Baz: Hello and good afternoon everybody welcome back to LatamReady. This is our monthly webinar where we talk about everything about Oracle NetSuite. Today we have Carlos here, hello Carlos welcome! If you noticed guys, there’s one person missing, our beloved Glenn our sales manager who is usually here during our monthly webinars but right now he is busy.
Carlos: We hope he’s busy in Miami!
Baz: I’m pretty sure Glenn is somewhere, if you’re watching Glenn you’re busy out there selling, selling, selling! And introducing LatamReady to the world. Ok so today we’re going to be discussing as usual the importance of thinking globally, acting locally in Latin America and why it’s a concept that all companies no matter what size should focus on right now. The topic of our webinar today is of course common pitfalls when implementing an ERP, an accounting software, in your multi-latin company.
Carlos: Yes after almost ten years implementing NetSuite all across Latin America we can share some ideas about that.
Baz: This is an interesting topic because when choosing an ERP for your company, people experience some challenges.
Carlos: yes, the first example that comes to my mind is thinking that Latin America is very similar to the US.
Baz: like the business process you mean?
Carlos: the business process, tax compliance, the way of implementing an ERP. And as you perfectly know, that’s not the case.
Baz: yes, it’s quite the contrary actually
Carlos: exactly. For example you will find very similar concepts,VAT for example, sales tax, purchase taxes. These exist in the States, in Europe and also Latin America. Be careful! A common pitfall is thinking that that’s it. In Latin America you will find a lot more.
Baz: so it’s not the same. Business processes in the United States and Latin America are completely two different processes.
Carlos: just to give an example, in Brazil you will find many BAT taxes. Another example is that Argentina is having withholding taxes. That’s a concept that’s not present or doesn’t exist in the US. In Argentina you will find many business cases where they do withholding taxes. It’s going to be a different withholding tax when you’re buying a service or when you’re buying a product. It also depends on whether that product is manufactured in the country, or if the raw material is from this or that state. So I’d say that withholding taxes are a different game.
Baz: it’s a headache! Because you have to consider all the different states, the different countries in Latin America, not like the US where it’s just one entity.
Carlos: exactly! For example electronic invoicing. We usually see American corporations arriving to Latin America thinking that their invoicing process is going to work in Latin America.
Baz: Now what is the NetSuite LatamReady solution for this?
Carlos: our suggestion will always be to use something that is already proven, that has been working in that field, with all the tricks of the business. Going back to electronic invoicing, in the States what you see is that companies issue a PDF file through emails when issuing an invoice. A common pitfall is to think that that’s going to work in Latin America. That’s absolutely a misconception of what’s happening here in Latin America, because electronic invoicing is in place in more or less ten countries across the region.
Baz: it’s important to understand that you need to know that it’s two different things, the US and Latin America are two different things when implementing an accounting software. The business processes are completely different so you need to have an experienced team.
Carlos: I remember the case when we were helping an American company, they told us they needed an electronic invoicing solution in place. We started to work with them and told them it’s not only electronic invoicing. You will find that you will need electronic credit memos, electronic debit memos, electronic WAY bills, depending on the country. The American company, our customer, was surprised because they thought they only needed electronic invoices. In Latin America when you say electronic invoicing you’re actually talking about electronic documents.
Baz: we’re going to talk about those electronic documents a little later into this webinar. So the solution for that would be having a plug-and-play solution, something configured a process that’s already working.
Carlos: exactly that’s what we offer a plug-and-play solution something that is already working inside of NetSuite.
Baz: including a team with the local knowledge of the processes as well!
Carlos: and talking about knowledge, as you know Baz, last year we launched LatamDojo, an e-learning platform that is collecting all the knowledge we’ve had from ten years working with NetSuite all across the region. Now that’s in place with e-learning plans for our customers, for them to understand not only in Spanish (or the local language could be Portuguese as well) but also in English.
