Brazil Nota Fiscal - OnPremise versus Cloud Part 6

Brazil Nota Fiscal version 3.1– (Part 6 of 6) OnPremise NFe Solutions or Cloud and Managed Service:

Top 5 Reasons Why Companies are Using Brazil version 3.1 to Transition off of on-premise solutions in to Managed Service Solutions

Over the last 4 weeks, we have explored the top 5 reasons why companies are switching off on-premise software solutions to cloud providers, more specifically hybrid cloud. Here is a quick recap of the key take-away elements as well as a review of why the selection of the best solution is imperative.

1. On-Premise NFe solutions have too many failure points and monitors
2. Day to Day support needs to be real-time: Most on-premise solutions have their operations shut down for days to weeks every year because of support challenges
3. No ERP system is configured the same – on-premise solutions force your ERP COE to alter their ERP global upgrade strategies every time there is a change.
4. Change management involves too many people, different groups, and different system developers
5. Lack of coverage and functional capability – these solutions are usually limited to country coverage and have gaps in functional requirements such as support for Service Invoices.

As you approach the 3.1 upgrade, I wanted to remind everyone of the risk of getting this wrong. This is a mission critical process that has both operational and financial tax implications.  Consider the following:

You Can’t Ship if NFe is not Working

Many companies have been shut down for upwards of 5 to 6 days at a time.  Can you imagine not being able to ship your goods to your customers for a whole week?  You should check with your local operations, as you might be surprised that this has happened to you recently.  In order to avoid these costly incidents, ensure you solutions have a single, comprehensive monitor and built-in “contingency” modes.

Local Audits and FCPA for US Public Companies

In Brazil, they literally have the ability to audit you in real-time. Not only do they have the transactional data of Nota Fiscal, they have aggregated reporting monthly, quarterly and annually called SPED to ensure that accuracy and consistency.  Non-compliance can mean local fines (on average 500 Reais per XML issue) or fines of 75% to 150% of the incorrect taxes. Such measures helped the government demand a record 109 billion Reais in unpaid taxes from individuals and companies in 2011 (Source: Reuters). For US companies, they also must worry about the Foreign Corrupt Practices Act, as fines can come from the SEC as well. It is a local issue and a corporate issue.

So Now What?  Here is a list of questions to go and ask your business:

• How many resources are supporting the ERP system and Nota Fiscal process?
  • How many SD (Sales and Distribution) resources?
  • How many MM (Material Management) resources?
  • Who owns the integration of the systems?
  • How many people are in the Shared Service center processing invoices in Brazil (both AR and AP)?
  • What is the cost of the physical architecture (hardware, maintenance)?
• How long do Brazil ERP upgrades take, what is the internal cost per project?
• When there is an error – where do we find it? What is the process?
• When something is wrong – who do we call? What is the process?
• When the government changes
  • Who is responsible for upgrading each solution component?
• Are your Inbound Receiving teams manually entering data or do you automate the DANFe process?
• Do you match the supplier XML to the Purchase Order before the truck arrives?
• How many people are in your Shared Services to process Brazil invoices?
• How many of your invoices are “touchless” – processed without any human intervention?
• How much time does your finance team spend at the end of a month fixing data issues that were just pushed through the process?

We have given you the basic requirements to understand the “real” cost of trying to manage Brazil Nota Fiscal, now it’s your turn to do the research.