Implementing NetSuite: Five Compliance Challenges and Solutions

Watch the full webinar HERE

Baz: Hey everybody! This is the monthly LatamZone webinar. First of all, as you know, at LatamZone webinars we discuss everything about our NetSuite localizations solutions for Latin America, we are of course LatamReady. I am Baz, and here I have today with me, as usual, Glenn our sales manager and Carlos Z our president and CEO from LatamReady. How are you guys doing today?

Carlos: Great Baz!

Baz: Today’s the first LatamZone webinar for this month, for the new year! It’s interesting because today we are going to be talking about the five compliance challenges and it’s solutions. We noticed a lot of people usually coming across different challenges with NetSuite in Latin America. Today we are here with our expertise to tell everybody the solutions for those specific challenges

Glenn: I think it’s a great topic the core of our business is to do tax compliance

Carlos: Do you remember Glenn that conversation between you and I in our Miami office, answering a request for RFP (request for proposal) from a potential customer. I was telling Glenn “I’m sure we are the only team in the world answering this RFP with a smile on our faces.”

Glenn: That’s a good point because nowadays there are more competitors entering the market, there are more tax compliance solutions in the NetSuite space. What Carlos says is important because we are still the most well-developed player out there, maybe not the biggest company but we have the most developed product. So we are very proud of that, it’s still a big part of our core business and definitely an interesting topic.

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Baz: The whole message is acting global thinking local with your multi-latin company. Earlier we had a brainstorming session thinking about the main challenges people usually experience in Latin America with NetSuite. I’m going to quickly go through them and then we’re going to talk about them in detail. First of all, we have taxes and withholding taxes, legal ledgers and tax reporting, e-invoicing, tax advice and finally the constant change and support regarding NetSuite and localizations and local legal rules.    

Glenn: Since it’s the start of the year we should give the viewers a little introduction of who we are, what we represent. If there are people watching who don’t know who LatamReady is, we’ve been in the business since 2009.   

Carlos: Yes exactly, we are reaching our tenth year on July 17th

Baz: July is our tenth year anniversary!

Glenn: The company started out selling NetSuite here in Peru, Carlos the owner of the company is Peruvian

Carlos: Exactly we started trying to get NetSuite into the local market in Peru. Five years later we decided to change our focus to the international market and we have the biggest and sexiest customers from NetSuite in the world.   

Glenn: Yes we work with beautiful clients all the big billion dollar companies that decided to run their operations on NetSuite, we support them in Latin America. We help about fourteen countries in Latin America where we offer tax compliance, solutions for tax reporting, electronic invoicing. All the typical challenges that international corporations that venture out into Latin America run into with NetSuite, that’s what we take care of.  

Carlos: And we keep growing. In our next version, we are going to have eighty-five new features developed by our team. Last week we hired twelve new people for our development team  

Glenn: It’s intense because it’s such a dynamic region which keeps changing. Recently we got electronic invoicing in Colombia for the first time, Brazil as well is always a big topic because tax rules always keep changing. When we talk about tax advice, later on, that’s a big one in Brazil. People need to know what’s going on, how does it work, which is a little bit easier but still not easy in countries like Peru or Colombia. It’s a dynamic region with a lot going on so for us that’s a flourishing business because. We know what we are doing, we have the experts, we have all the accountants, the technicians so it’s great!

Baz: last week we had a webinar where we talked about the first time implementing NetSuite and the common pitfalls. So stick around and go on to LatamZone.info if you haven’t seen that yet you’re going to see our current webinar there. Ok so let’s begin! Our first challenge for today is taxes and withholding taxes.

Carlos: the first idea is that taxes are very similar in the US and in Latin America. In the States, you will find BAT taxes that are common here in Latin America as well. That’s the first challenge, to understand how different taxes are here in the Latin American space. For example, now we have a project aimed at connecting a local supplier in Brazil, an expert in the Brazilian market, with NetSuite in order to get the correct rates for services and inventory items. They’re not the same.

Baz: they’re completely different things. We can’t think that the taxes in the US and in Brazil are the same. You have to think different taxes in different states, different taxes within Brazil itself, service taxes as well, different kinds of taxes!

Carlos: it’s the same concept but it’s not the same way of working.

