Baz: Hey guys thanks for coming in today! It’s one of those monthly webinars we have. It’s September. It’s that 2pm standard time webinar that we’ve been posting about all over our social media. I’m Baz, I’m here with Carlos, Edgard and Glenn. How are you feeling today gentlemen?
Carlos: Great! Energized! How are you guys? You spent two weeks travelling right? One week in Miami and the second week in New York! How was that guys?
Edgard: Great!
Glenn: Great to be with LatamReady in New York! I’ve been there a few times before this was the first time with LatamReady.
Baz: You’re going off again very soon to Canada to learn more about e-learning for our LatamDojo initiative
Baz: It seems like LatamReady never stops! We’re on the go with everything!
Glenn: Yes there are a lot of things going on! One of those things is Brazil and that’s what we’ll talk about today
Baz: Today’s webinar is called NetSuite & Brazil What to Expect so we’re going to be talking about challenges,insights and experiences from you guys, all from expert from LatamReady who have the experience and knowledge in this area!
Carlos: That’s the reason we have Edgard here, he’s our expert! You were born in Sao Paulo?
Edgard: Yes in Sao Paulo
Carlos: The last time you were in Brazil was in Sao Paulo, am I correct?
Edgard: That’s correct. I was implementing a big NetSuite project for Latin America.
Glenn: For people to know Edgard was not born in Sao Paulo, right? He looks Brazilian but he isn’t. He probably knows tax laws better than Brazilians
Carlos: And he’s becoming Brazilian now understanding the complexity of Brazilian taxes and withholding taxes
Baz: You’ll be able to speak Portuguese very soon!
Glenn: He already speaks a little bit right?
Edgard: A little bit
Carlos: Can you say a word? How do you chart of accounts in Portuguese?
Edgard: “Plano de contas“
Glenn: Nice!
Carlos: So our first topic is taxes and withholding taxes. Why is that complex in Brazil? Why is it well known as the most complex country to localize in the world?
Baz: Brazil is one of the most complicated Latin American countries to do taxes.
Edgard: Yes Brazil, like other Latin American countries, has specific configurations and rules for taxes. Normally taxes include VAT and withholding taxes, which need to be applied when you issue a purchase, when you pay or when you receive a payment according to the city and state.
Carlos: What makes Brazil so different than other Latin American countries?
Edgard: In Brazil you need to calculate taxes according to the services or products that you sell or buy.
Carlos: If it’s a service or inventory item, that’s the first difference
Edgard: If it’s a service it’s a simple calculation. But if you have inventory products, and if you manufacture them in a specific Brazilian city or state, specific rules will apply.
Carlos: Can we say that services are really covered on NetSuite?
Edgard: Yes, with LatamReady or other standard features in NetSuite you can cover theses calculations. The big challenge is for products and inventory.
Baz: This is something that a lot of customers have problems with.
Carlos: Edgard, do you remember in the past we managed to implement in Brazil using standard features from NetSuite?
Edgard: Yes, but if you use standard features on NetSuite, you’ll have a hard time with manual work. You need to manually add transactions by line all the VAT types.
Glenn: It really comes to the point how much manual work you want to do.
Carlos: It could work for a small and very standard operation
Edgard: Yes, small operations with only services.
Glenn: If that’s not the case, can we say there’s a big gap between NetSuite’s native functionalities and what we need to be compliant with local requirements?
Edgard: Yes sure. And remember it’s not only tax calculation. Every time you have the VAT or withholding tax amount, you need to complete other information to issue legal reports
Carlos: For the last three years, we’ve been listening to what NetSuite is calling SuiteTax. That’s already in place, right?
Edgard: It’s the next generation of standard taxing in NetSuite, created in order to support the calculation of VAT in Brazil, which has subtypes. This is a complex calculation, so NetSuite covers it with SuiteTax.
Glenn: SuiteTax is already there, right?
Carlos: I think you have to ask NetSuite in order to install and use the new module.
Edgard: NetSuite’s idea is that SuiteTax is the next generation or maybe we’ll need to make a migration to other customers to this new tax aging.
