Challenge
In January 2023, Portugal introduced strict new invoicing requirements: the mandatory inclusion of a Unique Document Code (ATCUD) and a certified digital signature on all invoices and tax-relevant documents.
For this client, a global specialty chemicals company, this was far more than a routine IT adjustment. Their existing SAP system was not configured to handle these unique requirements:
- Complex numbering logic required for ATCUD generation
The ATCUD is not a random number — it’s a unique identifier composed of a validation code (issued by the Portuguese Tax Authority when you register a document series) and a sequential number for each document in that series. Since this needs to be generated in real-time and automatically for every invoice, manual assignment is not feasible at scale. - Challenging integration of new logic into SAP
Integrating this new logic into their existing SAP system was a critical and complex task. The solution needed to be non-disruptive, scalable, and able to generate and apply the ATCUD in real-time for every invoice. - Automated, secure digital signatures applied to each invoice
Each document required a certified digital signature to ensure its authenticity and integrity. This component demanded a solution that could securely apply the signature automatically and link it to the document's unique identifier. - Conditional country logic to ensure compliance for Portugal while leaving other jurisdictions unaffected.
As a multinational, the client’s invoicing process is centralized. The solution needed to recognize the "tax departure country intelligently" (in this case, Portugal) to trigger the correct ATCUD and digital signature logic, while leaving transactions for other countries untouched.
Non-compliance posed a serious risk, with potential heavy fines and operational disruptions that could threaten the supply chain and product distribution. The client required a partner who could understand both the technical requirements and the business-critical implications of the challenge.
KGT’s Solution
KGT's approach was founded on a deep understanding of both the client's business processes and Portugal’s specific regulatory framework. The proposed solution was a comprehensive system that automated the entire process, ensuring total compliance and data integrity.
The core of the solution was the creation of a new, dedicated number range intelligently integrated within the client’s SAP system, specifically for Portugal's ATCUD and digital signature requirements. This new number range was designed to be conditional, activating only when the system identified the "tax departure country" as Portugal. This was achieved by:
- Configuring a new document series: KGT established a new document series within the ERP system, dedicated to invoices originating from the Portuguese market. This provided a clean, isolated environment for the new logic.
- Automated ATCUD generation: A custom-built program was developed to interface with the Portuguese tax authority's API. This program automatically fetched the necessary validation codes and applied the correct numbering sequence to generate a valid ATCUD for each document in real time.
- Seamless digital signature integration: KGT integrated a certified digital signature module directly into the invoicing process. Once the ATCUD was generated, the digital signature was automatically applied to the document, ensuring it was tamper-proof and met legal requirements. This process was entirely transparent to the end-users.
The tax departure country logic was the linchpin of the project's success. The KGT solution was engineered to analyze each transaction at the point of invoice creation. It used pre-defined business rules to identify whether the transaction's tax jurisdiction was Portugal. If so, the new number range and the ATCUD/digital signature process were triggered automatically. If not, the system reverted to its standard process for other countries.
This solution was engineered to be non-disruptive, user-transparent, and scalable for future regulatory changes.
Results
The implementation was a model of efficiency and collaboration. KGT’s team worked closely with the client's finance and IT departments, conducting thorough testing and user training sessions. The project timeline was challenging, but the modular and well-documented nature of KGT's solution ensured a smooth transition. The implementation delivered measurable success from day one:
- 100% Compliance: On the go-live date, the client was fully compliant with Portugal’s new regulations. Every invoice issued from Portugal had the correct ATCUD and digital signature, eliminating the risk of fines and legal issues.
- Operational Efficiency: The automation of the process eliminated the need for any manual intervention. What could have been a labor-intensive and error-prone task became an invisible, seamless part of their daily workflow.
- Enhanced Data Integrity: The digital signature provided an unalterable record for each transaction, strengthening the overall integrity and auditability of the financial data.
- Future-proof scalability: The solution was designed to scale, easily accommodating future growth in transaction volume and potential regulatory changes.
Impact
By transforming a complex compliance requirement into a seamless automated process, KGT not only safeguarded the client against legal and operational risks but also enhanced overall efficiency. The solution freed critical resources, enabling the client to focus on innovation and its global mission, rather than being consumed by regulatory firefighting.
Is your organization prepared for rapidly evolving tax and compliance requirements?
Partner with KGT to transform regulatory challenges into opportunities for efficiency, resilience, and growth. Contact us today to discuss how our tailored compliance solutions can safeguard your operations and future-proof your business.