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Glenn: the way it’s structured is very different, the way taxes are calculated depends on a lot of more factors than in the US, and those factors are very dynamic and can change. So having that set-up inside of your NetSuite environment in the right way is critical. If that’s not the case you are forced to make transactions outside of the system which makes the whole idea of having a NetSuite environment global fade away. If you’re not able to transact in the system there is no life real data to look at.

Baz: it slows down the process, it slows down your efficiency at work.

Glenn: it results in double accounting, working with accountants, local software pushing data and getting into the system later on in the month, but that you would be doing with the local

Carlos: yes withholding taxes is always a topic, it’s something that’s not very usual in the rest of the world but here in Latin America is present day by day. It’s a daily task that our customers are performing. The idea of withholding taxes is the following: you send me a bill and I have to pay you, but instead of paying a hundred percent of the bill I would pay you a certain percentage, let’s say 90% and 10% is going to go to the government. Basically, the company is collecting the taxes in advance and the supplier is paying taxes in advance.

Baz: this happens in every single transaction

Carlos: by the time the customer pays, they don’t pay 100% of the bill

Glenn: the tax authority taking it to the next level. Instead of waiting for you until the end of the month they make you pay your taxes when the actual transaction happens. We’ve talked about this before this is a form of well-established control in Latin America.

Carlos: and the rate is going to depend on the size of the company. If you are a big company and I am a small company, in some cases I’m not going to take the withholding tax it also depends on the amount of the bill. If the amount is high I’m going to apply the withholding tax, if it’s not the case (in Peru is less than $200) then I will not apply withholding taxes. It also depends if you are transacting with me more than $200 per month. There are a lot of rules.  

Baz: so if I were a company and I needed all this information, do I go on a website to find all the tax rules and regulations? What’s the solution for that? What is our solution?

Carlos: in LatamReady the rates are already there. In some cases, we are connecting NetSuite with the tax authority. In Argentina now we have padron, which is a specific type of withholding tax. What we did was to connect NetSuite with the tax agency in order to get those rates every single month.  

Glenn: remember when I talked about dynamism, with padron is the same thing, rates change every month. So we have to (…) integration with that information from the tax authority, we get automatically the dates uploaded inside of NetSuite and taxes are calculated in the correct way on those transactions, without people having to worry which specific rates apply to that item or product

Baz: because it’s automatic so they don’t need to worry.

Carlos: In the case of Argentina, that rate is specific per company. It’s not a rate for all Argentinian suppliers.

Baz: so every company gets different rates, depending on the type of the company. that’s the beauty of Latin America!

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Carlos: the case of Brazil is the same. We are now connecting NetSuite with LatamReady with a local supplier of tax rates in order to get withholding rates as well.

Baz: I think I want to reiterate, so people’s solutions were working with third-party solutions, but I think the best solution is having one system with the right partners who have the solution that works inside of the accounting software being NetSuite itself.  

Carlos: the other option is what we always see. We see a company that’s using NetSuite for global purposes and is still using local software for compliance purposes.

Glenn: that’s the situation we encounter most of the time, people reach out to us with that exact same picture. They have NetSuite, they’ve activated Brazil, they’ve activated Mexico it’s there for consolidation but they don’t have any tax compliance, so they can’t be transacting in the system. That’s where we can help.

Baz: now let’s move on to legal ledgers and tax reporting. Glenn what can you tell us about that?

Glenn: it’s the next step after-tax calculation and paying your taxes, come also reporting those every single month. In each country in Latin America are to be paid monthly  

Carlos: and in some case like the case of Argentina, you have to send some reports every two weeks.  

Baz: it sounds like Argentina is starting to become like Brazil.

Carlos: if you ask me, the winner in Brazil. Brazil has the most complex tax compliance in the world, then comes Argentina, then Colombia and Peru…

Glenn: that’s always a discussion. Peruvians say they have the most complex taxation system in the world, Brazilians say otherwise, it’s always a competition. I think we can conclude all of them are pretty complex, but for all of them, there’s a solution.     

Carlos: everything that’s happening in the tax compliance space is because of the governments need of control. For example, the Mexican government decides to have electronic accounting books. Two years later Colombia decides to do the same, they are copying each other’s good ideas. The same happened with electronic invoicing, it started in Mexico then it went to Chile and now ten countries are requiring electronic invoicing.

