IOFM - Managing Accounts Payable

December 2014ISSUE 14-12
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CONTENTS
Accounts Payable
THE
NETWORK
Form 1099 Update
IRS Voices Concerns About 1099 Processing�� 2
A recurring issue identified by the IRS in employment return tax audits is the failure of payers to backup withhold on 1099
reportable payments without TINs. Expect to see a sharper audit focus on this issue.
AP Organization
What Tasks Does Your AP Department‘Own’? �� 3
Often who does what is based on historical factors or on stated preferences of managers. Ownership of such tasks as vendor
file management has advantages as well as responsibilities.
AP Manager and AP Department of the Year
Institute of Finance Management Announces Winners�� 5
At the recent Accounts Payable Conference Expo, the Institute of Finance and Management (IOFM) announced the winners
of the 2014 AP Manager of the Year and AP Department of the Year.
AP Automation Implementations
How To Manage the Reduced Headcount That You Promised�� 6
One of the major selling points touted by AP automation vendors is that automation will reduce the head count. But should
lowering AP headcount really be such an important goal of AP automation?
Internal Controls
Establish P-Card Suspension and Cancellation Procedures�� 7
Clear policies and procedures put everyone on notice that their p-card can be suspended or revoked at any time. Spell out
the reasons in your p-card policies and procedures manual.
Question of the Month
Evaluated Receipt Settlement: Can It Save AP Time and Money?�� 8
The major benefits of ERS include invoice variance prevention, the elimination of non-value-added work (like tasks associated
with reconciliation), and the opportunity cost of capital savings.
AP Processes
Create Clear Procedures to Yield Top AP Results�� 10
Documented procedures are essential to the AP operation. They are critical to workflow and they keep everyone on the same
page. Here’s how to develop your procedures manual if AP doesn’t have one.
Vendor Master File
Big Y Grocer Creates Special AP Vendor File Maintenance Position�� 11
Vendor file set-up and maintenance are crucial tasks–not only for the effective operation of AP but also from the standpoint
of compliance. Here are some helpful “tricks of the trade” for AP professionals.
AP Leadership
Five Ways AP Sets the Standard for Relationship-Based Leadership�� 13
Make every interaction positive and informative, anticipating the needs of internal customers and suppliers. This leads to a
team atmosphere and a healthy culture.
News Briefs�� 14
Calendar�� 15

2
DECEMBER 2014
Editor-in-Chief, IOFM’s AP Publications;
Education Director, IOFM’s Accounts Payable
Certification Program
Pam Miller, APM with Distinction
Editor
Elaine Stattler, APM
Contributing Writer
Anna Maria Trusky
Group Vice President
R.D. Whitney
Group Publisher
David Beck
Editorial Director
Rob Rogers
Marketing Manager
Lucy Sullivan
Research Manager
John Pitsios
Copy Editor
Chris Horner
Production Associate
Sokvonny Chhouk
Sales Director
Brian Cuthbert
Member Services
Liz Fallon
EDITORIAL ADVISORY BOARD
Karen Anderson, Senior Compliance Advisor
Abandoned Property Services
Diane Yetter, President
Yetter™
Marianne Couch, ESQ., Principal
Cokala
PO Box 781, Williamsport, PA 17703
207-842-5557
fax: 203-516-2396
e-mail: lfallon@divcom.com
Published by
Diversified Business Communications
Copyright © 2014
Diversified Business Communications
PRINTED IN U.S.A.
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FORM 1099 UPDATE
IRS Voices Concerns About
1099 Processing
The IRS reports that a recurring issue showing up in employment return tax
audits is a failure of payers to backup withhold on 1099 reportable payments
withoutTINs,reports1099expertMarianneCouch,JD,Principal,COKALATax
Information Reporting Solutions, LLC.
This is one of the top concerns turned up by the IRS National Research
Program(NRP),anauditprogramthatselected6,000employmenttaxreturns
for a thorough audit. The audits were intended to help the IRS gain a better
understanding of employment tax issues, she reveals.
AsaresultofthisfindingintheNRP,organizationscanexpecttoseeasharper
audit focus on this issue over the next few years.
Backup Withholding Triggers
Backup withholding rules apply to payments reported on the Forms 1099-B,
-DIV, -INT, -K, -OID, -PATR, and –MISC.
Couch reports that some IRS triggers are:
1. You do not have the payee’s TIN at the time you make the payment
(not by the time you report it; you do not have until January 31st to
solicit TINs).AnnualTINsolicitationstopayeesforwhomyoudonothaveTINs
and who are receiving reportable payments are required for penalty waiver
purposes; these solicitations do not provide a safe harbor from the backup
withholding requirements.
2. TIN is not certified when required. Bank-deposit interest; gross broker
proceeds; dividends; original issue discount payments; patronage dividends.
3. Payee does not timely and appropriately respond to your B Notice
letters.
4. Bank sends payers of interest and dividends “C Notices.”
5. Payee crosses out line in perjury section of W-9. This section tells the
payer to backup withhold on interest and dividend payments.
Reporting Guidelines
Federal taxes withheld from payments must be deposited with the U.S.
Treasury according to your organization's deposit schedule, says Couch.
The payments must be deposited through the EFTPS (electronic federal tax
payment system). In addition:
• For 2015, you will be a monthly schedule depositor if the total tax
onyourTY2013Form945(filedin2014)(line3)was$50,000orless.
Deposits are due by the 15th of the month following the month in which
theliabilityarose.Ifyouareamonthlyscheduledepositorandaccumulate
a $100,000 liability on any day during a calendar month, your deposit
schedule changes on the next day to semi-weekly for the remainder of
the year and for the following year.
• If the total tax reported on the Form 945 for TY 2013 exceeded
$50,000,youwillbeasemi-weeklydepositor.LiabilitiesarisingonWed.,

3
DECEMBER 2014
Thurs.and/orFri.mustbedepositedbythefollowing
Wed.LiabilitiesarisingonSat.,Sun.,Mon.and/orTues.
must be deposited by the following Friday.
IRS on Lookout for Worker Misclassification
The IRS recently completed several thousand worker-
classificationexaminations.Inaddition,theDepartment
of Labor and certain states also have their own audit
programs, says Couch.
The IRS looks for organizations filing a large number of
Forms1099-MISC,reportingamountsasnon-employee
compensation (Box 7) and a smaller number of W-2s.
Ofparticularimportance,IndependentContractorsmust
qualify as independent by reference to IRS factors, not
by the decision of the payee or payer. For guidance on
this topic, go to:
• IRS Pub. 15-A and Form SS-8 for guidance
• http://www.irs.gov/pub/irs-pdf/p15a.pdf
• http://www.irs.gov/pub/irs-pdf/fss8.pdf
Issues with Box 7 on Form 1099-MISC
A policy that defaults to reporting all reportable
payments in Box 7 of the Form 1099-MISC will cause a
lotofproblemsforpayeesandwillrequireyoutocorrect
many 1099s, says Couch.
