Last week, we examined how to prepare for rolling out SAP in Brazil. In this complex regulatory environment, a SAP implementation is much more detailed and distinctive than in other countries. Special considerations must be taken into account to ensure compliance and avoid the hefty fines, penalties and business disruptions associated with e-invoicing and reporting errors and omissions.
Once you have mapped out your SAP template for Brazil, it’s time to move to the implementation stage. The first step is to assemble a team with the right skillset for smooth, seamless execution. Any disruptions to your compliance processes can result in severe tax penalties – up to $200 USD for each XML error and 75-150% of the incorrect tax values – in addition to shipping and receiving delays. A team that understands these implications and eliminates potential issues is required. Critical team members include not only a project manager and SAP functional experts, but a local subject matter expert (who is fluent in both Portuguese and English). This subject matter expert is crucial to fully understand the local requirements and translate them into corporate SAP requirements.
Even with a knowledgeable, experienced team, the project timeline for a SAP implementation in Brazil is often vastly different than in the rest of the world. It’s not uncommon for the implementation phase to stretch to six months, or even a year, as companies address the issues and complexities associated with compliance in Brazil.
Companies often underestimate these compliance challenges, and also overlook the constant changes in Brazilian regulations. Frequently, as soon as a need is realized and addressed in SAP, the government regulation changes and requires an update, prolonging implementation further.
Although these challenges to implementing SAP in Brazil are significant, the risks of managing compliance outside of your ERP are enormous. Using a third-party system for compliance increases the risk of errors, manipulation, and ultimately, government audits and penalties, making overcoming the SAP implementation challenge crucial.