Baz: Check up latamdojo.com where you can see our localization solutions for NetSuite in Latin America. It’s an e-learning platform which we initiated last year. We have all the information you need for localizations for Latin America. It’s free right now and very interesting. I feel like everyone should actually take a lot at this if you really want to know about NetSuite in Latin America. Ok common pitfall number two! To think that Latin American business processes can be easily moved into a financial shared service, managed exclusively in the US. Explain that Carlos.
Carlos: Yes, we usually see that big American corporations are working with shared services. A shared service could be a company or a business unit, that is centralized in all the business processes that could be repetitive business processes. For example accounting process.You could you imagine a company in the States with ten different legal companies. That corporation has created one specific company for administration. So that company is in charge of the accounting processes for all the corporations. That’s usually the tendency now with big corporations in the States. When they arrive to Latin America they think ok let’s move that Peruvian subsidiary to the shared service, and manage everything from the States. There could be a transition, but you have to be careful with which processes you transition to the shared service platform. Why? Because for example, registering a bill is something that could be transitioned to the financial services because it’s something repetitive that could be done from anywhere in the world by a person who does not know what’s happening with that bill in the country. That’s perfect. The problem starts when our customers were trying to transition tax compliance or specific processes like withholding taxes.
Baz: From the Latin American subsidiaries to the shared services in the States.
Baz: and by doing so it’s not really a good practice.
Carlos: Yes because governments are always involved in every single transaction.
Baz: That’s true
Carlos: so that American team that’s trying to work with all those different scenarios they’ll find in Latin America, they’ll have to learn everything from everywhere. Let’s imagine eight different accounting principles because they are used to working with US GAAP. That same team will have to start understanding Brazilian GAAP, Colombian GAAP, Peruvian GAAP, Argentinian GAAP...and each with different rules.
Baz: and this is going to be a long process if you want to go in this direction.
Carlos: is it possible? Sure! But it could be risky and a long term process
Baz: yes, a long term process maybe there’s multiple data entry and it’s a lot of manual work
Carlos: exactly, it’s manual work and also understanding of what’s happening. Let me give you an example. In the States when you issue an invoice, you send it to the customer and that’s it. For example in Chile when you issue an electronic invoice, your customer has eight days legally for accepting or rejecting that invoice.
Baz: eight days also to edit it, or to fix it...
Carlos: no, just to accept it or reject it. It’s legal to say “I reject this invoice” That’s part of the process that’s happening between those companies. Up to day number nine, if the customer says no, you have to issue a credit memo. Those kind of tricks is something that your US shared service team should start to know
Baz: that’s something you would learn through experience by working with Latin American processes over some time
Carlos: there are always surprises. The first time eight or nine years ago when we realized that that’s the way Chile works, it was a surprise for us. Today it’s something that we support. If you are a US team working in a shared service environment, trying to get that Chilean subsidiary into your work, that’s going to be a surprise. Latin American governments are in a every single transaction
Baz: Latin American governments can be very complicated at times.
Carlos:they are always willing to control. That’s the difference between the States and Latin American governments. Obviously the IRS has control.
Baz: everyone knows they have control, yes.
Carlos: the difference is that they have control when you pay taxes, in Latin America they have control in every single transaction through electronic invoices.
Baz: to make sure you pay your taxes!
Baz: so the solution
Carlos: our solution and what we always suggest our customers is, sure you can move some processes to the US team that is offering shared services, but you have to leave some processes to the local team.
Baz: specific processes should not be moved to the US office, because you need the local knowledge and the local expertise to actually work on those so it doesn’t slow down your business
Carlos: specially if you work in an ERP environment like NetSuite because you can have control everywhere you are working because it’s a cloud based software, so you’ll have control in your shared service office and in your local subsidiary office as well.
Baz: so you’ll have overall control in the end!
Carlos: and the local subsidiary team should be in charge of that relationship with the government, to send electronic invoices, to send legal ledgers every month or every two weeks or annually
Baz: working in this direction your business processes will be more efficient, than doing everything else in one area
Carlos: because the other option is to leave everything in the local subsidiary. It’s possible as well, sure, but then you are losing productivity
Baz: maybe visibility as well, time, etc...but productivity is very important for growing companies.