In addition, be aware that:
• Amounts reported in Box 7, as nonemployee
compensation,aresubjectbothtoincomeandself-
employment taxes.
• TheIRSwilllookforself-employmenttaxpayments
on the payee’s tax return. If they don’t find these
payments,theywillcontactthepayeeswithnotices
of taxes due; the payees will call you requesting
corrections and you will have to correct the original
1099.
• Forms 1099-MISC reporting amounts in Box 7 and
that have ITINs on them is a flag for possible work-
authorization violations. ITINs (9xx-6/7/8x-xxxx)
are issued by IRS to individuals who do not qualify
for SSNs but who need a U.S. TIN for tax purposes.
Individuals who do not qualify for SSNs are those
without work authorization.
• Non-employee compensation is income from
self-employment activities; self-employment is
employment, which means work authorization is
likely necessary. This is an issue probably not best
addressed in an accounts payable department,
but it should be reviewed somewhere in your
organization, Couch points out.
These are just a few of the new developments in 2014
year-end Form 1099 reporting, IRS compliance targets,
and 1099 filing mandates, says Couch. Changes are on
thewayinotherareas,aswell.Forexample,TaxYear2014
reportingonIRSForms1042-Sand1042isnewfromtop
to bottom and demands data not previously required.
Editor's Note: IOFM will present the webinar, “2014
Changes in IRS Form 1042-S Form 1042: Reporting
ForeignVendors,”onDec.11,featuringalistofclarifications
andcorrectionstotheInstructionsforForm1042-S(2014).
Since these changes were issued by the IRS in October
they do not appear in the 1042-S Instructions currently
on the IRS website. To learn more and register, go to
http://www.iofm.com/2014-changes-in-irs-form-1042-
s-and-form-1042-reporting-foreign-vendors-121114 q
AP ORGANIZATION
What Tasks Does Your AP Department‘Own’?
By Pam Miller, APMD
While all accounts payable departments “pay the
bills,” the manner in which they do so varies from
organization to organization. In addition to the
processing differences, there is a variation in the
ancillary tasks that AP is responsible for.
For example, in your organization, who owns the
vendor master file? Who owns p-card administration?
And who is responsible for escheatment?
Vendor Master File: There's No Place Like Home
Who should be responsible for managing the vendor
file? The respondents to the most recent IOFM survey
of AP professionals indicated overwhelmingly (83
percent) that AP should have this responsibility—with
the purchasing department being next in line for
ownership of the file.
One might think a better home for the vendor master
file would be purchasing, since purchasing manages
vendorrelationships.Butthetruthofthematteristhat
APpaysfarmorevendorsthanpurchasingmanages.In
fact,inmanyorganizations,thenumberofvendorsthat
have no relationship with purchasing far outnumbers
those who do.
It is no surprise that AP is more often the owner of
this file because AP needs more, and, in some cases,

4
DECEMBER 2014
different information than what purchasing requires.
With ownership comes responsibility. Managing
the vendor master file is a big job. AP must ensure that
the information contained within the file is complete
and correct, and the amount of information that is
required can be overwhelming. It’s not just a matter
ofobtainingthevendornameandremittanceaddress.
That can be difficult enough. Vendors change even
the most basic information (such as their name) from
time to time.
Compliance with federal reporting rules requires that
correcttaxidentificationnumbersbeobtained,verified,
andmaintainedsoastoavoidrisksforheavypenalties.
Also, AP must determine whether the payee is a U.S. or
non-U.S. person. Many states now require notification
when vendors subject to state reporting are entered
into the file and they of course require that the proper
reports be made in a timely manner.
Even what seems like the simplest of tasks—entering
vendor data into the file—can be fraught with
difficulties. Consistency is of the utmost importance,
because inconsistent or inattentive data entry is sure
to result in duplicate vendors. For example, consider
a vendor such as a state treasurer. Should the vendor
be entered under the title of “Treasurer?” Under the
state name? Or should it be entered under the actual
nameofthetreasurer?Andwhataboutvendorswhose
namesare(orcontain)abbreviations?Whataboutthose
vendorswhosenamesstartwith“The”?Manydecisions
regarding data standardization and normalization
must be made and consistently followed. And this is
no small task!
Purchasing Card Administration: Who Better
Than AP to Manage It?
Where does administration of the p-card program
mostoftenreside?AnIOFMpollingofAPprofessionals
indicatedthatinnearlyhalf(43percent)oforganizations
thathaveimplementedcardprograms,APadministers
them. The Purchasing Department is next most likely
to have this responsibility (30 percent).
One of the primary reasons for implementing a
purchasingcardprogramistosavemoneybyriddingAP
of small dollar invoices—invoices whose value is often
less than the cost to process them. P-cards are quite
successfulatmeetingthisgoal.However,implementing
a p-card program does not magically do away with all
ofthetasksrelatedtothesetransactions.Someonehas
to manage the program.
Managing the p-card program, like managing the
vendor master file, requires specific training. The
card issuer’s online program must be configured,
cardholders trained, files manipulated, declines and
other suspicious activity investigated, and reports
run. And routine issues such as account creation, card
termination, changes in MCC status, and credit limits
must be handled pretty much on a daily basis.
Successful card programs do save AP time, cut costs
for the organization, and often bring home cash in
the form of revenue share, but they do require the
implementation and monitoring of strong policies,
procedures, and controls.
Theseadministrativetaskscouldcertainlyresideinany
number of departments, but AP, being a department
that is accustomed to working within strict controls—
andonethatisjustifiablyobsessedwithtinydetails—is
likely to be assigned this task. Additionally, the feeling
is that, with fewer invoices to process, AP certainly
should have the time and resources to meet the task.
Escheatment: AP Is the Logical Overseer
Uncashed checks make up the lion’s share of most
organizations' escheatable funds. And since AP is the
department responsible for generating those checks,
APismostoftenownerofthistask.AccordingtoIOFM’s
most recent survey, 68 percent of the respondents
reportedthatAPisresponsibleforreportingunclaimed
property to the state. The next most common owner
of this task is the Tax Department (29 percent).
Determiningwhatisreportableisanongoingtaskand
is the responsibility of AP regardless of who actually
completes the forms that must be submitted. And
doingtherequiredresearchunderdeadlinepressureisa
recipe for incorrect and/or incomplete reporting.
Escheatment tasks. As a matter of policy, AP should
researchallreturnedanduncashedchecksonaregular
basis. Staffers initiating voids and stops should be
required to research offsetting transactions and make
noteoftheirfindingsinthesystem.Proceduresshould
bereviewedonaregularbasisinanefforttodetermine
why checks are returned or go uncashed, and fixes to
these issues should be implemented.
