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Coupa Success Portal

Cross Border Transaction Practices

Handling Cross Border Transactions in Coupa

Cross-border scenarios are pretty common for multinational organizations. Most of these companies have Suppliers that are not just domestic but distributed across many countries. Equally, multinational Buyers themselves are distributed across many countries and have registered legal entities in many places.

Particularly for invoices, the correct addressing is essential because it determines the tax handling of the transaction. For cross-border transactions, many additional rules apply so that suppliers and buyers can ensure the correct tax determination for the transaction.

There are Buyers who try to ensure correct tax handling by the Supplier by guiding them through the PO process, i.e. put tax estimates on the PO under the assumption that the supplier will create exactly the same content on the invoice. Unfortunately, that is a common error that can lead to massive problems in case Buyer's calculations are wrong or Supplier needs to amend the PO (shipping less or shipping from a different location/maybe country etc.)

The area Buyers really need to be concerned with (apart from internal policies) is the tax legislation related to their inbound invoices and the requirements on shipments they receive from abroad. Of course, for cross-border shipments, the customs documentation is crucial as it serves as the basis for the tax assessment upon importation of the goods. Receiving services from abroad is a slightly different topic.

In summary, the most important takeaway is that trading partners handle the taxes accordingly.

Recommendations

Option 1: Send these Invoices for approval

To ensure trading partners are sending a proper invoice with correct taxes and charges, we recommend flagging these invoices for the proper group of users for review before the invoice is approved for payment. This would require the requester to indicate if a requisition line is cross-border, by using a checkmark box custom field, ‘Is this a cross-border purchase’, which they’d check at the time they submit the requisition. This field would then be carried to the Purchase Order and Invoice. You would then need an approval chain set up to route these cross-border invoices to an approver who would review the taxes and customs charges, and then have the option to either approve or dispute back to the supplier.

Option 2: Route Requisition for approval

Instead of approving the invoice you send the requisitions for approval. The benefit of this approach is it allows you to prevent policy violations. The downside is you don’t actually review the invoice. Configuration is the same as the invoice, in terms of the custom field, you may also want to set up a submission blocker if this is a field you want users to check yes/no before submitting

Option 3: Route both Requisition and Invoice for approval

If you’re looking to really ensure these type of purchases are reviewed on the front-end (req) and back-end (invoice), then this is your best option. Keep in mind if you decide down the road that you do not need one of these to go for approval you can simply turn off the submission blocker and/or approval chains

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