As Latin American governments aim to maximize revenues, investors are faced with a vast and complex network of tax and compliance regulations that could throw a wrench into their regional expansion plans.
That tangled web has become an opportunity for Atlanta-based Invoiceware International, which operates a cloud-based software solution that plugs into companies’ existing systems and updates automatically with the latest regulatory changes.
A favorite of Fortune 500 companies, the Invoiceware system works across eight Latin American countries. It takes the guesswork out of compliance, reducing risk, cutting fraud and optimizing cash flow while eliminating potentially costly reporting errors. Last year, the system processed $84 billion in invoices from 80,000 businesses, making it one of the largest business networks in the region.
Constantly changing regulations are an ongoing source of stress and a threat to corporate operations, says Scott Lewin, president and CEO of Invoiceware.
“If you don’t follow these regulations properly, you could go out of business, get fined or face big penalties. Getting it right is mission-critical,” he told Global Atlanta.
Companies with the highest risk are those who use multiple systems for compliance — separate solutions for each country or separate systems for e-invoices, accounts payable and receivable and tax reporting. The more systems, the more chance for data errors, discrepancies and manipulation. With Invoiceware’s software the data is all in one place — a company’s existing enterprise resource planning system — and the risk becomes negligible.
Giants such as Coca-Cola Co., Kellogg, DuPont, Siemens, Pfizer, Philips and Heilbras are using Invoiceware’s systems to avoid getting tangled in red tape in Brazil, Chile, Mexico, Argentina, Peru, Uruguay, Ecuador and Colombia (by early next year).
Mr. Lewin calls it reducing the “burden of compliance.”
“For instance, take Brazil, which in addition to the federal regulations, also has 20 state regulations and hundreds of city government regulations. It’s a huge issue for big companies to manage,” he said.
Mr. Lewin laid out the path of a transaction in a typical cross-border scenario. Each transaction passes through these governments twice — when it enters the country and when paid for and sold.
“Coke sends a shipment to a country in Latin America,” he explained, “and they have to, before they ship, send the receiving location to the government and say what they are selling. Taxes are collected and their documents are validated before they can ship. On the other side, when you receive the cargo or shipment and get the invoice, you can’t just pay it. You have send it to the government to compare what you’re paying with what the shipper said. And, this is all in real-time for every single transaction.”
The bottom line is that every country wants to improve its bottom line, and tax collection is paramount in doing so. That opens up a huge market for companies like his that can smooth out the process for investors while helping governments get their due, Mr. Lewin said.
“Greece is a great example of everything falling apart,” he added. “Tax evasion is widespread. They have a tax on swimming pools. There are 16,000 pools in Greece and they’re only collecting taxes on 300. Governments are figuring out how to get a better handle on tax leakage and how to control it — all in real-time. This compliance issue is going to explode internationally.”
Since these countries have digitized the entire tax system, there are no paper invoices, but that creates another opporunity: efficiencies in the supply chain.
Invoiceware is supplementing its business with a supply chain finance platform that clears invoices for immediate payment without manual intervention for buyers while providing suppliers greater access to liquidity, ultimately enhancing cash flow throughout the region.The benefits are reduced operation costs, payment transparency and longer windows to finance receivables. “Win-win,” he says.
Invoiceware’s biggest challenge is managing its growth, he added. It reported a record-breaking first half of 2015, processing 80 percent more invoice volume than the same period last year.
The company has a large Atlanta-based group that does sales and marketing, plus implementation and support for all the Spanish-speaking countries and a similar group in Brazil. Invoiceware intends to enter the European and Asian markets next year. Customers pay recurring fees based on transactions as well as some set-up fees.
“We make an impact for companies in several areas,” he says. “We offer full visibility, full transparency for every document. That’s one reason why multinationals like this model.”
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