Adherence to strict policies and procedures—
particularlyintermsofnotingresearchoutcomesinthe
file—ismorelikelytobemaintainedifAPisresponsible
for unclaimed property reporting.
Size Often Determines Who Gets the Job
The decision about where certain tasks will reside is
oftenmadebasedonsize.Forinstance,taxdepartments

5
DECEMBER 2014
are not all that common in small organizations. Size of
the AP department is of course a factor. For example,
a one-person AP shop would not be the proper home
for the vendor file, since segregating duties would be
nearly impossible.
Often who does what is based on historical factors
(how it’s always been done) or on stated preferences
of strong managers in AP or elsewhere. Regardless,
ownershipoftheseandothertasksthatdonotcomprise
partoftheprocessof“payingthebills”hasadvantages
aswellasresponsibilities.APdepartmentsconsidering
the optimum structure for their organization should
bear this in mind! q
AP MANAGER AND AP DEPARTMENT OF THE YEAR
Institute of Finance Management Announces Winners
On the opening day of the Accounts Payable Confer-
ence Expo, held Oct. 26-29 at The Mirage Hotel
Casino in Las Vegas, Nevada, the Institute of Finance
Management(IOFM)announcedthewinnersofthe2014
APManageroftheYearandAPDepartmentoftheYear.
Rick Menoscal, AP Manager at the Florida-based
headquarters of Memorial Healthcare Systems, was
recognized as AP Manager of the Year, and JM Family
Enterprises, also based in Florida, was declared the AP
Department of the Year. More than 700 people were in
attendance at the awards luncheon.
RickMenoscalistheAPManagerofMemorialHealthcare
Systems, where he has worked for more than 14
years. Under Rick’s leadership, his team has achieved
productivity gains of 67 percent (processing more than
350,000invoiceslastyear).Heandhisteamarenotedfor
their technical skill, high performance, and dedication
to continuous improvement.
JM Family Enterprises operates a diversified
portfolio of businesses in the automotive industry,
according to AP Manager Joan Stramaglia, APS. The
AP department undertook an ambitious invoice
processing transformation, ultimately converting over
65 percent of their checks to electronic payments.
The department also demonstrated a dedication to
compliance, getting ahead of the FATCA updates
and requiring forms W-8 and W-9 from all vendors.
“AP is a department that is all too frequently under-
recognized,” says RD Whitney, IOFM’s Group Vice
President.“It’sacriticalfunctionforanycompany,butthe
dedication of the staff is sometimes taken for granted.
We are proud to take an opportunity each year to
recognize the important achievements going on in AP,
notonlybyhonoringtheawardwinners,butbycreating
an exciting event dedicated to the world of AP—both
where it is and where it’s going.”
ThenextAPConferencewillbeheldinFloridaatDisney’s
YachtClubResort,May18-20,2015.Formoreinformation,
go to http://www.iofm.com/conference. q
Rick Menoscal, AP Manager of Memorial Healthcare Systems,
accepts the AP Manager of the Year Award.
Joan Stramaglia, AP Manager, of JM Family Enterprises, accepts
the AP Department of the Year Award.

6
DECEMBER 2014
AP AUTOMATION IMPLEMENTATIONS
How To Manage the Reduced Headcount That
You Promised
By Pam Miller, APMD
OneofthemajorsellingpointstoutedbyAPautomation
vendorsisthatautomationwillreducetheheadcount,
minimizing the cost of an implementation for an
organization.
Anyone who has attempted to get an AP automation
project approved has probably made these ROI
calculations and offered similar assurances as to how
costs can be managed.
But should lowering AP headcount really be such
an important goal of AP automation? Is it even the
correct goal? And what happens to the people who
are supposedly no longer needed? Will they be let go?
Should they be?
Consider Redeployment
InmanyAPdepartmentsthereareasignificantnumber
of tasks that are routinely left undone. There is simply
no time to complete them. Some of these tasks may
be low priority. Other tasks, like filing, may disappear
once the automation project has been implemented.
However, some of those undone tasks could add
value that is significant enough to the organization
to justify redeploying staffers. Such a redeployment
could possibly offer a better overall result than simply
lowering the headcount.
For example, assigning statement reviews and open
credit research to a specific staffer is likely to recover
moreinfundsthanthatstaffer’ssalary.Or,perhapsthe
vendorfileneedsmoreattentionandtheorganization
finds itself facing stiff fines and penalties every year
for incomplete 1099 filing. Moving resources to this
area rather than simply cutting headcount could
result in reduced fines and penalties that would justify
continuing those payroll dollars.
Encourage Staffers to Seek Openings in
Other Areas
Knowing that your staffing needs will change may
influence how you react to staffers’ interest in job
openings in other departments. While the timing may
beinconvenient(theseopeningsalwaysseemtooccur
intheearlystagesofimplementation,notneartheend),
this may be the time to encourage qualified staffers
to seek out these openings. It can be a great solution
for everyone involved, assuming of course that you
recommend only highly qualified staffers!
Reassign Positions
Depending on what type of automation is to be
implemented, new positions may be required. For
example, when implementing an imaging system,
there is a need for someone to prep and scan the
documents.Reassignmentmaybetheanswerhere.For
example,filingclerksmaybeabletobecomescanning
specialists.
Allow for Attrition
In some cases, there really is nothing to be done but
decrease the number of people in AP. While attrition
is a fact of life, it unfortunately often occurs when you
don’t want it to rather than when you need it to.
However, sometimes you get lucky and a staffer’s
need to move on coincides with your project’s
completion. Or on other occasions, the stress involved
in implementation or an employee's concerns about
how the job will change will cause some staffers to
jump ship.
When All Else Fails, Bite the Bullet
There will be times where you simply can't redeploy,
reassign, or reduce headcount through attrition. You
will need to let some staffers go. If this is the case, it
is important to carefully assess the skill sets of all the
staffers, keeping in mind how the automation project
will change what is required.
Work with HR to be sure all the proper guidelines are
followed in releasing staffers. In addition to ensuring
that all the proper steps are being taken, HR can help
in developing severance packages and re-training
opportunities.
It's Important to Consider Staffing Issues
From the Outset
When considering an automation project, there is
really no one-size-fits-all solution for how to manage
the changing staffing needs. AP managers looking to
automateshouldtakestaffingintoconsiderationfrom
the outset.

7
DECEMBER 2014
INTERNAL CONTROLS
Establish P-Card Suspension and Cancellation Procedures
Dampening down the rosy colored expectations that
vendors present to executives is nearly always a good
idea—whether those expectations are for reduced
headcount, rapid ROI, or some other benefit of the
application.
Discussions with executives as to what the newly
automated AP should look like are critical. Outline
several scenarios, including those that require
redeploymentofstafftonewlycreatedpositions.Point
out the value that AP can add to the organization by
completing tasks that currently are not being done
on a regular basis. This is simply good management.
