PUE, PPD, REP, and CFDI: What Do They Mean and How Do You Request an Invoice?
This is probably not the first time you’ve heard these acronyms. Maybe you heard them at the office, when receiving an invoice, or when your accountant referred to one of them.
Although they are part of the day-to-day operations of any business, it is not always easy to know exactly when to use each concept. This can become one of the main causes of administrative errors, which in turn can lead to tax-related issues.
That is why it is worth understanding what they mean and how they relate to one another.
In 2004, Mexico approved the use of electronic invoicing, better known as the Comprobante Fiscal Digital por Internet (CFDI).
In 2010, the transition from paper invoices to digital invoices began, and in 2014, with the implementation of the CFDI for payroll receipts, the transition from physical to electronic formats was completed.
Over time, taxpayers’ needs led to the evolution of the CFDI, which was divided into six types:
1. Income (Clave I)
Used when goods are sold, services are provided, professional fees are charged, or lease transactions are carried out.
2. Expense (Clave E)
Functions as a credit note to document returns, discounts, or rebates.
3. Transfer (Clave T)
Supports the transportation and legal possession of goods when they are moved from one location to another.
4. Payroll (Clave N)
Serves as documentation for payments of salaries, wages, and similar compensation to employees.
5. Payment Receipt (Clave P)
Also known as REP (Payment receipt) or Payment Receipt Supplement, it is used to record installment or deferred payments after an Income invoice has been issued.
6. Withholdings and Payment Information (Clave R)
Used to document transactions in which taxes are withheld from third parties, such as may occur with dividends.
In 2018, two payment methods were implemented:
PUE = Lump-sum payment
PPD = Payment in installments or deferred payment
These methods indicate when the transaction will be paid and are related to payment methods, which indicate how the payment was made.
The payment methods contemplated by the SAT include:
The PUE (Lump-sum payment) payment method is used when the transaction is paid in full at the time the invoice is issued or, at the latest, on the last day of the month in which the transaction took place.
In this case, the invoice must reflect the corresponding payment method because the payment information is already known.
Not all transactions are paid at the time they take place.
When payment for a sale or service is expected after the month in which the invoice was issued or is to be made on a deferred basis, meaning through multiple payments, the PPD (Installment or Deferred Payment) payment method must be used.
In these cases, payment method 99 – To be defined is used because the payment has not yet been made.
When an invoice was issued using PPD and the customer subsequently makes one or more payments, the REP (Electronic Payment Receipt) comes into play, also known as the Payment Receipt Supplement.
Its purpose is to inform the SAT that the payment has been received and to indicate how the payment was made. Therefore, it must be linked to the corresponding PPD invoice.
An important point to keep in mind: the maximum deadline for issuing an REP to the SAT is no later than the fifth calendar day of the month following the month in which the payment was received. Issuing REPs after the deadline may result in a penalty.
We can think of the REP as the final step in a transaction.
First, the PPD invoice is issued. Then, the service is performed or the sale is completed, the customer makes the payment, and finally, the REP is issued.
This documents that the payment was received and closes the transaction associated with that invoice.
In practice, many problems do not arise from a lack of knowledge of the law, but from incorrectly applying concepts that may seem straightforward.
Choosing correctly between PUE or PPD and issuing an REP on time can help prevent collection delays, invoice cancellations, customer rejections, and discrepancies with the tax authorities.
Properly applying these concepts can make an important difference in the tax administration of a business.
At Guerrero Santana, we have professionals who can advise you in reviewing your tax information and verifying that it is properly handled according to your transactions, helping you avoid future issues.
