Last week while at a Financials conference I wrote about the “calm before the storm” – basically what will happen when the Mexico tax authority mandates the use of CFDI.  As I stated in that blog, more than 90% of all invoices in Mexico are still on a legacy version called CFD, not the version of CFDI which requires real time government validations.  In conversations with a few companies this week, I realized that organizations were not only unaware of this huge change; they also were unprepared into how to plan internally.  So to net it out – there are five mission critical points you should plan for as you look at migrating from CFD to CFDI. 

• First and the most important: there are thousands and thousands of companies that will need to transition when the change takes place.  You need to ensure you are starting conversations with your vendors soon in order to understand the level of effort, impact to your ERP system, and resource availability given the expected number of companies needing to move.  My experience in these situations is companies who wait to the last minute will miss out on the deadlines imposed (Brazil Nota Fiscal 2.0 implementation and Mexico CFDI v3.2 July 2012).

• Implementation –For many, this will not just be a web service connection, it will be a change to your ERP system configuration.
  • Who will do this work – you, your SI, or does your CFDI provider take care of this task?
  • Will you have to manage a middleware in order to exchange your files with the CFDI provider?
  • How will you manage the integration of customer specific Addenda?
  • How will you manage the real time processes of printing, cancellations, et al…?

•  Monitoring – The CFDI process can affect your ability to ship just like in Brazil. 
  • Will you have one single monitor in the ERP system?
  • Or will you have three separate monitors:  one in the ERP, another monitor in the middleware, and another monitor in a 3rd party solution?

• Maintaining –As the mandates take hold, they will not be static. They will be constantly changing and evolving.  In the last 18 months, the Mexico SAT came out with multiple announcement. The most recent one required the buyer to validate and archive inbound XML (December 28, 2012). 
  • Who will keep up to speed with the fiscal changes and the impact to ERP?

• Accounts Payable Validation – Many companies are still validating there invoices manually with the Mexico SAT.  This may be fine for a few XML per day. But when the government makes the changes to CFDI, your organization will see a dramatic increase in the amount of XML received. For most multi-nationals, the volume will require automation.
  • How will your organization address transitioning from manual validation to a fully automated solution?

This transition should not be overlooked – the question is – will you be prepared or one of the companies that waits to the last minute. Remember, failure in the compliance markets translates into fines, criminal penalties, customer collection issues and potential delivery/shipping delays.