Executives are rarely aware of what AP actually does.
Provide them with factual information and some
modestrevenueprojections.ThiswillnotonlyserveAP
well, it will help convince them what a valuable asset
AP is to the organization. q
One of the most frequent objections to p-card use is
the concern that the cards will not be used properly
and thus will put the organization at risk. But these
objections can be easily overcome by ensuring that
the proper controls are in place.
Establish Suspension and Cancellation
Procedures
Clearpoliciesandproceduresputeveryoneonnotice
that their p-card can be suspended or revoked at any
time the organization sees fit. Many organizations
suspend cards if statements are not submitted in
a timely manner or if a cardholder violates p-card
policies.
The reasons for suspension and the reasons for
ultimatecancellationshouldbespelledoutinap-card
policies and procedures manual. Most issuers will be
able to handle immediate cancellation requirements
easily.
Communicate With HR
If an employee is no longer employed by your
organization—regardless of the reason for
termination—that individual's p-card must be
cancelled immediately. This should be done even if
the parting is amicable or the employee has left of
his or her own volition. Not cancelling a card under
these circumstances is begging for trouble.
However, it is often the case that AP and/or the
p-card administrator are the last to know when a
cardholder has been terminated. Make certain that
HR is informed that you need immediate notification
of all terminations on an ongoing basis.
Fortunately, AP is in good communication with
human resources at Lehigh Valley Health Network
(LVHN), says Tricia S Wieder, Accounts Payable
Supervisor, Supply Chain Management Division. We
receiveatermination/separationreportfromHRevery
two weeks. We check that against all active p-cards
to ensure that nothing is missed.
As announcements are received regarding abrupt
termination, we immediately suspend the card and
the manager destroys the credit card—the card is no
longer usable as soon as it is suspended, she says.
Verify That All P-Cards Are in the Hands of
Existing Employees
Per policy, any cardholder at LVHN is responsible
for the charges placed on the card regardless of
who actually places the charge, says Wieder. We
discourage employees from giving their card to
another employee for use. If another employee uses
the card, it is up to the cardholder to make sure the
policyisbeingfollowedandthatthechargesarevalid.
We have strict internal controls and perform
random audits throughout the year to ensure that
our cardholders are following policy and that they
are using their charge card for accurate business
expenses, she says. q
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8
DECEMBER 2014
Evaluated Receipt Settlement (ERS) is a procedure for the
automaticsettlementofgoodsreceipts.Itwaspioneeredby
GeneralMotors(GM)tosavethecompanytimeandmoney.
The major benefits of ERS include invoice variance
prevention,theeliminationofnon-value-addedwork(like
tasksassociatedwithreconciliation),andtheopportunity
cost of capital savings.
How Does it Work?
A supplier and the purchaser enter into an agreement to
useevaluatedreceiptssettlement.Thesupplierkeepsthe
purchaser current with price/sales catalogue data from
whichthepurchaserextractsaccurateproductandpricing
information during the purchasing cycle.
In many cases, the supplier delivers an advance shipping
notice(ASN)tothepurchaser,permittingloading/receiving
docks to be properly scheduled and accurate material
receiptstobegenerated.Thepurchaserauthorizessupplier
payment upon confirmation of arrival of goods, making
the invoice redundant.
Who Is Using It?
Thismonth,theeditorsofManagingAccountsPayableasked
membersoftheAPAdvisoryPanelthefollowingquestion:
Do you use evaluated receipt settlement (ERS) at your
organization? If so, what are the advantages and
disadvantages?
Here is what the panelists had to say.
'Most of Briggs Stratton's Invoice Processing Cost
Has Been Virtually Eliminated By the ERS Program'
Al Barrett, Shared Services Manager, reports that the
Briggs Stratton Corporation uses ERS extensively—and
successfully. In FY14, we processed close to 193,000
automated invoice postings—66 percent of our business
volume–through one of our many automated payment
processes.140,000ofthosepostingsweregeneratedfrom
our ERS program, he says.
Wehavehadafewchallengeswithprovidingacceptable
information, but we work closely with our buyers, the
suppliers, and our own receiving staff to be sure we
provide the best possible payment information to assist
incashapplication,hesays.Ifthesupplierisnotcapable
of accurately applying payments, we hold off on moving
to ERS for some time while we work through alternatives
with the supplier.
We educate our buyers on the ERS program, explaining
that it's a cost savings opportunity and stressing the
importance of accurate PO pricing and proactive price
updates, says Barrett. We educate our receiving staff as
well, clarifying the value of the program, their part in the
costsavings,andtheimportanceofaccurateandcompliant
receiving. They also have specific instructions related to
the information they enter for each goods receipt, he
says. If the delivery document reports 'Invoice Number,'
that exact information is reported on the receipt posting.
If invoice is not reported, the advance shipping notice
(ASN) number, 'packing slip' number, and lastly, 'delivery'
number is entered.
Many of our suppliers issue ASNs, which are later used in
thereceivingprocess,reducingdataentryatgoodsreceipt
point,explainsBarrett.Weinstructoursupplierswhereon
theirASNtransactiontorecordtheirowninvoicenumber
orotherinformationtheycanusetoapplypayments,and
we use that same information when generating the ERS
postings.
We even backdate the ERS document date by two days
(averagedeliverytime)inanefforttomatchthesupplier's
paymenttermexpectations.WealsoincludethePOonthe
payment advice, he says.
I have one proviso however: An ERS program will
greatly reduce the effort to process payables but it is
not a perfect solution, says Barrett. Anytime a payment
process is automated, it must be closely monitored for
policy compliance, suspect postings, and questionable
entries. At Briggs Stratton Corporation, review of all ERS
postings is part of an AP Associate's daily responsibilities.
ERS education is also part of AP's new buyer orientation.
I estimate that the failure rate is between two percent
and five percent, but that means that 95 percent to 98
percent of the related invoice processing cost has been
eliminated by the program. That equates to a savings of
close to $525,000 per year!
'ERS Implementation Is Well-Worth the Pain'
WeutilizeERShereatDurrEcoclean,saysDianaPetrovski,
Credit Collections Specialist. I was here during the
implementation of this new process and it was quite an
overhaul, and we had many suppliers who were not very
enthusiasticaboutthechange.However,itwascompletely
worth the pain it took to get where we are today.
QUESTION OF THE MONTH
Evaluated Receipt Settlement: Can It Save AP
Time and Money?

9
DECEMBER 2014
ERS changes two important things when it comes to
accounting: the use of the supplier’s invoice number,
and the invoice date, says Petrovski. Our receiving
department is responsible for assigning the 'reference
number' to each goods receipt they enter into our SAP
system.