Glenn: tax reporting is all about control, it’s all about the tax authority receiving the right information in a specific format, which is digital today. Receiving that every month so they are in control and they see who are paying their taxes, what amount of taxes is being declared. It’s a challenge to generate those specific reports from an accounting system like NetSuite, those reports are very dynamic just like the tax rates, structures can differ, new requirements, new kinds of information is required on those documents, so it’s not easy to have a solution for that.    

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Carlos: imagine you have to develop ten custom reports for Peru, you will find surprises there. It’s not just any report it’s going to include all sorts of information in order to get that specific report, developing a very specific format to be uploaded to the government portal. In a few months, this report will not be valid  

Glenn: it’s going to be different because of the dynamic characteristics of the region. Like Carlos said, those governments are always copying things from other countries, new rules are being made, new requirements are being invented. And that’s where LatamReady becomes very interesting because we have a team of about 30 developing people today in January 2019. They’re constantly working specifically on keeping customers’ compliance at all times. It doesn’t matter having a reporting solution one day and next month everything changes. That’s what happened with NetSuite a few years back in Mexico. It’s difficult to keep up with that, so having a partner like LatamReady is very useful.

Carlos: in countries like Colombia medios magneticos or electronic accounting is changing every November. They have a very specific month of the year for changes. But that’s the exception because usually legal books are changing randomly.

Baz: you have to be on the field and know your stuff

Glenn: people should know when stuff is changing but that’s the beautiful thing about LatamReady. We have a team behind you, specifically focusing on getting solutions for those changes, in time, so you are live with the solution when it’s necessary and can be compliant that exact same month when the new requirements come out.

Baz: we were talking about how tax reporting have to follow a specific format. How do people get their hands on those specific formats? What’s our solution for that?

Carlos: we produce everything from inside of NetSuite. We already have all the required fields and structures. Our customers only have to press a button in order to produce the format. You will find that those electronic reports, in most cases, are not readable by a human being. For those cases, we have Smart Start, a set of reports that are presenting the information in a human way, readable by a person.

Baz: something humans can read

Carlos: or analyze. The challenge for our customers is having to present information and understand what they are saying to the tax agency.

Glenn: those report are available from our product, that’s important because not only sending that information to the tax authority is a must, but looking at it internally and doing internal audit and analysis with those numbers is super important  so having those reports out there and generating them with the click of a button is very easy.

Baz: and also having partners like us is a plus because we are updating you with those report so you don’t have to worry. That brings us to the next topic, e-invoicing. It’s not just invoicing.

Carlos: it should be called electronic documents

Glenn: electronic documents is a very nice topic to follow up on electronic reporting because the concept is similar. All of the information electronically received by the tax authority in a specific format. Every single invoice, credit memo, debit memo, waybills, withholding taxes certificates…any kind of documents that needs to be submitted to the tax authority when issued before they have any legal value it’s an XML file. It’s something that is not able to be read by a human being, goes to the tax authority, they validate it, and when it comes back validated that’s the document that’s legal here in Latin America.

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Carlos: it’s a graphical representation of the XML file, the legal one is the XML file

Baz: how long do people have to create this report and send it off to the tax agency?

Carlos: it’s transaction by transaction and it takes three seconds

Glenn: we’re talking about the blink of an eye. Every time you make a transaction, documents get sent to the tax authority, get validated and then you have a legal document.    

Carlos: now transaction by transaction is controlled by the local governments in Latin America. For example in Brazil’s case. Let’s say you are transporting books in a truck. You have a PDF which is the representation of the XML file. If the police stop you and ask for an electronic invoice, you show them the PDF and they will scan the barcode and check your information

Baz: it works as a list of inventory as well.

Carlos: everything is online, everything is controlled transaction by transaction

Glenn: the beautiful thing is that’s it’s possible for us to generate it from within NetSuite, that’s the whole point. When we talk about electronic invoicing we can explain the concept, which is great, but the most beautiful thing for the clients is learning how to do that. We can generate that document from within NetSuite, send it directly to the tax authority with automated integration seamless. The customer does not have to fill out information from that invoice from a separate portal. Everything is from within the same instance.