Carlos: We’ve been seeing local Brazilian customers already using SuiteTax migrate from a Brazilian local company, the problem comes when they go global. SuiteTax is just to be used in Brazil.
Glenn: Once you use it for Brazil it would mean that you have to use it for all your subsidiaries.
Carlos: That’s right! If you go to the States, Chile, Colombia or Argentina it’s not going to be possible to be used.
Edgard: If you have NetSuite implementation in Europe or Asia and then you need to implement Brazil, you can only have the standard tax aging and cannot enable SuiteTax.
Glenn: You can only use SuiteTax if you start from zero, and you’ll have to take into account that SuiteTax is compliant with what you’re using as a localization solution in the rest of the world.
Carlos: I think that’s a good point. My suggestion would be the following. If you are a Brazilian company operating locally in Brazil and you don’t have plans to expand regionally SuiteTax is perfect for you. If that’s not your case and you want to expand globally, you should keep using the standard tax aging from NetSuite.
Baz: How new is SuiteTax? How long has it been around?
Carlos: Two or three years I believe. A third option we are using at LatamReady for tax calculation is to connect NetSuite via web services to a local tax engine
Edgard: In Brazil there are companies like Sistax.
Carlos: That’s a big player in Brazil, right?
Edgard: Yes they are a big player, they have a local tax aging for VAT withholding tax calculation. In this case we can connect NetSuite and LatamReady with SuiteTax using web service to send specific parameters and receive the calculation for inventory, sales or purchases.
Carlos: Then we process that information inside of NetSuite.
Edgard: The idea is to send information about the customer, the type of service, the location, etc. Suite Tax processes this information in order to get the correct rates, combination or matrix of taxes. We receive the results via webservice, we save it in NetSuite and then process it for legal purposes.
Carlos: That’s interesting! So there are basically three options. The first one is the easier implementation we can find, using manual work. The second is SuiteTax, only in the case you’re a local company working in Brazil with no plans to expand. The third option that we offer is a connection to sistax.
Glenn: Which is smart because the tax system is very dynamic. There’s changes going on at all times. It’s not an illogical decision to say “let’s not build that natively inside of it, but let’s do it through an application that we connect ”
Baz: We do that third option at LatamReady, right?
Carlos: The first option with standard features, was an option for us in the past, with our simpler implementation.
Edgard: For small or service companies.
Carlos: Why are we discussing this? Because of its complexity. Our American or British customers expanding to Brazil should expect different types of tax combination. It’s absolutely different from what they see in the States or UK.
Baz: International companies movies in to South America, especially Brazil. Especially taxes is what they need to consider because they’re so complex.
Carlos: Exactly! The combinations of geography, type of items, delivery is complicated.
Edgard: If you sell inventory products, the tax calculation includes where you deliver the product. Maybe my office is in Sao Paulo and I need to send my product to Rio de Janeiro, the tax calculation includes the origin and destination.
Carlos: Those are the options available today. Another main topic is chart of accounts.
Glenn: That’s something we hear a lot about. Different opinions from different clients depending on their size.
Baz: What is charts of accounts? Could one of you explain it in a simple sentence?
Edgard: It’s an accounting concept. If you have an accounting ERP, you need to use accounts (codes and names.) You can have a corporate list of accounts or a local list of accounts. Normally the local is regulated and mandatory by tax authorities. Tax authorities design the number, correct structure, name, type, hierarchy, etc. Like in the case of Colombia and Peru, you have a statutory chart of accounts
Carlos: It means that the company has to use that specific account.
Edgard: Yes because in some countries, for audit purposes you need to present all your accounting using this official format.
Carlos: That not Brazil’s case, am I correct?
Edgard: Brazil is similar to Mexico. It depends where you configure NetSuite for your corporation.
Carlos: We’re going to find two different scenarios. The first scenario is going to be a Brazilian company implementing NetSuite
Edgard: Brazilian local implementation or a corporate implementation.
