Digitisation of accounting in Brazil: possible role model function for Germany

​published on 17 June 2021 | Reading time approx. 2 minutes

The topic of digitisation is quite on top of the agenda of many companies worldwide. According to a forecast by Gartner consulting firm, for example, the market for RPA (Robotic Process Automation) will grow by 19.5 per cent in 2021 and at two-digit rates in the following years until 2024.

This trend can also be seen in Brazil: after the digitisation of accounting processes in Brazil, especially through RPA-based automation, was an issue mainly among large companies until a good two years ago, also many small and medium-sized companies have recently decided to automate their administrative processes. Many internationally operating SMEs have chosen Brazil as a global pilot destination for RPA-based automation of their corporate administrative systems.

Digitisation of tax accounting in Brazil

This is mainly due to the fact that in Brazil the digitisation of administration (especially in the area of taxes) is already very advanced. Many companies are already going paperless and use data only in electronic form.

Sales invoices are a good example: companies transmit the invoice data directly to the tax office via an interface. Based on the transmitted information, the tax office then automatically creates the official electronic invoice within seconds. As a result of this standardised process, the electronic invoice has a fixed format and presents the same information (e.g. tax number of the issuer/recipient, tax code of the raw material, etc.) always in the same place. This makes automation much easier because the robot knows exactly where a certain piece of information is located. However, it should be noted that invoices for the movement of goods are issued by the tax office of the respective federal state, whereas invoices for services are issued by the tax office of the respective municipality in which the company is located. Especially in the case of services, the formats used by the individual municipalities may therefore differ.

It should also be noted that in May, Congress will discuss a tax reform planned by the Minister of Economy, Paulo Guedes. Ideally, the tax reform bill should be passed before the end of 2021. Among other things, the bill provides for harmonising the highly complex VAT. If this was implemented, it would also simplify digitisation and enable the further and faster advancement of RPA.

Advantages of RPA

The advantages of RPA are manifold: On the one hand, it speeds up the handling of processes, not only because the robots do tasks more quickly, but also because they are available 24 hours a day, 365 days a year. However, it should be taken into account during implementation that the processes must be coordinated so that the robot(s) can really be used efficiently, i.e. 24/7.

Another aspect is certainly the increase in quality. Brazilian tax rules are very complex. Since virtually all information has to be submitted electronically and the Brazilian tax office invests heavily in its IT infrastructure, all submitted information is automatically reconciled with each other. In the event of differences, the software automatically generates tax assessment notices and the company may then have to make additional payments or prove that the payments have been made correctly. Both involve an effort. This risk can be minimised by introducing an RPA. Here too, however, it must be noted that changes in tax legislation must be incorporated into the automated process. This means that companies should allow for a certain amount of maintenance in their planning.

Automation also ensures consistent compliance with defined business processes. However, this aspect also implies one of the major challenges of automation: it will only be successful if the processes are structured reasonably. Automating processes that contain errors or gaps, on the other hand, will lead to massive problems. Therefore, automation is always a good opportunity to review and optimise existing processes.

It is often advisable to automate some key processes first. This can usually be done within relatively a short time (2-3 months), as many RPA platforms are easy to understand and learn. Once employees are familiar with process automation and the RPA platform, they often go on to automate more and more administrative processes.

Conclusion

Especially in Brazil, the automation of accounting processes is gaining ground. It is advisable for globally operating companies to start a pilot project here, which can then be rolled out across the group, if necessary. This can further accelerate the digitisation of companies, also and especially in Germany, in order to ensure that the entire group is well prepared for the new “Accounting 4.0”.