This takes the place of the vendor's invoice number, so
it is important that they use a number that our suppliers
can easily match to their invoices, she adds. In most
cases,weusethepackingslipnumber.Butsomevendors
need to be handled differently, and we work with them
to provide what they need.
Theinvoicedateweuseisactuallythedateofthegoods
receipt, says Petrovski. This still comes up from time to
time, when a supplier invoices at the time they ship and
we have the invoice date as the date we received the
goods. The difference is usually only a few days, so not
usually a big deal.
'ERS Can Be a Mixed Bag: Some Bad,
Some Good'
I had experience with ERS at two former employers,
one a food company and the other an automotive
company, says AP Consultant Tammy Doumanian. At
the food company, ERS was not widely used, and it
caused problems because the PO prices were incorrect.
They were too high, causing outstanding credits that
were collected by a third party, which was costly.
It also caused issues with vendors applying cash,
because the company used SAP. The SAP PO is set up
with Goods-Receipt-Based Invoice Verification (GR-
based IV), and every GR has its own document number
that is used as the 'invoice' number on the remittance,
she says. This is a huge pain, and makes for very ugly
remittance advices. The AP manager at the company is
trying to phase out the use of ERS.
At the automotive company, however, ERS was widely
used—and used successfully. They were an SAP shop
as well (so the remittance was the same as above), but
therewereveryspecificparametersforusingERSandthe
vendors worked very closely with purchasing to make
sure everything ran smoothly.
The Pack Slip Number Is Most Widely Used
As an Identifier
Previous companies that I have worked for used the
pack slip number as the invoice number, says Debbie
Johnson, AP Lead at SUMCO in Albuquerque, NM.
With a lot of companies, the pack slip number and
invoice number are the same. If not, they can usually
pull the pack slip number in as a reference to match the
payment.
Kelly Coxon, Director, Procure to Pay, reports that while
the University of Pittsburg Medical Center (UPMC) does
not use ERS, she did use ERS in a former job at Alcoa.
We used the PO number and release number as the
invoice number, she said. It worked well, and I do
not recall any issues with the vendors' ability to apply
payment.
Large Companies Are Biggest Users of ERS
According to a recent IOFM survey, large companies
are the highest-rate adopters of ERS. Nearly half of
organizations with more than 50,000 employees (44
percent) report having had ERS in place for one year or
more, as compared with only about 6 percent of those
with fewer than 1,000 employees (see Exhibit).
Overall, organizations of all sizes plan to implement ERS
at about the same rate in one to three years , ranging
from 10 percent of the smallest firms to 17 percent of
mid-sized companies.
The requirements of a successful ERS program include:
1. Integrationbetweenthepurchasing,receiving,and
accounts payable systems;
2. Vendor-supplier trust and cooperation;
3. Establishmentandagreementoncriticalinformation
such as prices, payment terms, and shipping terms;
4. Handling of dynamic charges outside of the ERS
program—manyexpertsrecommendhandlingthe
shipping charges separately;
5. Rigorous discipline in ordering and receiving;
6. Participatingvendorsmustshiphigh-qualitygoods
with minimal material rejects, and must keep the
purchaser current on products and pricing. q
USE OF ERS BY COMPANY SIZE
In Use
Over 3 Years
In Use
1-3 Years
In Use
Under 1 Year
Less than 1,000 4.4% 1.1% 1.1%
1,000 - 5,000 4.8% 6.5% 0.0%
5,000 - 10,000 20.8% 8.3% 0.0%
10,000 - 50,000 15.4% 0.0% 0.0%
More than
50,000
33.3% 11.1% 0.0%
Source: IOFM

10
DECEMBER 2014
AP PROCESSES
Create Clear Procedures to Yield Top AP Results
When Beth Hinten, APS, Accounts Payable Processor,
joined CBC Companies, Inc.—a public records research
and retrieval company based in Columbus, OH—she
asked for a copy of the AP procedures manual, only to
learn that it didn't exist.
“I was told there wasn’t any official manual, just
handwritten notes here and there that others had
devised over the years,” she says. “I am a believer in
documented procedures, and I think they are the
lifeblood of the AP department. They are essential to
workflow and they keep everyone on the same page.”
Just Do It!
Hinten snapped into action and took it upon herself
to organize the AP processes and procedures into a
cohesive and accessible document. Here are the steps
she took.
Analyze the tasks carried out in AP. Hinton
documented the steps needed to complete the
following functions and tasks:
• AP processing/data entry
• Monthly commissions
• Weekly uploads for shipping/phones/copiers
• Running reports for other offices
• Deposit scanning
• Stop payments
• Manual checks
“Ialsowroteupthetasksforveryspecificitemsrequired
by our accounting software, such as how to change or
reverseanaccount,howtoaddorcorrectsalestax,how
toplaceaninvoiceonhold,andhowtovoidpayments,”
says Hinten.
Create electronic and hard-copy procedures
documents.TomaketheproceduresavailabletoallAP
staff and ensure consistency, Hinten created a physical
binder containing all the procedures. She also posted
themontheAPsystem.“AllAPproceduresaresavedon
ashareddrivethateveryoneinAPcanaccess,”shesays.
Tips for Success
Hinten advises using the following strategies to
document AP procedures:
1. Sit with the expert on the procedure that needs
to be documented. “Watch the whole process a few
times in order to decide on the best approach. Record
the procedure step by step as if assuming the person
reading the document knows nothing at all about it.
The goal is to enable the user to complete the task with
little to no assistance simply by using the instructions,”
she explains.
2. Take notes. “When observing a procedure, take
detailed notes. Leave nothing out, even if it seems
insignificant. Document it, because it can always be
edited out later,” she says.
3. Type up your notes and review them. “I type up
mynotesandthentaketheinstructionsandgothrough
each step to make sure I didn’t miss anything,” says
Hinten.Intheprocess, Itweakoradjusttheinstructions
as needed.
4. Share the instructions with another set of eyes.
Hinten’s last step is to have someone else in AP work
through the procedure step by step as written to make
suretheinstructionsareaccurateandnothinghasbeen
leftout.“Twosetsofeyesarebetterthanone,especially
when you’ve been looking at your notes so much,” she
acknowledges.
5. Emphasize the accounting advantages. Having
well written procedures can help AP establish a better
relationship with staff accountants. “Information will
become more easily accessible, reports arrive sooner
than anticipated, and there will be fewer mistakes. All
this results in fewer journal entries at month-end,” says
Hinten.
Challenges to Overcome
“Whenyouhaveadepartmentmadeupofpeoplewho
have been at the company as long as my co-workers
have (most have been in the department for more than
15 years), change can be scary, says Hinten. So you
may hear people say, when they are presented with
new written procedure instructions, 'But we’ve always
done it this way.'
