONAL © 2016
Confidential
Governments: Constantly Changing & Accelerating
From 3 to 10 Countries in less than 2 Years, More Business Processes Affected
2013 2014 2015-2016
AR eInvoicing
AR eInvoicing
AR eInvoicing
AP eInvoicing
Freight Invoices
SPED ECD
AR eInvoicing
AP eInvoicing
Nomina
eContabilidad
AR eInvoicing
Proforma VAT
AR eInvoicing
AP eInvoicing
Freight Invoices
SPED ECD
SPED ECF
eSocial
AR eInvoicing
AP eInvoicing
Libros Reports

5. INVOICEWARE INTERNATIONAL © 2016
Confidential
Solution Requirements
Simplify Complexity Today, Manage Change in the Future
Cash, Compliance & CostEfficiency & Stability
CFO
Objectives
How do I automate processes with
my customers and suppliers?
How do I streamline transparency of
reporting & cash flow?
Efficiency
 On-time delivery
 Lower Inbound Receiving costs
 Accurate tax reporting & IVA Credits
 Complete audit trails
Cost
 Employee productivity
 Cost and time of shutdowns
 Tax penalties, missed deductions
 Cost of closing books monthly
Flexibility
 Automated Contingency in place
 Process workflows
 Working capital optimization
 SAP as single system of record
IT Consolidation
Chief Information Officer
How do I provide value with fewer
systems and lower costs of upgrades?
 Effort build, integrate, and maintain
SAP & multiple country solutions
 Staff, Solutions, Infrastructure
 Annual upgrades & consulting
 Stable budgeting vs. fire drill projects
 Buffer SAP from change
VP Supply Chain

6. INVOICEWARE INTERNATIONAL © 2016
Confidential
Multiple Solutions
• Local country solutions
• Middleware interfaces
• SAP ERP updates
SAP not System of Record
• Data is changed in 3rd party
tools not in SAP ERP
Who Supports?
• Search & Rescue Missions
Who Maintains?
• Alignment with SAP ERP –
global regression testing?
• Ongoing knowledge of what
was done and what needs to
be done
IT – Traditional Approach is Costly
Multiple Solutions, Constant Upgrades
SAP
ERP
Middleware
Integrate the
System
Different
Solutions for
Each Country
CUSTOMER
IDOC1
2
3
4
5
Monitor #1 Monitor #2 Monitor #3-6
Who
Supports
Who
Supports
Who
Supports
6
7
8

7. INVOICEWARE INTERNATIONAL © 2016
ConfidentialConfidential
IT – Financial Accuracy Equals Cash Flow
VAT Remittances & Working Capital Issues
Working Capital Optimization
• Accurate invoicing equates to lower DSO & less returns
• VAT tax obligations & deductions equal millions for multinationals
• Transform mandated compliance into Supply Chain Financing opportunities
Financial Reporting Accuracy - VAT
 VAT obligations in Latin America – 16-22% of goods sold
 Brazil VAT – based on physical movement of goods which means can
owe even before you collect from your end customer
 VAT Credits/Deductions must be linked to supplier’s registered XML
Finance Penalties – Local and FCPA for US Public Companies
• Mexico - $3,000 per event (i.e. transaction) plus denial of deductions
• Brazil -75% to 150% of tax values - $50 Million dollar Chem business
fined $3 Million by SEFAZ for deduction issues (page 30 of 10K)
• Foreign Corrupt Practices Act – SEC fines CPG company 4.2 Million of
Mexico invoices issues; High Tech company FCPA issues approach $108
Million

8. INVOICEWARE INTERNATIONAL © 2016
ConfidentialConfidential
Supply Chain – Business Impact is Substantial
Mission Critical Timing & End User Productivity
Invoicing Can Shut Down Operations
Government approved documents are
needed to ship legally. Built in back up
processes ensure you can always ship.
 Level 1 - On Network Contingency
 Level 2 – On Premise Contingency
 Automatic Reconciliation to get
invoice registered when systems
back on line
Standardization can drive down costs
Use XML Invoice and PDF on trucks to
lower cost in inbound receiving
 Automated Purchase Order – Invoice
matching before the truck arrives
 Eliminate data entry at warehouse
by scanning the PDF for data entry
 Manage discrepancies and trigger
government processes (return
orders, gov’t status messages)