Carlos: specially if you are working in a shared service environment.
Baz: handling multiple subsidiaries as well!
Baz: next common pitfall that a lot of companies experience: an invoice in many countries acts as a bill of lading. There’s a problem here.
Carlos: yes a common questions is “is electronic invoicing only related to invoicing?”
Baz: is invoicing invoices?
Carlos: and the answer is no. We’re talking about electronic documents here
Baz: a lot of people get confused with this
Carlos: exactly. Back to the Brazil example, every invoice is able to be used as a Waybill. Brazil is requiring electronic invoicing. So when you issue an electronic invoice in Brazil, you will issue two types of documents a PDF and an xml file. The xml file is a technical representation of the official electronic invoice. Obviously xml is not something that you can read, but the PDF you can. So the PDF is the graphical representation of the xml file. So the person who is in charge of the shipment goes with the PDF of the invoice that’s working as a way bill and if somebody from the government decides to stop you...
Baz: for example if you’re driving a truck and you’ve got some goods, you’ve got this Waybill (invoice) and someone stops you
Carlos: the government authority is going to scan your PDF’s barcode, there’s going to be an online control system with the government, and they will be able to see whether the invoice is related to the truck, the type of goods and to the destination.
Baz: and they’ll also have a list of inventory of what you’re carrying
Carlos: and in the case of Peru, they will also know who is driving, the person who is driving that specific truck and also the plate number.
Baz: oh! the plate, his driver’s license, etc.
Carlos: yes! So electronic invoicing is a whole different universe of requirements. That’s the reason it’s a common pitfall to think it’s just about producing a PDF or using what they have in place in the US.
Baz: and to avoid common pitfalls like this, not knowing what are invoices (and they’re not just invoices they’re electronic documents) our solution is having somebody on your implementation team with strong local knowledge of this sort of information.
Carlos: and a proven solution that is in place. As you know Baz, we’re supporting more than twelve Latin American countries, including Brazil, Chile, Colombia, etc. Electronic invoicing all across Latin America.
Baz: I believe fourteen countries?
Carlos: fourteen countries supported, ten of which are legally requiring electronic invoicing.
Baz: if you want to know those countries check out latamdojo.com
Carlos: and the list is growing! Panama is going to be on our list next year
Baz: see that guys? Did you know that Panama is going to need electronic invoices?
Carlos: this year we added Costa Rica, Bolivia...and this year we are adding Brazil for inventory items
Baz: inventory items is something very new that we’re working on.
Baz: continuing with number four. So your ERP or your accounting software is not the financial system of record, what does that mean, Carlos?
Carlos: that’s a classic situation Baz. Many of our Miami based customers that are operating with subsidiaries in Latin America, originally have an ERP in place in the US and once they get into a new country they decide they want something different. They start working with a local package for accounting purposes.
Baz: while using their ERP in the US and in Latin America?
Carlos: no, something different in Latin America. A different accounting software
Baz: a different accounting software not similar to the one they’re using in the States
Carlos: for example that’s the case of one of our new customers in Fort Lauderdale in Miami. They decided for NetSuite a year ago, and they have subsidiaries in Peru and Ecuador. They decided to implement NetSuite for their US operations, but still not for the subsidiaries
Baz: did they say why?
Carlos: because of the speed. They decided to go faster to Peru and Ecuador. They were operating in the States with NetSuite, they were consolidating information every month from the subsidiaries but paying taxes with the local softwares. So we had a broken process there.
Baz: this broken process is not automated it’s not quite efficient, because manual work is put in there. So if you’re in the US and want all your data
Carlos: you have to wait until the beginning of the next month to have that information in place in NetSuite. And you’re not in control of what’s happening there
Baz: you don’t know what’s happening, you cannot see anything, and you’re spending money as well doing something you could have done in just one single system
Carlos: and with the risk of paying taxes without your control, without your supervision
Baz: of course I want to control where I’m paying taxes, I don’t want to know where I’m not paying
Carlos: that customer is now working with us. We’re going to make them work in one single platform. They doing that because of different reasons. One reason is because it’s faster, maybe because they thought that it was a customization from NetSuite. But the important thing is, that they thought that the information they have to issue for the governments is that different, that they require something local.