Also, some employees fear that if job procedures are
documented, their jobs will be at risk. “In a former job,
there was a staff member who refused to document
anything because she didn't want to be easily
'replaceable,' says Hinton. But I strongly disagree with
this mind-set. AP is a team, and the goal is to keep our

11
DECEMBER 2014
VENDOR MASTER FILE
Big Y Grocer Creates Special AP Vendor File
Maintenance Position
Sarah Jasiewicz, APS, Accounts Payable Senior External
Support, works in the eight-person AP department at
Big Y Foods, Inc., a grocery store chain headquartered
in Springfield, Massachusetts. Her main responsibility
is vendor file set-up and maintenance, a crucial job not
only for the effective operation of AP but also from
the standpoint of compliance. She has learned many
important“tricksofthetrade”thatcanbehelpfultoother
AP professionals when it comes to effective vendor file
maintenance.
“I was promoted into this position in August of 2012.
Since then, I have been responsible for making sure
that all new vendors are set up correctly and have all
required paperwork filled out,” says Jasiewicz. “I am
also responsible for updating the vendor file with any
changesthatneedtobemade,suchasaddresschanges,
name changes, and changes to terms. Plus, it is my job
todeactivateoldvendorsthatarenolongerbeingused.
I am the only person in AP responsible for these tasks.”
Risks of Improper File Maintenance
“Keepingourvendormasterfileuptodateandaccurate
is important for 1099 reporting as well as making sure
wearepayingthecorrectcompanies,”saysJasiewicz.“If
thevendorfileisnotsetupandmaintainedproperly,AP
can be exposed to many risks.”
➢➢ Case in Point: “If the vendor file is not maintained
andpurged,APcouldendupwithmultipleactivevendor
numbersforthesamecompany.Thiscancauseerrorslike
reportingawrongTaxIDnumberormailingpaymentto
an incorrect remittance address,” says Jasiewicz. “Also,
whenvendorsthathavenotbeenusedforseveralyears
are left on the file as ‘active,’ this allows for them to be
used again without getting new information from the
company. This, in turn, can cause us to issue payments
to incorrect companies or to companies that are listed
with incorrect tax IDs.”
Jasiewicz takes the following steps to ensure proper
vendor master file setup and maintenance.
Setting Up the Master Vendor File
Get all critical information and documentation up
front. “Whenever I receive a request to set up new
vendors, I make sure that I have their W-9s. All the
informationontheW-9sshouldmatchtheinformationthe
vendorsfilledoutonthevendorpacketswesentthem,”
shesays.“Ireviewthepaperworkthatwassenttomeby
thebuyertomakesurethatwehaveeverythingweneed
and that we have all the signatures needed. Once all of
thishasbeenverified,Ienterthevendorintothesystem.
Checkforduplication.Beforeactuallyenteringavendor
into the system, Jasiewicz also double-checks to make
sure that the vendor is not already in the system.
Maintaining the File
Get new W-9s when vendors change their names.
“I make sure to request a new W-9 whenever I receive a
name change from any company. This greatly reduces
theriskthatincorrectinformationwillbereportedtothe
IRS, which cuts down (if not eliminates) the chance that
we will receive B notices,” says Jasiewicz.
“It is important to review all requests that you receive
for changes to vendors to make sure that no further
paperwork is needed before making those changes.
➢➢ Case in Point: If a vendor sends us a request for an
address change, but the company name is not listed
exactly as we have it in our system, I may request a new
W-9 to make sure that the vendor still has the same Tax
IdentificationNumber.Unfortunately,notallcompanies
inform us when this has changed due to mergers or
acquisitions,” says Jasiewicz.
well-oiled AP machine running. We want procedures in
place so that anyone can do any job.”
“Be patient when instituting the new procedures,” she
advises. “Give people time to get used to doing the
procedures as documented. They will soon appreciate
the fact that they can accomplish the same results
while taking a shorter route. Let them come to this
understanding on their own terms—it will happen.”
The bottom line: “Missing or inadequate procedures
cancausemistakes—mistakesthatcancostacompany
time, money, and even in some cases, a vendor or
client. In today’s market, most companies can’t afford
to lose a vendor or client, so why risk it with inadequate
procedures?”
Editor's Note: See the News Brief story on page 15 for
additionaltips.Beth Hinten,APS, isa recentgraduateof
IOFM/TAPN'sAPCertificationProgram.Shehasworked
inthesix-personAPdepartmentatCBCCompanies,Inc.
for two-and-a-half years. q

12
DECEMBER 2014
Deactivate unused vendors. “An important part of
goodvendorfilecleanupistodeactivateallvendorsthat
have not been used for more than two years,” she says.
“You must also deactivate any vendors that have been
replaced by new ones due to tax ID number changes.
This lessens the chance that the wrong vendors will be
paid—and fewer incorrect payments means less work
for everyone.”
Take the opportunity to look for problems when
makingchanges.“Spendingafewextraminuteslooking
ateverythingwhenmakingonechangetoavendorcan
save you a lot of time and headaches down the road,”
says Jasiewicz
Review the vendor file on a regularly scheduled
basis.Jasiewiczreviewsthevendorfileperiodicallytosee
whetherthereareanyvendorsthatshouldbedeactivated
and to make sure there are no other issues that need
to be addressed. “I try to be proactive in maintaining
the vendor master file to avoid issues—and it seems to
work,” she says.
Just How Long Must a Vendor Be Inactive Before It
Is Deactivated?
According to IOFM's AP Department Benchmarks and
Analysissurvey,themostcommonperiodofinactivityat
respondents’organizationswastwoyears(46.9percent).
Another 29.7 percent wait 18 months (see Exhibit).
The size of an organization, no matter whether it is
measured by annual company revenue, employee
headcount, or size of the AP department, doesn’t have
any correlation to the length of the inactivity period.
Forexample,inthelargestorganizations,thosereporting
over $5 billion in annual revenue, the same number
of respondents wait one year as wait two years. An
overwhelmingnumber(70percent)ofdepartmentswith
just one staffer wait two years. But an equal percentage
of respondents whose AP department consists of just
two staffers wait one year, 18 months, or two years. q
MASTER FILE TIPS FOR OTHER AP PROFESSIONALS:
Sarah Jasiewicz, APS, Accounts Payable Senior External
SupportatBigY,advisesAPprofessionalstousethesetips
for more successful vendor file management:
Never pay until all I’s are dotted and T’s crossed. “We
also do not issue any payments to a company until all the
requiredsetuppaperworkhasbeenreceived.Thisensures
that everything is correct and helps us avoid payment
errors,”she says.
Double-check all setups and changes. “All the vendor
setupsandchangesthatIdoarereviewedonaweeklybasis
as part of AP’s‘checks balances’system,”says Jasiewicz.
Handle change requests promptly to keep purchases
and payments flowing. “I handle all requests for setups
and changes right as they come in to keep from holding
up deliveries to one of our buyers and/or payments to
one of our vendors,”she says.
