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Brazil Nota Fiscal – Insider Tips for Orders to Cash

Always Implement Automated Contingency

by Steve Sprague, Vice President of Product Strategy, Invoiceware International

August 27, 2015

No other country has enacted more stringent government regulations to ensure that it is collecting the maximum amount of tax revenues from businesses than Brazil. Over the last five years, multinationals have been dealing with constant change to their business processes and consistent upgrades to their global SAP ERP systems. And while every company ultimately has implemented solutions to maintain compliance, not all solutions are created equal. From an accounts receivable (AR) viewpoint, your company should always implement automated contingency workflows, especially if you have time-sensitive shipping windows.

The reason for implementing automated contingency workflows is due to Brazil’s invoice requirements being as much of a logistics issue as they are a financial issue. In Brazil, the government-approved XML invoice acts as the bill of lading. The penalties for shipping without this document are so severe that most companies would rather delay or cancel shipments rather than dare to let a truck leave the warehouse without proper documentation. Fortunately, the Brazilian tax authority realized that system outages could cause shipping issues, so they created three backup procedures that would still allow you to legally move your goods from point A to point B. Each procedure poses both a problem and benefit to the end user.

Contingency (Level 1)
Contingency (Level 1) is known as SVC and is often referred to as the “virtual servers.” With the introduction of Nota Fiscal 3.1 in April of 2015, the SVC process replaced SCAN as the standard way for companies to deal with government system outages. However, unlike SCAN, the decision to switch to the backup web service is no longer controlled by the company. Instead, the government tells you when you can switch.

  • SVC Challenges – As seen with issues in São Paolo earlier in 2015, if the government servers are down and do not transition to the backup web services, it is possible that a company cannot ship their goods.
  • SVC Benefits – When you are able to transition, your shipping is not affected and there is no need for reconciliation. This means that the authorization code is automatically sent to the state server and controllers don’t have to guess about what billing documents have been properly registered with the government systems.

Contingency (Level 2)
Contingency (Level 2) is known as EPEC and is often referred to as the “federal web services.” It is legally possible to fall back to the federal web service when the specific state server that you are trying to obtain an approval code from is not working properly or within your time constraints.

  • EPEC Challenges – If you transition to the federal web service in order to legally print out the PDF known as a DANFe and release your truck, your company still needs to register that same document in the state servers and obtain the government approval code after the fact. If you have not implemented an automated workflow to reconcile that number, then people will need to chase it down. Additionally, as this is a backup web service, your IT communications network needs to be operational. If that fails, then this will leave you unable to ship as well.
  • EPEC Benefits – Unlike SVC, your internal staff can decide to switch to EPEC. The transition is not controlled by the government.

Contingency (Level 3)
Contingency (Level 3) is known as FS and is often referred to as the “provisional DANFe.” This is a special document that contains two separate bar codes. You have to register to utilize this backup procedure and obtain the paper forms, but this is truly the only avenue that gives your shipping team the most flexibility.

  • FS-Provisional DANFe Challenges – If you transition to the paper model, in order to legally print out the DANFe and release your truck, your company still needs to register that same document in the state servers and obtain the government approval code after the fact. Again, if you have not implemented an automated workflow to reconcile that number, then people will need to chase it down. 
  • FS-Provisional DANFe Benefits – Unlike SVC and EPEC that are on network-based solutions, with the FS paper forms, as long as you have connectivity from SAP ERP to your printers you can always ship.

The best practice for orders to cash in Brazil is clear, especially in light of the recent NFe 3.1 changes to the government web services. Your solution for NFe should be able to automatically flow between the different contingency models based on automatic time-out values. And more importantly, the system should always try to obtain the authorization code after the fact. If you are unable to do this automatically, you will face problems that you don’t want to run into in Brazil, such as operational shut downs and audit risks. Automated contingency should always be on your list of must-haves in Brazil.

For more on Latin America compliance and for the latest updates and trends in business-to-government compliance visit Invoiceware International’s blog.

 

Steve Sprague is the Vice President of Product Strategy for Invoiceware International. He is responsible for both product management and e-Invoicing regulatory updates. Over the last 16 years, he has designed solutions for SAP ERP that deliver out-of-the-box compliance for Latin America and European Union e-invoicing and fiscal reporting requirements.

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