Edgard: I you have a corporate implementation you can choose to have multi booking feature or not, in order to have multiple accounting principles in the same instance.
Carlos: Let’s work with examples. Let’s say we are implementing NetSuite for a Brazilian company working locally.
Edgard: In that case you can upload your chart of accounts for Brazil using that legal name and number
Carlos: It’s easier for the Brazilian accountant.
Edgard: You can have the statutory chart of accounts according to the tax authority.
Glenn: There’s no need for multi booking in that case, right?
Edgard: No, because you have the same legal and number and name delivered by the tax authority.
Carlos: That sounds easy! Let’s say we find an American corporation expanding to Brazil and I want to have two different scenarios there: brand new implementation and an old implementation, a customer that’s been working with NetSuite for seven years. As you all know seven years ago there was no multi book, it was a different NetSuite.
Edgard: In this first scenario you can have different statutory charts of accounts implemented in NetSuite
Carlos: We’re talking about scenario without multi booking, but several countries implemented in NetSuite US, Brazil, Argentina, Spain, France, etc. Each country implements statutory chart of accounts. In NetSuite you can have the US GAAP the statutory chart of accounts from France, Brazil, Peru, etc. That way when you see your financial statements you will see the French account, the Brazilian account, etc.
Carlos: So you’ll have a huge chart of accounts!
Edgard: If you look at the details, you’ll see many account combinations according to the country. You could also have a specific hierarchy using the ‘parent child’ structure in charts of accounts in NetSuite. Maybe the parents is the US GAAP and the child is the French, Brazilian and Mexican account. This a scenario for several countries without multi booking.
Glenn: What you’re trying to say is, we can use the multi book feature to avoid that situation and to be more organized.
Edgard: That’s right!
Carlos: That’s a real situation. Many of our current customers implemented NetSuite several years ago.
Glenn: That’s because they started implementing without multi book. And then they want to have a primary, then a secondary book. Back then they didn’t have the multi book feature to do that, so they started adding many accounts to the corporate chart of accounts.
Edgard: Remember that currencies are another big challenge. Normally, if you don’t have multi booking, you implement the basic currency of the country. So besides the different statutory charts of accounts, there are different currencies; Brazilian Reals, Peruvian soles, american dollar, etc. You can do the financial consolidation using the consolidate change rate, but the visibility is very confusing.
Carlos: Implementing old books, in one book
Baz: Having visibility of everything
Carlos: It’s possible! Do you remember Glenn two weeks ago we were discussing that change with a new customer who had been implementing NetSuite for 30 years, and now they’re implementing Argentina with us, am I correct? They want to use multi book for Argentina
Glenn: That client wanted to have their primary book in US dollars, through consolidating in a way where they could drill down to the transaction. But they hadn’t done that for the rest of the subsidiaries. They had set up primary books in functional currency, and as secondary book in US dollars. Now implementing a new country, we use the example of Argentina, but we can say the same thing about Brazil.
Carlos: That’s the case of a customer that’s been using NetSuite for many years. What happens in the new implementations with new customers who decide to use multi books? They are now using the full potential of NetSuite. What do we recommend to an American corporation arriving to many Latin American countries including Brazil?
Edgard: Our recommendation is first, send all your primary accounting books using the US GAAP or corporate chart of accounts, and for all countries always in dollars. And then your secondary accounting book using the local or statutory chart of accounts using the base currency of the country. So with this scenario you can have the corporate consolidation using US GAAP in the primary accounting book, and the local chart of accounts in the secondary book with the base currency. With this information you can send legal reports from secondary accounting books.
Carlos: This way we are combining local requirements with corporate requirements. Visibility to the corporation is key here. This third scenario is a new NetSuite implementation for a global corporation arriving to Brazil. There’s a mapping between the global chart of accounts and the statutory or the Brazilian account, am I correct?
Edgard: Yes the relationship is one to one. You need to have one US GAAP account, with one local account. This mapping includes multi booking so that NetSuite can post in the correct local account in the secondary accounting book. The mapping of multi booking is very different from the specific mapping for reporting purposes.