Be persistent. Jasiewicz says that the most challenging
aspect of vendor file setup and maintenance is making
sure AP gets all the required paperwork up front.“Some
newvendorsdonotwanttofilloutorsigncertainportions
of our vendor packet and we can end up going back and
forth with them to get everything we need,”she says.
Stayontopofbuyers.Onecommonproblemthatarises
is when the company’s buyers use vendors that are no
longer active and have been removed from the system.
“When this happens, we usually don’t know until after
we’ve received the product,”says Jasiewicz.“I make sure
to contact the buyer as soon as this happens and request
that the buyer send the vendor company a new vendor
packet to fill out and return as soon as possible.
“Toavoidtoomuchofadelayinpayment,Iwillreactivate
the vendor in our system and place them on hold until
we'vereceivedthenewpacketfromthem,”shesays.“This
way, the invoice can be processed and awaiting payment
in our system right away instead of waiting until all of the
steps have been performed after the packet has been
received.”
Thebottomline:“Alwaysbeproactiveinmaintainingyour
vendor file. It can be very easy to do just what’s needed
when requested, but this opens the door for a lot of
work and headaches down the road,”says Jasiewicz. “By
beingdiligentwhenmakingchangesandsettingupnew
vendors, you can cut down on B Notices, eliminate the
need for checks to be voided and re-issued because of
wrong vendors being paid, and avoid checks getting lost
in the mail because of being sent to a wrong address. All
of this helps not only you but everyone at your company
who is involved in the process of ordering, receiving, and
paying for products or services.”
Length of period of inactivity prior to deactivation
0
10
20
30
40
50
6.3%
6 months 1 year 18 months 2 years
17.2%
29.7%
46.9%
Source: IOFM

13
DECEMBER 2014
According to Jean Leslie, a researcher at the Center
forCreativeLeadership(CCL),“Buildingrelationshipsis
oneofthestrongestskillssetsrelatedtoAPleadership
effectiveness.”
In a comprehensive research study undertaken by
CCL,morethantwo-thirdsofthe400,000respondents
agreed that building and maintaining relationships is
a critical competency for managers—AP managers
included.
To find out how AP managers can become proficient
relationship builders, Managing Accounts Payable
interviewedAPManagerAnnetteWinrick,whoworks
for Conatster Construction TX, LP, a construction
company in the Dallas-Fort Worth area that provides
infrastructure for urban and private development.
Winrick's AP department has 2.5 full-time employees
handling 30,000-plus invoices annually.
Wehaveaveryfast-paced,high-stressenvironment,
saysWinrick.OnethingthathelpsourAPdepartment
succeedisthatwebuildverystrongrelationshipswith
all of our stakeholders.”
Basic Tenets of a Leadership Culture
Winrickstressesthatyoucan'thavesolidrelationships
withoutastrongfoundation.Buildingthatfoundation
requires these steps:
1. Never underestimate senior management's
hungerforup-to-dateinformation.Firmlyestablish
a predictable schedule for reporting so that manage-
ment can focus their attention on other issues,
knowingthatyourAPreportsaretimelyandaccurate,
says Winrick.
At Conatster Construction, for example, AP updates
the managing partner at least once weekly on cash
management issues. We work together closely to
come up with a final payee schedule for our weekly
run, she explains.
2. Focus on the overall goals of the business. All
yourcommunicationswithuppermanagementshould
reflect the goals and objectives of the business, says
Winrick. Focus on what the higher-ups really care
about—namely, how to protect the business, save
money,andsavetime—andcommunicatetheimpact
of various factors on the business.
3. Serve your internal customers with accuracy,
efficiency,courtesy,andtimeliness.Our field staff
at Conaster are dependent on AP to meet their goals
anddeadlines,saysWinrick.APneedstoensurethatall
paperworkisinordersotheydon'thavetospendtime
onpaperworkandadministrativetasks.Suchactivities
take time away from their ability to actively manage
their jobs.
Good internal service ultimately results in excellent
external customer service, she adds. Benjamin
Schneider, Ph.D., a professor at the University of
Maryland College of Management, reveals that
there's a remarkably close and consistent link
between how internal customers are treated and
how external customers perceive the quality of an
organization's services. I agree with that premise,
because a commitment to serve internal customers
invariably shows itself to external customers. It's
almost impossible to provide good external service
if your organization is not providing good internal
service, says Winrick.
4.Buildimpeccablerelationshipswithvendors.Be
approachable,realistic,andtransparentwhenworking
with vendors/suppliers. A breakdown in vendor
relations could affect your company's reputation
and credit. Simple as it sounds, AP can have the most
influenceonbuildinggoodrelationshipsthroughthe
timelyreturnofcallsande-mailsrelatedtopayments,
missing invoices, and tax certificates, says Winrick.
5. Add value to every interaction. Make every
interaction as positive and informative as possible,
saysWinrick.Trytoanticipatetheneedsofcustomers,
suppliers,andotherpartnersandproactivelyprovide
necessaryinformationtotheseparties.Bringsolutions
to the table whenever possible.”
Keep Your Eyes on the Prize
Cooperation between AP, senior management, and
other departments leads to a team atmosphere.
Everyone kicks in when needed because respect and
trust is present. Similarly, good relationships with
vendors/suppliers will allow you to get top-notch
servicebecausevendorsandsupplierscometoregard
you as a company they know and trust, she says.
Editor's Note: Winrick is a recent graduate of IOFM/
TAPN's AP Certification Program. q
AP LEADERSHIP
Five Ways AP Sets the Standard for Relationship-Based
Leadership

14
DECEMBER 2014
NEWS BRIEFS
P-CARD STATS AT A GLANCE
ArecentCAPSResearchstudy,SnapShots2014:Corporate/
CommercialPaymentCard,offersAPprofessionalssome
insights regarding the number of companies using
p-cards and their current spending trends. Here are
some key findings:
• Asignificant81.45percentofcorporationssurveyed
had a commercial payment card program.
• More than half (50.5 percent) of these companies
reportedincreasedspendingontheircardprogram,
while slightly over one-quarter (27.72 percent)
reported no change.
• The range (minimum to maximum) of increases to
p-cardprogramswas1to42percent,withanaverage
(mean) of 13.13 percent.
• Per-transaction limits range from $750 to $50,000,
with the mean being $4,188. (For companies using
e-payables,virtualcards,orpaymentgateways,these
limits would not apply.)
• Monthly limits have a range of $1,000 to $200,000,
with the mean being $19,041.
• The p-card spend that was reported as “maverick
spend” was a mean of 6.23 percent. Only 6.52
percent of the companies reported that this out-of-
compliance spend was on the rise.
TheSnapShots2014:Corporate/CommercialPaymentCard
study is based on a May 2014 survey of more than 125
companies across 20 industries in both manufacturing
and non-manufacturing.