Carlos: and now we’re connecting a POS with a new customer, which is a library in Mexico City. We’re connecting their POS to NetSuite online so they can have electronic invoice directly produced by NetSuite.

Baz: we should have a webinar about this!

Carlos: yes it’s an interesting case because it’s the first time we’re connecting our own electronic invoicing solution, developed inside of NetSuite, with external software.

Baz: that brings us to the next topic which is electronic invoicing tax advice. We talked a little bit about it earlier but I want to get into more detail about that

Carlos: that happened a lot with your prospects in Brazil, am I correct?

Glenn: yes specifically for Brazil because it’s the most complex in the region if we talk about taxes. I think tax advice is a big one when we talk about international organizations. If a foreign company ventures out to Brazil they obviously have a lot of questions. They hire an accountant and they say A, they hire another accountant and they say B…that’s the classic in Latin America especially when things are complicated everybody gives different kinds of advice. So tax advice and where to get it, specifically for Brazil, is key.

Carlos: how would we help that customer? We would invite a local accountant from Brazil?

Glenn: what we do is try to find tax the right advisors in those critical countries, establish a good relationship, find people that we can trust with the right information. We build credibility with them and we use them as tax advisors to work in our team, to help us establish our products as well and give tax advice to our customers.

Baz: this is what we do in other Latin American countries as well

Carlos: exactly, but I think it’s critical in Brazil. That prospect’s profile was one of a new company stepping into Brazil with a small operation. The need was to implement NetSuite because they are using NetSuite globally.

Glenn: their situation was critical because they had already issued a first invoice of several hundreds and thousands of dollars and they didn’t know what kind of tax rate to apply to that. That can be very  different, we can talk about 5%, 10%…up to 80% depending on who am I selling to, what kind of product is it, where does it come from, etc. Is it a software? If it’s a software, is it subscription based or not? It’s very complex. Getting the right advice not to do tax evasion but to make sure you don’t overpay your taxes is critical to how successful your business will be.

Carlos: we invited our local accountant, he understood what’s happening in the company and told us what was the rate we have to use when installing NetSuite

Baz: this is someone working directly in Brazil giving us reliable and credible advice

Carlos: exactly

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Glenn: it’s an absolute necessity. You need a point of contact that you know has the right information and that you can trust. The clients that we work with in Brazil are big and important corporations so we need that.    

Carlos: and the explanation in English is necessary as well. A customer could arrive in Brazil and face the language barriers Portuguese, Spanish and English are all different. That explanation, in English, supported by a company like us that’s offering a service in English is a great advantage for our customers.

Baz: we’re always thinking about our customers what’s easier for them if there’s any information they need. We work hard at finding the right person to give you all the right services and all the right information.  

Carlos: exactly! And with that input, we take the next steps for our product. For that customer in Brazil, we had to connect withholding tax rates to NetSuite. Withholding tax rates in that specific industry for that client are always changing, so we decided to look for a connection with a local withholding tax rate supplier and connect NetSuite in order to get that information online.     

Baz: and with the help of LatamReady, of course, our clients are going to get the right solution. Lastly, we will talk about the constant changes that are experienced in Latin America when it comes to tax compliance.   

Carlos: the example we always use is, do you want to understand tax compliance in Latin America you cannot take a picture, because that picture is not going to be valid next day or next month. If you decide to work on a list of the tax compliance requirements of Peru and Colombia. Last week we had the opportunity to work with an international partner that had made a list of all the tax requirements for five countries. We analyzed that list it was very valuable, but then we realized that a few reports had been changed or had been replaced. Also, that list had the monthly requirements, not the annual requirements.   

Baz: it’s the lack of local knowledge

Carlos: yes exactly! Changes are always there. To take a picture is not a good idea

Glenn: that’s the challenge of any global ERP deployment, how to keep up to date with that. The challenge will always be the same, how to keep complying natively inside of a platform with such a dynamic region because it’s complicated. That’s what the structure of NetSuite is doing working with the LatamReady SuiteApp provider as a strategic partner, it’s a very smart decision because they can rely on the knowledge and the dynamic response from a local partner to make sure their clients are complying at all time.