Carlos: Ok I understand.
Edgard: For example in the case of Mexico, NetSuite has standard features in order to have statutory chart of accounts only for mapping and reporting purposes. This way they can electronic accounting files monthly. This is very similar to Brazil where you can have your primary accounting book in dollars using US GAAP, the secondary with Brazilian account number, or only use the US GAAP in Reales. However in the mapping for reporting purposes you can assign a specific code or account number for Brazil.
Carlos: How many book does Brazil require?
Glenn: I don’t know!
Carlos: Eight books!
Edgard: The structure of this report is very different from other countries.
Carlos: That’s the main difference!
Edgard: For example you have the DCTF which is tax declaration about all sales and purchases made in a month. But you also annual reports, which are a structure of ten blocks of information. These depend on the company type, service, tax declaration and they will determine whether or not you only need to send five of the ten structures, for one report!
Carlos: This is very different from what we see in other Latin American countries, I’d say from the rest of the world! Usually you would see an xml file for each report.
Baz: I’d like to stop you guys there for a moment. Someone has made a comment on the chat group. Gino from Toronto Canada says “to my experience Brazil is continent inside of another continent. Things are so different within states, people from Sao Paulo are different from people in Rio, but for sure there are tons of business opportunities and great people to do business with!”
Carlos: Gino is forgetting about the food, no? Brazilian food is great!
Edgard: I remember the picaña
Baz: We also have Pablo who asked us a question, when we were talking about tax calculation. “Do we cover all industries? Such as professional services, manufacturing, or distribution? Is there any feature that covers particular functionalities such as SPEDs”
Edgard: Sistax is in charge of making this calculation. When you implement NetSuite for a manufacturing company or a professional service company, every time that we send the information for tax calculation of an invoice or a credit memo, we need to set parameters like company or customer type. With this information Sistax process the calculation and send the correct amount.
Carlos: That’s the beauty of our approach. We don’t support directly these calculations. We confide on a local expert, which is Sistax in this case, we send parameters, we receive the information and then everything is processed inside of NetSuite.
Glenn: It’s a similar approach than what we do with electronic invoicing. Exactly the same thing we’ve been doing for years. Instead of building it inside of NetSuite, just connecting through web services and let another company take care of it.
Edgard: In the case of Brazil, you can have both integrations when invoicing. First you set the invoice, send the information to Sistax and receive the tax calculation.
Carlos: Great!
Edgard: Then you update the invoice transaction in NetSuite with the correct amounts, in order to have the correct dealing pack. Then using electronic invoicing with LatamReady integration with a local service provider for electronic invoicing, we click two buttons and the information is sent.
Carlos: We’re talking about two seconds
Baz: Do we cover taxes for different industries?
Glenn: Yes that’s the beauty of it! That’s why we work with Sistax because we don’t have to worry about different industries.
Baz: I hope that answers your question Pablo. Gino says “food is awesome!”
Glenn: let’s talk about electronic invoicing, that’s a big topic in Brazil.
Baz: Where can we begin with electronic invoicing and Brazil?
Carlos: We should call it electronic documents, not just invoices, because it includes credit memos, debit memos, invoices, etc.
Edgard: And other specific documents according to the country. In Brazil the invoice is called nota fiscal. You can have a nota fiscal for services or for products. In NetSuite you can have one transaction called invoice, but within the invoice you can issue debit notes, nota fiscal, etc.
Carlos: Electronic invoicing means that everything is not a PDF, it’s not a paper …basically it’s an xml file that’s the electronic document.
Glenn: There’s a PDF representation as well, but the actual legal document is an xml file that can be read by the software of that tax agency.
Carlos: The PDF is a graphical representation of the xml file.
Glenn: That’s for us to understand because it has no legal value.
Carlos: the PDF is just a picture.
Edgard: It’s like a bank voucher or a check.
Carlos: The xml file is the official version. Question for Edgard. Companies in Brazil should produce an xml file for every single document they produce?
