Invoicing in Mexico – An Electronic Tale

Bob Roberts, CEO of We Make Stuff, Inc., walks into a meeting with his top executives.  He shares the news that their new subsidiary Hacemos Cosas in Monterrey, Mexico, is almost up and running.  He tells his CFO Fran Francis that she’ll need to make sure all is set on the finance side of things.  Since We Make Stuff, Inc. uses Dynamics 365 for Finance and Supply Chain (D365), Fran begins the task of researching the differences between the US and Mexico when it comes to processing financials.  She quickly learns that invoicing is quite different in Mexico and begins the task of setting up Electronic Invoicing.

Getting started with sending an electronic invoice

Mexican law requires the customer invoice process (i.e. invoices being sent out from D365) to flow through the Mexican tax authority (Servicio de Administración Tributaria, or SAT).  The SAT requires invoices to be in a specific format, known as Comprobantes fiscales digitales por internet, or CFDI.  These requirements apply to sales invoices, free-text invoices, credit notes, and project-based invoices.  Before any invoicing can occur, approval from the SAT in the form of a certificate is required.  Upon approval, the SAT will also issue three numbers needed during the process: an RFC number (Registro Federal de Contribuyentes), a CURP number (Clave Única de Registro de Población), and a state inscription number. 

A required piece of the puzzle

The SAT does not process the invoice themselves.  Instead, they rely on a network of authorized third-party digital signature service providers, or PACs (Proveedores Autorizados de Certificación).  It’s important to note that D365 does not have out-of-the-box integration for any specific PAC.  In the invoicing process, the PAC serves the role of authorizing the invoice on behalf of the SAT.  The invoice will go from D365 using to the PAC, which will assign a folio number and provide a digital stamp for the invoice.  It then returns the invoice to D365 at which point it can be sent to the customer.

It’s all in the details

The SAT provides the XML schema definition (XSD) that must be used when sending and receiving the invoices.  The SAT also requires archival of each XML that is sent to a customer.  In D365, to set up the connection parameters to the PAC of choice, the RFC number must be entered.  The email template must also be set up to transfers XML and PDF files.  Also, while D365 will show the option for multiple CFDI versions, as of March 31, 2023 only the 4.0 version is accepted.

Seeing it all in action

Now that Fran has gone through the process of selecting a PAC, getting her trusted (purple) partner to assist with the interface, and all the configuration is done, she is ready to try a test invoice.  Once she gets a test order processed to the point of invoicing, she posts the invoice which will trigger it to be ready for sending to the PAC.  She goes to Accounts receivable, in the e-invoicing section, and selects Export/import electronic invoice process.  Once the PAC processes and approves the invoice, she can view it in Accounts receivable inquiries, under CFDI (electronic invoices).

The road to e-happiness

Fran can now report back that invoicing at the new subsidiary is ready to go.  While invoicing in Mexico is quite the different process than invoicing in the USA, the combination of functionality in the Mexican localization for D365 and a helpful partner can make the process successful.  Now all that’s left for Fran to do is figure out how far it is from Monterrey to Cabo San Lucas so she can take a well-deserved beach vacation.