The electronic invoice in Mexico took its first steps in 2004 when the SAT (Tax Administration Service) created the legal framework that defined the implementation of the CFD (Digital Tax Receipt), its first e-Invoicing system. Although its use was not mandatory, the large number of businesses that did adopt it led the SAT to establish a new invoicing model in 2010: the CFDI (Digital Tax Receipt by Internet).
Over a short span of time, the use of the CFDI has become compulsory in e-accounting throughout Mexico, used in 100% of economic transactions.
This success has led governments across Latin America to develop their electronic invoicing systems, using the Mexican system as a reference.
Features of the CFDI
Beginning in 2011, due to the fact that adoption of the CFDI allowed the SAT to have better fiscal control, the SAT began progressively extending mandatory compliance under the CFDI scheme to more and more companies until it became the only valid invoicing model permitted in the country.
The speed of the expansion is highlighted by the figures gathered by the SAT indicating that the volume of digital invoices issued between 2011 and 2017 increased from 1.7 billion to 6.5 billion.
The CFDI’s success is fundamentally driven by five aspects:
- Standardization: Invoices must be issued in a specific XML format adapted to the requirements established by the SAT.
- Flexibility: However, they allow for the inclusion of an addenda with content not regulated by the SAT, enabling the format to be adapted to contain information required by each individual buyer.
- Digital signature: the CFDI requires a digital signature to be applied via a digital certificate provided by the fiscal authority (SAT), which guarantees document integrity and authenticity.
- Authorized Certification Provider (PAC): this is unquestionably the biggest difference between Mexico’s digital invoice and that of all other countries. In fact, the implementation of this feature is probably the main reason for the success of the CFDI. Externalizing the fiscal validation of invoices served as an encouragement both to users and to the SAT, as validation was delegated to an authorized third party which streamlined the process and removed the reliance on the fiscal authority to validate all invoices.
- Permanent evolution: the CFDI is constantly being reviewed and updated by the SAT for problems detected with its use over time. Amendments to the model with mandatory implementation dates are introduced when changes must be made. The most important dates the Mexican government has set for 2018 involve the implementation of CFDI 3.3 as the only valid version for e-Invoicing and the incorporation of new add-ons such as payment receipts, an export complement and invoice cancellation.
The CFDI as an example of the implementation and development of e-Invoicing in Latin America
The e-Invoicing system in Mexico is a success story thanks to its heavy promotion that allowed it to reach out to the entire Mexican population in just a few years.
Mexico, Chile and Brazil are the most advanced countries in LATAM in regards to e-Invoicing and are all inspiring other countries to develop electronic invoicing models. From this perspective, we can identify four states of maturity in the e-Invoicing process:
- Very mature, where e-Invoicing covers 100% of transactions, as occurs in Mexico, Chile and Brazil.
- Somewhat mature, i.e., countries with progressive rollout, including Guatemala, Ecuador, Peru, Argentina and Uruguay.
- Immature, or countries that are starting to develop an e-Invoicing model and the accompanying legal regulations. This group includes Costa Rica, Colombia, Panama, Paraguay and Bolivia. In some of these countries e-Invoicing is expected to become mandatory in 2018 and 2019.
- Unknown or in process, i.e., countries where interest in e-Invoicing has scarcely been detected, such as Honduras, Nicaragua and Venezuela.
Although the system in most of these countries is based on Mexico’s CFDI, e-Invoicing in each of them will be bound by the specific norms and requirements established by their governments.
EDICOM: The Leading CFDI Provider in Mexico
Edicom has been at the forefront of providing CFDI services since its inception. In 2010, EDICOM became the first PAC in Mexico to be SAT-authorized for CFDI validation and in 2015 the first provider certified to receive digital documents (PCRDD).
EDICOM has its own cloud based CFDI platform capable of generation, delivery, and reception of CFDIs . It enables companies to simplify their administrative processes by integrating the automatic platform with their management systems.
Edicom also offers cloud based CFDI archiving solutions to provide customers with the digital management of their invoices with no need for their own technological archiving resources.
Edicom offers businesses operating in LATAM a single platform compliant with all country specific legislation, that allows them to integrate all transactions with their internal management systems.