Carlos: you can’t face this challenge thinking that it’s a customization. It’s a customized report for Colombia, a customized development for electronic invoicing… it’s not like that, it’s going to change tomorrow. For example in Colombia things are changing very quickly, they have a set of books that are changing in November. In Mexico last November we received a notification from the local government that now comprobante de pago, a different type of document, is going to be required in the electronic invoice as a electronic invoice type of document. So our team started to work and by October we already had that document in our solution, faster than the Mexican players            

Baz: it’s great that a lot of these companies are getting into NetSuite and it’s great that they’re asking these questions about being compliant in Latin America. What’s important for them to understand is, yes, NetSuite is great but you also need to consider working with the right partner who have the right solutions that will get your NetSuite working in Latin America

Carlos: and the right support for all the massive changes that you will find in Latin America. Do you remember that expression a customer once used, he was a Mexican prospect, now a customer he said: “are you ready for facing this dramatically changing environment?”

Glenn: what we often run into when we talk to prospects or people that reach out or people that we reach out to, they’re very very scared. They’ve had a lot of bad experiences with other ERPs. They know how difficult it is to have an international product deployed in Latin America. So they always come in having a very low expectation of what it is we could do. And after one or two meetings you can see that they open up and start realizing that there’s definitely some potential here, this is something we really like.     

Baz: we’re giving them that confidence

Carlos: now everything is also included on our e-learning platform LatamDojo which we are re-launching in a few weeks. A lot of information is already there, demos and specific features, for more than ten countries.

Glenn: it’s a space where we’ve been sharing the knowledge of our company for free for the last year and a half, now it’s going to be a fully paid platform. There’s going to be a paid access to it, we’re going to have premium courses with additional pricing. Anyone in the NetSuite space, a partner, a representative or a customer, can all sign up to our online educational platform pay a monthly fee and get full access to the company’s knowledge. I can tell you from personal experience, the platform is amazing we use it internally to get trained, customers use it for training sessions. All of the information you need from the highest level to the lowest level, everything is there!          

Baz: in English, in Portuguese and in Spanish as well.

Carlos: and we will have standard features explained, not only LatamReady Suite App features, for example multibook. We’re going to have training material about Multi-book, the options, the pros and the cons for our international customer to understand what to do in Latin America when handling different charts of accounts. Not only LatamReady SuiteApp features  

Baz: this is something that’s coming up very soon! Our LatamDojo learning platform, which used to be free but now we’re going to start monetizing it. We’re in Latin America so we’re following theses constant changes, all great always coming up. We’ve covered five of the main challenges for tax compliance in Latin America with NetSuite. Taxes, withholding taxes, legal ledgers, tax reporting, e-invoicing, tax advice and of course the constant changes and the support people get when using NetSuite in Latin America. Final message gentlemen please to our audience?

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Glenn: well I think this year we’re going to have a lot to talk about. Last year was a very big year for LatamReady, the company grew a lot and I think this year it’s going to be even bigger. We have a very interesting space to play. There’s a lot of changes happening in the NetSuite environment while a lot of more organizations are expanding to Latin America. People are ready to spend money on Latin America international businesses can flourish these, so it’s an interesting year for us we’re in the right space!

Baz: we’re here with a new mindset!

Carlos: we started the year with a new partnership with Celerum, I just signed the contract with them. Celerum is a SuiteApp also. Their specialty is to work with automatization of quality assurance for software. So we’re going to have our first bot. Our bot is going to apply business cases for all the supported countries in order to apply quality assurance tests for our product.

Baz: that’s very important!

Carlos: everything is changing we will have different features for different countries arriving every day. So we have to be sure that everything is proven and tested. That’s the reason now we have Celerum in place. I’m very proud of that because now we’re going to go to the next level in our software development environment and the automatization of it.

Baz: everything is becoming automatic now that’s awesome! Final words from me, thank you, everybody, for joining. Check out Latamzone.info to see our recorded webinars from before. Check out our YouTube channel just type down LatamReady you will see all our videos featuring Glenn and Carlos and other sales reps as well. Don’t forget to follow us on social media, send us your comments, follow us on Facebook, Instagram  

Carlos: and see you at Suite World!

Baz: yes! We will be in SuiteWorld in April, from the 1st to the 4th. We’re going to have a booth during the entire event and we are ready to receive you! Thank you so much we’ll see you in our next webinar!

 

 

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