Accounts payable is a vital function in compliance with Mexico’s eContabilidad accounting requirements. Once a vendor XML e-invoice is accepted by the accounts payable team, the government views it as accurate and complete, then uses this invoice to verify corresponding tax obligations. If an invoice includes errors and tax liability is inaccurate, correcting these mistakes is much more complex after the fact – causing headaches in multiple departments. Therefore, the AP team is a key piece in the compliance puzzle and should be a primary factor as companies evaluate compliance options.
Here are eight components to consider when evaluating an inbound solution in Mexico.
- ERP as system of record – Accounts payable in Mexico must be managed within your ERP for accurate compliance. Using an external system opens up the risk of manipulation, errors and discrepancy, which is why you need a single source of truth for accounts payable and corresponding tax liability.
- Automatically imports supplier XML into ERP – Knowing that your ERP is crucial to compliance, look for a system that automatically imports your supplier XML invoices into the system of record. This gives you automatic linkages from your ERP to the government-approved document – providing a verifiable trail in the event of an audit.
- Eliminates manual data entry – Your inbound AP solution should pull required information straight from the supplier XML. Any solution that requires AP teams to manually enter this data is inefficient and risky, as errors as small as typos can trigger fines. Considering that Mexico requires a 30+ digit, case sensitive, alphanumeric unique identifier code, you can see how error-prone manual data entry could be. Not to mention, it’s time consuming – especially considering that the data is already there in XML format and could be easily pulled without manual intervention.
- Provides 3-way match of PO, goods receipt and supplier invoice – A system that automatically matches and verifies purchase orders and goods receipts against the supplier XML invoice ensures the accuracy of compliance initiatives and reports.
- Automatically links XML records to journal entries – Carrying the XML invoice through from accounts payable into accounting records provides the links and government verifications needed to validate compliance documents and tax calculations in the event of an audit.
- Maintains archives – XML archives are required for five years in Mexico. Your AP solution should provide a seamless, touchless solution to maintain these records.
- Facilitates supply chain finance – There is good news hidden within these compliance requirements. Look for solutions that have a proactive compliance outlook – ones that optimize efficiencies, reduce costs and improve cash flow. Supply chain finance is one way of doing so. Since invoices can be marked “okay to pay” as soon as goods arrive with AP automation and government standardized e-invoices, companies can more easily offer supply chain financing options to their vendors – letting suppliers opt for real time payments, improving cash flow and strengthening relationships.
- Local language support – Compliance in Mexico is often a multi-country corporate challenge, with teams at both headquarters and local offices having a role. Being able to access support in local languages for each team minimizes the efforts required to maintain compliance.
With Mexico’s announcement of real-time, automated audits, 100% accuracy in accounts payable and compliance is a necessity. Use the list above as a checklist for evaluating potential solutions in order to ensure such accuracy and reduce the risks involved in accounts payable in Mexico.