Edgard: Yes, using the electronic invoicing bundle in NetSuite, LatamReady has a specific feature to install templates. What’s a template? It’s a specific structure in xml file according to the document type. We set this template in NetSuite. Every time the user creates an invoice, clicks on two buttons to process this information in the format, connect to the service provider, and send this information, and finally the provider validates.
Carlos: We work with a local third party in Brazil.
Edgard: the local service provider is a certified provider by the tax authority.
Glenn: That’s important because anyone who wants to have a solution needs to be certified by the government. We cannot just get connected to the tax agency directly without certification, correct?
Edgard: That’s right.
Carlos: But is it possible?
Edgard: Yes it’s possible. A partner like us can have a certification with the tax authority. We need to be certified in the country, maybe by state in the case of Brazil.
Carlos: That’s right. One should be certified by the state, so it would be an additional thing to handle
Glenn: The idea is to avoid that by working with a certified provider. Once we arrived in Brazil this year we had two options. To certify ourselves in any state in Brazil or to work together with a local third party provider.
Glenn: As we have been doing with eleven other countries in Latin America.
Edgard: This partner has experience!
Carlos: Yes they have experience already handling volumes. In some cases, changes from the government take place on their side and not inside of NetSuite. So we’re also avoiding disruption or change in this schema.
Glenn: It’s all compliance and peace of mind. It’s all about what you want for your customer. Do you want them to worry about new tax laws coming out or requirements for invoicing? Or do you want to provide them with a connection that provides them with peace of mind at all times? By working with Sistax or with a local provider for invoicing, it allows us not to think about that and trust on our solution.
Baz: So that way you’re not distracted helping clients with implementations and localizations while also worrying about taxes.
Glenn: Exactly. This allows us to act in a very dynamic way. If there’s any change we can trust on those providers that we work with to be compliant and therefore our customers are compliant. This can be very different with different kinds of solutions, if you manage everything natively inside of it and you’re in full control of any changes in tax laws and you’re fully responsible for that it becomes a little more complicated.
Edgard: A legal change means that we have to update our templates, maybe include a new field. But the service provider is in charge of the logistics.
Carlos: They are in charge of the main changes without affecting our customers or in the rest of Latin America because it’s the same approach for any country. Now moving on, what about electronics payments?
Edgard: There are two types of electronic payments. One is related to the customer payment in Brazil it’s called boleto bancario. On the other hand there is the vendor payment, for which we can use the standard feature bundle in NetSuite. It’s like the electronic invoicing, to work in specific templates by a local bank (not by tax authority.)
Carlos: Is NetSuite offering Brazilian bank templates?
Edgard: Not for Brazil, only for the US and some other countries.
Carlos: I think for Belgium also, right Glenn?
Glenn: I don’t know.
Baz: Maybe that will come up soon !
Carlos: LatamReady is supporting a couple of other banks.
Edgard: Yes we work with template, install it in your instance, and connect it with this bundle. So that every time you need to pay ten bills for ten different vendors, you click on a button using this bundle and it will generate a txt or xml file. You can download it from NetSuite and upload it to the bank portal.
Carlos: That’s for massive payments
Edgard: If the company only makes ten payments in a month maybe it’s not necessary to use electronic payments. In the case of customer payments, the boleto bancario is a specific format you send to the customer every time you create an invoice.
Carlos: Alright
Edgard: With this certificate or electronic voucher the customer will go to the bank and pay you. Boleto bancario includes the company’s information, the invoice number, etc.
Carlos: That’s unique! It’s not something that we see in the rest of Latin America
Edgard: This process is regulated by the Central Bank of Brazil.
Baz: When do you e-payments?
Carlos: How many bills? Two hundred per month?
Glenn: It depends on what the client wants. Some of them need a low amount but they want to have everything automatized. They want to have control they don’t want to have any specific manual work if they can avoid it. From our customers we can conclude that there are clients with very low amounts but still go for the full compliance option, and then there are clients with a very high amount that have to go for the other option. It depends on what they want.
