[Webinar] A More Efficient Accounts Payable Function: Implement These Simple Best Practices

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Best practices are all in the details. Ignore those details at the expense of the profitability of the entire organization. It's that important.

In this webinar, Mary Schaeffer of AP Now and Tomorrow discusses:

- The true bottom line cost of ignoring best practices
- Changing best practices and the importance of identifying changes
- Best practices along the entire procure-to-pay process
- The role technology is playing in the best practice arena
- The future of best practices in accounts payable

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[Webinar] A More Efficient Accounts Payable Function: Implement These Simple Best Practices

  1. 1. A More Efficient Accounts Payable Function: Implement These Simple Best Practices Mary Schaeffer Publisher & Editorial Director AP Now Author Fraud in Accounts Payable: How to Prevent It + 15 other business books
  2. 2. Agenda  Changing best practices and the      2 importance of identifying these changes; The true bottom line cost of ignoring best practices; Best practices along the entire procure-to-pay process; The role technology is playing in the best practice arena; and The future of best practices in AP Closing Thoughts © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  3. 3. AP Best Practices: Overview 3 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  4. 4. Why Are Best Practices Changing So Much  Technology changing the playing field  Huge regulatory impact  States budget deficits  IRS (tax gap and more)  Corporate Reporting  Increasing fraudulent approaches aimed at accounts payable 4 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  5. 5. What Goes Wrong when AP Issues Are Ignored  Duplicate payments  http://ap-now.com/duplicatepaymentresources.html  Fraud increases – especially in troubled economic times  Dinged on S-Ox audit  Lost early payment discounts – probably your best investment alternative today  Low morale and turnover  Vendor relations become frayed as payments go out late 5 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  6. 6. Best Practices – NOT!  Void Pantographs  Claiming funds from missingmoney.com if your organization is not reporting unclaimed property  Thinking only paying from an original invoice will protect you from duplicate payments  Never paying from a fax  Relying on boarding pass as proof trip was taken  Putting forms for vendors on your website  (password protected Intranet still okay) 6 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  7. 7. True Cost of Poor Practices  A duplicate or erroneous payment of $1,000  Net profit margin 1% - sales of $100,000  Net profit margin 5% - sales of $20,000  Highlight Fraud potential  More work in AP 7 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  8. 8. Invoice Handling 8 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  9. 9. Invoice Handling: Problems  The invoice hot potato  The AP black hole  Invoices addressed to no one  Tardy approvals  Discrepant invoices  Fraudulent invoices  Second copies  Not establishing delivery points for invoices 9 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  10. 10. Invoice Handling: Best Practice  Standards:  Vendor name,  invoice number,  invoice number creation for invoices w/o invoice numbers No excuse for not doing this Best protection against duplicate payments 10 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  11. 11. Invoice Handling: Low-Tech Solutions  All sent to one location  Mail address  Email address  Fax number – dedicated for invoices only  Develop standard letters for common problems  No PO/Requisitioner: Return invoice  Invoice Amnesty Day (rarely used) 11 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  12. 12. Invoice Processing: Staff  Everyone processes the same – check and recheck  Detailed written instructions  All invoices entered – no waiting for more information  Train, cross train, educate, rotate 12 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  13. 13. Invoice Handling: Technology Solutions  E-Invoicing  Escalating approvals  Track disputes/resolutions – so there are no black hole invoices (or only a few) 13 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  14. 14. Payments 14 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  15. 15. Check Processing: Problems  Check fraud – still biggest type of fraud  Check costs  Check printing/signing/mailing  Rush checks  Returning checks to requisitioner  Uncashed checks 15 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  16. 16. Check Processing: Solutions  Wherever possible: Pay electronically  Never return checks to requisitioner if you can possibly help it  Limit Rush checks  Make sure strong controls are in place through out the check production and signing cycle  Good follow up routines for uncashed checks  Consider outsourcing check printing to your bank  Use positive pay payee name positive pay 16 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  17. 17. Newest check fraud problem  Fraudulent checks returned by positive pay are being represented as ACH debits – and making it through  Daily reconciliation of bank accounts, where no ACH blocks are put in place 17 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  18. 18. Electronic Payment Best Practices  Strong internal controls  Consistent with check practices  Make sure receivers and POs extinguished  ACH blocks – EVERYONE  ACH filters  Separate account, if feasible 18 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  19. 19. Electronic Payments  Separate PC used for online banking only  No email  No surfing Internet  Nothing else  Turned off when not in use 19 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  20. 