Conclusion: 5 Reasons the Hybrid Cloud Compliance Model Simplifies Brazil Nota Fiscal Version 3.1 Transition

April 1, 2015

Reduce Support Costs, Avoid Fines and Focus on Business Innovation

We’ve recently explored the top 5 reasons why companies are switching off on premise software solutions to cloud providers, more specifically hybrid cloud. This model: 

  1. Configures to your unique SAP ERP and eliminates multiple upgrades 
  1. Eliminates failure points and the need for constant monitors 
  1. Provides real-time day-to-day support 
  1. Streamlines the compliance process and frees up finance and technical staff 
  1. Provides multi-country support

Compliance is a mission-critical process that has both operational and financial tax implications.  Consider the severe business impacts of getting this wrong: 

You Can’t Ship if NFe is Not Working

Many companies have been shut down for more than 5 days at a time.  How much money will you lose if you are unable to ship goods to your customers for a whole week?  To avoid these costly incidents, ensure you solutions have a single, comprehensive monitor and built-in “contingency” modes.

 Local Audits and FCPA Fines are Prevalent

The Brazil government has the ability to audit you in real-time. Not only does it have the transactional data from Nota Fiscal, but it also has aggregated monthly, quarterly and annual reporting (SPED) to ensure accuracy and consistency.  Non-compliance can mean local fines (on average 250 US Dollars per XML issue) or fines of 75% to 150% of the incorrect taxes. Such measures helped the government demand a record 109 billion Reais in unpaid taxes from individuals and companies in 2011 (Source: Reuters).

U.S. companies should also consider the Foreign Corrupt Practices Act.  Latin American mandates give the SEC increased visibility into companies’ financial records, making compliance a corporate issue, not simply a local problem.

Next Steps

As you implement NFe compliance solutions, here is a list of questions to ask of your IT and fiscal teams:

  • How many resources are supporting the ERP system and Nota Fiscal process?
    • How many SD (Sales and Distribution) resources?
    • How many MM (Material Management) resources?
    • Who owns the integration of the systems?
    • How many people are in the Shared Service center processing invoices in Brazil (both AR and AP)?
    • What is the cost of the physical architecture (hardware, maintenance)?
  • How long do Brazil ERP upgrades take? What is the internal cost per project?
  • When there is an error, where do we find it? What is the process?
  • When something is wrong, who do we call? What is the process?
  • When the government changes, who is responsible for upgrading each solution component?
  • Are your Inbound Receiving teams manually entering data or do you automate the DANFe process?
  • Do you match the supplier XML to the Purchase Order before the truck arrives?
  • How many of your invoices are “touchless” – processed without any human intervention?
  • How much time does your finance team spend at the end of a month fixing data issues that were just pushed through the process?

We have given you the basic requirements to understand the “real” cost of trying to manage Brazil Nota Fiscal on premise. If your company could benefit from the cost reductions and simplifications provided by a hybrid cloud solution, contact us before you pour hundreds of thousands of dollars into compliance, just to have to do it all over again with the next change.

 

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