Inbound Logistics in Brazil: How One Company Reduced Costs 70%

August 5, 2016 Scott Lewin

 

Compliance with Brazil’s e-invoicing mandate isn’t as simple as receiving an NFe (e-invoice) and sending payment; layers of complexity affect enterprises at all levels, especially when it comes to logistics.

Brazil’s compliance legislation includes several core required documents related to logistics and receiving, including: 

  • DANFe – This physical representation of the e-invoice must accompany shipments. Government officials – including customs agents and patrolling police – can validate shipments in real-time by Accounts Payable & Inbound Logistics in Brazil scanning the DANFe. If a shipment doesn't match the NF-e records, the truck can be impounded and will not be released until financial penalties are paid.
  • Manifestacao do Destinatario – This manifest of reception is required in certain industries and localities, such as oil & gas and the state of Rio Grande del Sul. These automated messages to the SEFAZ confirm the awareness of a supplier NFe and the accuracy of the goods received.
  • CTe – This document is sent by your logistics provider for freight charges, and must be collected, validated and archived.
  • MDFe – This aggregation document is required for a truck with multiple CTe. Companies doing their own shipments or using trucking contractors not affiliated with a larger third-party logistics company also use these.

Companies that are paying freight charges must collect CTe documentation and archive it just like NFe; then, the approval codes must be entered into SPED accounting reports. There are a couple of ways that companies are handling this process: 1) CTe Writer – simply collects the CTe and writes the approval codes to the SPED tables for basic reporting compliance, or 2) CTe MIRO – in which companies match the CTe to a purchase order (PO) of freight, just like they would a PO for a regular invoice. This can be done through standard procurement POs in SAP or a through transportation management system.

No matter which method is used, at a minimum companies must meet government requirements - collecting the CTe, validating they are accurate and registered, and archiving them for 5 years. Through these requirements, the government ensures that goods, prices and taxes all match, ultimately eliminating tax leakage.

And though these requirements may appear cumbersome, there is good news hidden in these validation and reporting processes. Smart companies are using these mandated processes to streamline operations and drive efficiencies. By requesting that suppliers send the NFe as soon as the truck leaves the warehouse, buyers can match the XML to the purchase order and manage issues before goods are received. This is especially important since companies should never accept goods that have an inaccurate NFe; doing so shifts the liability to the buyer.

Automating this matching process and inbound receiving actually lowers the cost of receiving and invoice processing. Companies can eliminate data entry at the warehouse by using a simple scan and click of the DANFe that accompanies the shipment. If you automate the XML NFe match against the PO at the line item level before the truck arrives, you can ensure that what is arriving is an approved purchase. Your inbound receiving team doesn’t have to search, or worse, call procurement to verify items.

Coca-Cola Andina is a prime example of these efficiencies. Using the straight-through processing (STP) method made possible by government-mandated standardization, the company reduced inbound receiving costs more than 70 percent. STP takes electronic data from invoices and automatically matches it to a backing document, such as a purchase order or goods receipt. Assuming the two match, the invoice is processed and made ready for payment without manual intervention.

If your accounting team is manually entering NFe and CTe data into reports, the risk of error increases, and you’re missing opportunities to improve efficiencies and reduce the costs associated with receiving. Learn more about how mandated e-invoicing facilitates supply chain efficiencies here.

Listen to webinar replay on Accounts Payable and Inbound Logistics in Brazil. During the webinar, Steve Sprague, our VP of Strategy, will discuss real-world examples. Register to listen to replay.

 

 

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