Baz: so the companies that use local softwares instead of using NetSuite, they’ve got the right idea but they’re one hundred percent sure of the solutions of the capabilities of NetSuite.
Carlos: exactly, and then they put their operations in risk, because that software that’s not part of the control, could be manipulated. You will not only an efficient process but also a risk, because you’re issuing legal ledgers from that local software and you’re blind about what you’re saying to the government
Baz: basically you’re blindfolded and walking in the middle of the street
Baz: the risk of penalties is higher if you’re not using a built for NetSuite solution.
Carlos: and the government doesn’t care. The governments says: You presented that, I don’t care if it’s from this cheap software or (...)
Baz: or if they made a mistake it’s your fault! So don’t be at fault guys, you’ve got to be careful with this
Carlos: and you know we usually see that because our corporate customers they think at the beginning that it’s that complex, that they will not be able to find something in place in the market to support those specific requirements, so they want to avoid customizations, they don’t want to customize their ERP, they don’t want to customize NetSuite for that local requirement so their faster option is to work with a different software and the solution is there, it’s always there
Baz: having the right solution so you can have full control of your business operations of your multiple subsidiaries. That is a life saver for people to understand! So continuing with number five, most important pitfall to know what these companies experience is, not taking into consideration the constant changes of the legal rules and regulations in Latin America
Carlos: we have many examples for that pitfall. I still remember three or four years ago, we received a prospect now it’s a customer, that was working on a list of legal requirements for five countries. They worked on that list for more or less three months. Could you imagine an American implementation team travelling to every single country to write down a list with examples. It was a great job. The pitfall was that it was valid five months ago, everything is different now.
Baz: local legal rules and regulations change all the time in Latin America. There’s not one set regulation, not for the whole year.
Carlos: yes as you said when we were preparing this webinar, there’s not specific time of the year for the governments to say “ok I’m going to change”
Baz: let me repeat what you just said. There’s not specific time of the year in Latin America for the government to change the legal regulations or the local rules. That’s something to really open your eyes to because you have to know on the spot, you have to update yourself daily to find out what’s new.
Carlos: and going back to the example of that partner that was working on that list, their list was not valid anymore three months later. And obviously when you ask somebody what do you need, you run the risk of not receiving all the information. For example in that case, they received the list of monthly requirements, but not annual requirements. In some countries in Latin America you have to set legal ledgers every month, and also at the end of the year. So their list wasn’t complete because of this changing environment that you will find in Latin America.
Baz: that’s very unfortunate when companies experience that because they’re so close to having all the right documents, data and information but maybe there’s one thing that’s missing.
Carlos: it’s like you’re trying to take a picture, but the problem is that the picture is going to change and if you focus it from a different perspective you’re going to understand that you have to have more information and more information. If you take the picture it’s going to be valid for that moment, tomorrow’s not going to be valid.
Baz: this goes back into control with government. The reason why these changes are always in place is because of control
Carlos: exactly, they are looking for ways to have more control. For example in Mexico, in november of last year, the mexican government decided to put in place a new electronic type of document called complemento de pago for buying purposes. So they are adding more and different ways of understanding what your company is doing, what you are doing, how much you are selling, how much you are buying. Online. Transaction by transaction.
Baz: the government in Latin America is like big brother looking at everything you do
Carlos: that’s a good example
Baz: They’re keeping a close eye on you.
Carlos: exactly. What you find across the market is, for example SAP, Oracle and even NetSuite are saying ok we have our version for localizations. But again, it’s an american team working on localizations. They had a plan, but once they finished their plan everything has changed. That’s the case of complemento de pago or DIOT file in Mexico. Our friends from NetSuite finished the or DIOT file, but it was only valid for two months.