9. INVOICEWARE INTERNATIONAL © 2016
ConfidentialConfidential
Mexico SAT Requeirements
 Account Receivable mandates - Sending Invoices to customers – these must be
CFDI if your business does more than 250,000 pesos of revenue per fiscal year.
 Account Payable mandates - Receiving invoices from suppliers – the government
only cares about XML during an audit as of the 2012 diaries, so you must collect,
validate and archive your supplier XML.
 Logistics companies - should be producing the Carte Porta and this should
accompany your goods movement in the country, customs documentation can be
used for import.
 Import numbers - known as Pedimento must be applied to the invoice.
 Nomina Electronica – All payroll receipts must be validated before you can deduct
taxes, this is retroactive and effective as of January 1, 2014.
 eContabilidad (eAccounting Reports) – due for Chart of Accounts, Trial Balances
and Journal Entries which need to be linked to government CFDI XML approval
codes known as UUID.

10. INVOICEWARE INTERNATIONAL © 2016
ConfidentialConfidential
Mexico e-Invoicing
Business Process Overview
PDF or ML via Mil or electronically via FTP, email, etc.

11. INVOICEWARE INTERNATIONAL © 2016
Confidential
Invoiceware International
Avoiding Financial Penalties with Audit Proof Processes
Fiscal Compliance: XML Invoice collected and
status updated inside of SAP
Process Automation: XML linked to a PO or
processed along with SAP MIGO
UUID and Signing Attributes: UUID automatcially
posted to SAP once validated with gov’t and all
signing attributes for audit included in SAP
monitor
5 Year Archive: Integrated archiving, so can
access XML and PDF from SAP monitors
Revalidate XML: You should have abilit to
revalidate XML as a supplier could cancel an XML
days after first sending. This process ensures that
time stamp and validation happens when XML
received as well as when payed (could be days
later)

12. INVOICEWARE INTERNATIONAL © 2016
Confidential
Mexico eContabilidad 2015
eContabiidad
 April 3rd Deadlines for Chart of Accounts & Trial Balances
 Polizas (Journal Entries) – Due September 2015 for July Movements
 Due if audited
 Due if require Tax Credit (Compensacion, Devolucion)
 In order to do Polizas – must have XML automated through gov’t
validation to G/L posting – 95% of companies are manual off PDF and not
using XML in Payables process
Issues that many will have
 Polizas – UUID (gov’t signing attribute) needs to accompany G/L entries
for proof of tax credits and deductions
 Inbound Procurement – typically invoices doesn’t have the UUID,
needs to match and align to the FI posting in SAP
 Gastos (T&E)– need multiple XML per expense report, often expense
report is a single entry on G/L with many to one link of XML for T&E
 Nomina (Paychecks) – need to have UUID at grain of employee, usually
G/L entry is at Cost Center

13. INVOICEWARE INTERNATIONAL © 2016
Confidential
Invoiceware International
Business-to-Government Compliance Suite for SAP
Latin America Regional Platform
• Brazil, Mexico, Chile, Argentina, Peru, Ecuador,
Uruguay & Colombia
SAP System of Record
• SAP sole system of record
• Single user interface inside SAP
Process Automation
• Automated Contingency – always be able to ship
• Lower Inbound Receiving & AP Costs
• Transactions & Reports are fully integrated
• Working Capital Optimization solutions
End to End Support
• End to End support in Portuguese, Spanish and
English whether SAP issue or gov’t issues
Fixed Fee - Change Management
• All maintenance is covered by fixed cost annual
fee (software & labor included)

14. INVOICEWARE INTERNATIONAL © 2016
ConfidentialConfidential
Resources
Click the links below for more information
 Learn more about Mexico requirements
 Effective SAP Implementation in Mexico Is a Critical Component of
Business-to-Government Compliance
 Mexico SAT mandates checklist
Want to stay up to date on compliance in Latin America?
Subscribe to our blog today.

15. INVOICEWARE INTERNATIONAL © 2016
ConfidentialConfidential
Next Steps
Contact Us To Learn More
+ 1800 – 988 – 0728
www.invoicewareint.com