Baz: Just out of curiosity, have there been any challenges with e-payments? Any stories from clients?
Carlos: Do you remember a conversation with a customer in New York, when they were asking us for an encryption code? We hear a lot about that, right?
Edgard: Yes we use it in order to avoid manual edition of txt files
Carlos: Once you produce a txt file you could modify it. This month a couple of customers have asked us about a solution for encryption of files, in order to avoid any changes.
Edgard: Now the standard module doesn’t support this feature but you can implement a specific custom script, it’s a customization that you can have after you create the txt file.
Carlos: I’ll take not of that for our next version!
Glenn: Let’s talk about the options someone has in Brazil. We’ve talked about a lot of very detailed things. If I think about using NetSuite for my Brazilian subsidiary what options do I have?
Carlos: The first option I’d say is Oxygen. Like LatamReady, they are a native SuiteApp which has been built inside of NetSuite and they are experts in the Brazilian market. They have two versions. The first version uses SuiteTax and the second is a standard (…) 40:20
Baz: They’re a local Brazilian partner and they work very well in Brazil. I’d say they’re a good option for a local company in Brazil.
Edgard: Good for local implementation.
Carlos: The second option we see is Avalara.
Glenn: Avalara is very well known internationally. The biggest difference between them and Oxygen or what we do or what NetSuite does, is that they’re an add-on or a connector that can connect not only to NetSuite but to many ERPs or many other products. They have a good solution, bt technically speaking they have a different approach. We are not generating anything natively inside of NetSuite everything is connected to a platform.
Carlos: They take information out of NetSuite, process and produce ledgers. The third option is LatamReady! We are also a native SuiteApp, we work inside of NetSuite like Oxygen. The main difference is that we implement NetSuite.
Glenn: We’re a NetSuite partner that implements NetSuite and also has a localization solution. That’s a big difference because Oxygen doesn’t have a localization solution but they do not implement NetSuite
Carlos: An important difference is the approach we take. We take a multi country, big corporations approach. Every single customer that we have in Brazil, is also working with us and the rest of Latin America. If the custmer is looking for one single point of contact, LatamReady would be the best option.
Glenn: I completely agree with that, the biggest difference is the kind of clients that we work with. We handle global companies that have operations all over the region, they want to have one single point of contact to localize all of those countries with the same methodology, same contract, same pricing structure and same support. This is not something you can reach if you try to work with different local partners or connector like Avalara.
Baz: It’s beneficial to have one point of contact for all your different subsidiaries.
Glenn: It’s a huge competitive advantage for us, because even if there would be a better solution out there, it’s still very interesting to use ours because it’s one same point of contact.
Carlos: We have new features as well. We’re going to have a big presentation, we have new t-shirts for that!
Glenn: Nice!
Baz: Just to wrap things up because we’re running out of time, one of the last things I want to say is that we have another webinar coming up in October, in a week and a half! We’ll be announcing our new release, 2018.2 SuiteApp release, can hear a little bit about that?
Carlos: I’m very excited about this announcement because we will present great features for Brazil, Argentina, Colombia. We’re also presenting LatamTax, which is our brand new withholding tax engine for handling all those tricky scenarios in Latin America. We’re very proud of that! We’re also presenting the first version of LatamHub, that’s the first connection with local tax agencies. In Argentina we’re connected with a local tax agency Padrones, to extract information about withholding taxing rates. And finally we’ll be presenting our Partner Program!
Baz: Partner Program!
Glenn: We’re trying to reach a larger audience through a partner program. So LatamReady will not be the only company anymore that’s allowed to sell the LatamReady SuiteApp. That’s big news because any partner from NetSuite can now certify themselves to sell our SuiteApp, implement it and be in full control of the whole process.
Baz: Give us a call at 786 600 2641 to talk to one of us about our Partner Program, our SuiteApp…there are a lot of things going on! We’re so excited! Thank you to everyone who has registered. We’ll send you this webinar and we’ll send you a registration link for our next webinar coming up!
Glenn: Thank you!
Carlos: Thank you!
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