Baz: two months! That must have been a surprise after the two months
Carlos: for them yes! Not for us though, it’s part of our job
Baz: it’s part of our job! We actually get down and dirty we get updated with the changes and that’s how we help our clients.
Carlos: exactly we have accountants hired in every single country, telling us what’s happening and what’s going to happen.
Baz: what’s going to happen is important!
Carlos: our customers and our electronic invoicing partners are telling us what’s going to happen.
Baz: so you’re saying that the solution is having a dedicated team with the support and local knowledge to help out.
Carlos: and working on the field in Latin America, exchanging ideas, in Spanish and in Portuguese with local players.
Baz: we work with local accountants in those specific countries where we have our localizations. We have real time local knowledge in those areas so we know beforehand. Before the changes take place we know what to expect.
Carlos: in Colombia and in Bolivia we work with a partner called COMFIAR those guys are from Argentina good friends of ours. They told us that Bolivia is going to change the way electronic invoicing is working three months before it was legally published, because they are in that environment, they’re part of the team that’s working with the government on this.
Baz: if I were looking for an ERP of course the solution I want is someone reliable who has the knowledge. I wouldn’t hire somebody else who does not have that.
Carlos: that was the case Colombia. We were working on our integration for electronic invoicing two months before it was required legally. Once it was legally required, the solution was there ready to start working.
Baz: I think what we do is magical! It helps thousands of people and companies as well. I’m really quite happy about this!
Baz: that’s actually the end of this webinar. So those were some common pitfalls that we actually covered. Let me go through the again. Number one common pitfall is thinking that Latin America is similar to the US, business processes. It’s not! The best way to do this is having a plug and play solution and local knowledge, a team that’s dedicated to help you there.
Baz: second common pitfall are the shared services.
Carlos: move to your shared services only what is related to productivity. Do not move your the relationship with the government to the shared service unit, leave that to the subsidiaries. Leave electronic invoicing and legal ledgers in the country.
Baz: so you have to think hard about what you need to do. Third common pitfall is invoices. Invoices aren’t just invoices, they are electronic documents
Carlos: a whole world with different rules in each country and different types of documents. In some countries you will find electronic withholding tax certificates, in Peru Waybills re required in electronic format,
Baz: your accounting software is not a financial system of record.
Carlos: that’s a common pitfall. Corporations have in a place a world class ERP and their subsidiaries are working with local software. Without control, with broken processes, and with a lot risk also.
Baz: so the solution for that is having one single system, to have full control.
Carlos: implement NetSuite with us!
Baz: full control with NetSuite and LatamReady will help you there. And lastly of course, not taking into consideration the constant changes of the local legal rules, you need a dedicated team, you need somebody who has the local knowledge, who works with people with local knowledge.
Carlos: a team that is supporting, updating and working on the field.
Baz: with LatamReady you’ll find that we are working with so many people in different countries with all the local knowledge.
Carlos: and local partners and customers as well who are always giving us feedback.
Baz: that way we are always up to date!
Carlos: we update our SuiteApp twice a year with NetSuite to cover new features and we update our SuiteApp for legal features all along the year
Baz: all the time!
Carlos: every single week we have some new here
Baz: every single day on our morning meetings there are new things on our SuiteApp!
Baz: I think this webinar was very informational I hope you all enjoyed that and got something out of this. If you didn’t don’t worry because our phone number is 786 600 2641 if you have any questions please ask us. We are always happy to to give all the information you need so you can have a clear understanding of how this works. Don’t forget to check LatamZone.info to see all our past webinars as well, where we did talk about e-invoicing and about certain countries. You’re going to find everything there. You will see us again next week on the 15th of January 2pm EST. We are going to have our LatamZone webinar where we’ll talk about our SuiteApp. So keep up to date with that! We’ll see you again thank you everybody!
Carlos: thank you!
Baz: give us a call! Have a good afternoon.
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