The complete study results are available to CAPS
members only. For membership information, go to
http://www.capsresearch.org/membership/.
GRAPHICS HELP TELL—AND SELL—YOUR
STORY
If you are presenting your business case for additional
resources to senior management, numbers and hard
dataalonewon'tnecessarilysellyourproposal.Graphics
andchartsmayalsobeneededtohelpmakeyourcase,
says IOFM Director of Education Pam Miller.
Clean and compelling visuals can draw your audience
intothecontent,encouragingthemtoexplorethedata.
Forexample,ifyouarequotingastatistic,showingthe
data in graphic form will increase comprehension and
retentionandmakeamorelastingimpression,shesays.
The white paper, How to Use Data Visualization to Win
OverYourAudience, recommends steps you can take to
come up with the most effective graphic to get your
point across. Here are the key takeaways of the report:
1. Start with your question. Begin with considering
the most important point that you want to get across.
Look for the data and the accompanying graphic that
canhelpanswerthequestionand/orgivemanagement
more insight into your issue.
➢➢ Example: If the most important point you want to
get across is the cost and time savings that automation
canachieve,youmightbeginbyquotingbenchmarking
statistics illustrating best in class organizations.
Presenting these statistics in graphic form reinforces
the point that organizations that automate see great
savings in time and costs.
2. Work with a solid data set. Make sure that you are
drawing relevant data from a reputable source. Gather
information from benchmarking organizations that
conduct independent research.
3. Craft a cohesive narrative around your key data
points. Coordinate your message with the content on
your graphic.
➢➢ Example: Use the industry best-practice bench-
markingdataandcompareitagainstyourorg-anization's
performance. Again, this is where a graphic can be
extremely effective. Take your data and plug it into
the industry data to present a true picture of where
your organization stands in terms of the cost and time
benchmarks.
There is a certain level of subjectivity involved in the
selection of how much and which content to include,
but your data analysis will inform the story you want to
tell, reveals the report.
Your main goal is to shape a concise and coherent
narrative around the data to compel your audience to
take some sort of desired action.
Editor's Note: How to Use Data Visualization to Win
Over Your Audience, offered at no cost by HubSpot and
Visage, is available at http://offers.hubspot.com/data-
visualization-guide.

15
DECEMBER 2014
NEWS BRIEFS
WRITING AN AP PROCEDURES MANUAL:
WHERE DO YOU START?
Beth Hinten, APS, Accounts Payable Processor at CBC
Companies Inc., advises other AP professionals to take
the following steps when preparing to write an AP
Procedures Manual:
1. Get organized. “If procedures are well organized,
you will be able to retrieve information quickly, which
willavoidtensionwithinternalandexternalcustomers
and promote speedy and efficient payments,” says
Hinten.
Organization is a must because so much is asked of
the AP department. On a daily basis, we are asked to
provide information at a moment’s notice—anything
from a vendor number to invoice status to copies of
reports, she says.
2. Involve everyone on the team in writing
proceduresforthedepartment.“It’sagreatlearning
experience for all parties involved. Going through the
processtogethercreatesateamatmosphere,”shesays.
3.Takesmallsteps.“Youcan’tdoaproceduresmanual
overnight. Frankly, attempting to do so will scare off
many would-be supporters of the cause. As the saying
goes, ‘slow and steady wins the race,’” says Hinten.
4. Talk to colleagues in your field. “Get advice from
others on best practices for AP procedures. How do
otherorganizationshandlemonth-end?Whatsoftware
do they use? Give them some of your AP scenarios and
ask them what steps they would take in that situation,”
Hinten suggests.
5.Informyourself.“Knowledgeispower.Themoreyou
know about your field, the better you can refine work
proceduresasyougoalong.Neverturndownawebinar
or class when it is offered to you. You never know what
you’lldiscoveraboutyourselforyourcompany,”shesays.
Well-thought-out procedural guidelines help AP
staffersanswerquestionsandprovidebettercustomer
service in a concise, intelligent manner,” says Hinten.
WHY SHOULD AP DEVELOP CASH FLOW
FORECASTING MODELS?
Business leaders aim to manage cash flow to the point
where every available dollar is at work, either covering
payments of checks or producing income.
Cash flow forecasts examine and project cash receipts
and cash payments and anticipate future cash
requirements in order to protect liquidity and avoid
a cash shortage crisis. These forecasts create what if
scenarios to help in planning, to offset uncertainties
in cash flows, and to match incoming receipts with
disbursements.
Models can range from simple to complex (simpler
models are used for shorter-term forecasting). On the
disbursement side, forecasting models account for all
disbursements including payroll and AP, interest on
debt, and dividends.
Cash flow forecasts are based on seasonal, monthly,
daily, and cyclical patterns as well as trends. They can
be short term (one day to two weeks), medium term
(a few months up to one or two years), or long term
(multiple years).
By integrating information into the forecast as soon as
it is available—using a rolling format so that updates
are continuous—an organization can better time its
disbursementstomeetincomingreceipts.Theserolling
forecastscanimproveforecastingaccuracyandcansee
the company through cash-critical periods. q
2014 Changes in IRS Form 1042-S Form 1042:
Reporting Foreign Vendors, (webinar), Dec. 11,
2:00pm-3:30pm (ET) For more information, go to
www.iofm.com/2014-changes-in-irs-form-1042-s-
and-form-1042-reporting-foreign-vendors-121114
AccountsPayableCertificationTrainingClass, Dec. 15
16,liveonlinetrainingclassandexaminationwith
Judy Bicking. For more information, go to http://
www.iofm.com/AP-Certification-121514,callMegan
Hall at 207-842-5651, or e-mail mhall@divcom.com.
2015 Order to Cash Summit, June 17-19, Chicago.
Presented by IOFM and The Accounts Receivable
Network (TARN). For more information, contact Liz
Fallon at 207-842-5557, or e-mail lfallon@divcom.
com.
IOFM’s Payments Summit, June 17-19, Fairmont
Chicago Millennium Park, Chicago. For more
information, call 207-842-5557 or e-mail lfallon@
divcom.com.
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PERIODICALSMANAGING ACCOUNTS PAYABLE
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Completely updated!
With new reporting requirements, the
Master Guide to Form 1099 Compliance is a
must-have for all AP professionals. The new
edition features many pages of updates,
analysis of the latest critical rule changes,
and numerous entirely new tax or updated
forms with instructions.
Big changes in this year’s guide include:
* The latest updates to the new FATCA requirements
* New IRS Forms W-9 and W-8 series
* New rules July 1, 2014, affect foreign vendor payments
and FATCA compliance
* Reporting Payments on the Form 1099-MISC
* Reporting Attorneys’ Fees and Legal
Damages Payments
* Middlemen, Agents, and Assignment of Income
* Fringe Benefits and Expense Reimbursements
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