According Scott Lewin, President and CEO of Invoiceware International, every
transaction between a buyer and a seller has to pass through the government
twice, and this is currently the state of business-to-business transactions in Latin
America.
In Latin America, Lewin said, many
companies had two or three sets of books. It was very difficult to
track revenue and income.
As a result, and in an effort to capture this tax leakage, Brazil led
the way with a complex, but more
effective way of monitoring transactions.
How It Works
Lewin described the process, using Invoiceware International customer
Kellogg Company as his example.
“A grocery store sends a purchase order to Kellogg,” he said. “Kellogg
sends the information to the government, which validates the order and sends
the validation back to Kellogg.”
Kellogg then ships the product, which the grocery store receives along
with an invoice from Kellogg.
Finally, the grocery store sends the invoice to the government for
validation, at which point the grocery store can pay Kellogg.
It’s Complicated
Even though these transactions happen over the Internet in real time,
multinational companies such as Kellogg, The Coca-Cola Co, Siemens AG (ADR) and
others who are among Invoiceware International’s 200+ customers, struggle to
adhere. Different types of information go to different areas of government and,
according to Lewin, the rules change constantly. “If you screw it up,” he said,
“your business literally stops.”
Mexico Has Upped The Ante
Mexico, which is asking businesses to report on all of these
transactions on a monthly basis beginning March 2015, has added another layer.The
payoff for companies is a tax refund based on value added taxes (VAT) they have
paid.
According to Lewin, “For large companies this represents tens of
millions of dollars a month.”
The Invoiceware Solution
Invoiceware connects with its customers’ internal systems, where it converts information into a format the
government wants and delivers it to the proper department, according to
Lewin. Acting as intermediary, Invoiceware handles all transactions
between the company and the foreign government.
Hybrid Cloud
One reason for Invoiceware’s success, according to Lewin, is its
use of a hybrid cloud. “We put stuff onto
our customer’s site as well -- as we have the cloud connected to all
the governments,” he said. “If the Internet is down, we can create a contingent
invoice,” he said. Then, when the Internet is back, the invoice is validated
and paid. The system, Lewin said, is unique to Invoiceware.
Supply Chain Financing
“We are now rolling out supply chain financing based on these LATAM
(Latin American) processes,” Lewin said. Thanks
to government validation, suppliers to large companies can obtain
financing based on the buyer’s credit rating, resulting in more savings for
both the supplier and the buyer.
Lewin summed it all up by saying, “There really are benefits when you
digitize an entire economy.”
Fastest-Growing Business Network
Invoiceware International has grown from zero dollars to $84 billion of
invoice value since 2011.
This makes the company the largest network across Latin America and the
fastest-growing business network in the world.