20. Regulatory Issues 20 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  21. 21. Regulatory Issues 1099/1042-S, Unclaimed Property and Sales and Use Tax) 21 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  22. 22. Regulatory Issues  Don’t ignore – Feds and states all need more money and are targeting those not paying their fair share  Corporate reporting part of Healthcare Reform Act – likely to be repealed  Probably coming back at some point  Government agencies to start withholding 3% of payments made to independent contractors in 2012 22 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  23. 23. IRS Audits  For data collection  Focus:  Worker classification  Expense reimbursement  Exec comp 23 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  24. 24. When You’re Not Complying  If you are not currently handling correctly, and an auditor shows up, get professional help.  Watch out for the no-fee auditors – you’ll end up paying a lot more! 24 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  25. 25. Regulatory Best Practices  Get a W-9 from everyone one before first payment is made – no exceptions  Use TIN Matching Program as soon as you receive the W-9  Try and prevent someone outside AP telling you how to classify a worker – do it per the form (proper worker classification was an Obama initiative when he was a senator – this issue is likely to become front burner in the near future.)  Get regular updates on the rules – some go once a year 25 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  26. 26. Master Vendor File 26 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  27. 27. Sudden Master Vendor File Attention  Healthcare reform  W-9s from everyone  Where to start ….  The Master Vendor File 27 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  28. 28. Master Vendor File: Problems  Unlimited access  No naming standards  Vendors in several times  Vendors never de-activated  Segregation of duties issue  Coding standards don’t match invoice processing standards 28 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  29. 29. Master Vendor File: Solutions  Coding conventions to match invoice processing standards  Cleanse and de-activate regularly  Require W-9 before setting up vendor: avoid year end 1099 problems and B-Notices 29 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  30. 30. Master Vendor File: Controls and Fraud Prevention  Limits to who can add new vendors and update the MVF – appropriate segregation of duties  Review of all changes to the MVF by high level executive regularly 30 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  31. 31. Technology in AP 31 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  32. 32. Huge Impact  20 Years ago: hand me down PCs  10 Years ago: fighting for Internet access  Today: heading into a paperless world  Tomorrow: completely automated invoice processing  Diminished exception processing 32 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  33. 33. New Technology in AP  Tablets  Smartphones  Boarding passes  What else??? 33 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  34. 34. What This Means for You  Almost no manual invoice processing  Exception processing will decrease due to improved invoice accuracy  AP staff will focus on more value add work  Expect an increase in:  Regulatory issues  Fraud prevention  Integration with other areas 34 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  35. 35. AP: Yesterday vs. Tomorrow 35 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  36. 36. #5 Suppress Credits  Vendor statements with credits suppressed  Solution:  1) Use best practices so credits not created  2) Request statements and follow up on a timely basis  3) Hire an audit firm 36 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  37. 37. Future of Best Practices in AP 37 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  38. 38. AP Best Practices: Future  Changing  Continue to have their place  Strong internal controls  Efficient process  Regulatory compliance  Fraud resistance  Your Challenge:  Keeping up 38 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  39. 39. Closing Thoughts  AP Best Practices continually changing  Stay on top of the issue  Detailed policy, strong internal controls, appropriate segregation of duties and automation will you run an efficient and effective accounts payable function. 39 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  40. 40. Thank you/Questions Questions always welcome. To share your thoughts and insights Mary Schaeffer  marys@ap-now.com  302 836 0540  Sign up for our free weekly ezine at www.ap-now.com/ezinesignup.html 40 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  41. 41. About Mary Schaeffer   She also handles most of the firms consulting assignments (focused primarily on AP issues) often working with other well-regarded professionals. Her blog, at http://apnow.com/blog/ is read by over 15,000 professionals each month.  Ms. Schaeffer is the author of over 15 business books including The CFO and Controllers’ Guide to Accounts Payable and the recently published Fraud in Accounts Payable: How to Prevent It. John Wiley & Sons is the publisher of most of her books.  She also is a regular contributor to the AICPA’s Corporate Finance Insider.  Ms. Schaeffer has a BS in Math from York College (CUNY) and a MBA in Finance from New York University.  41 Mary Schaeffer is a nationally recognized accounts payable expert. Following a career in finance she turned to writing and consulting. For the last 15 years she has been researching and writing newsletters for the accounts payable profession. Currently she is the Editorial Director & Publisher of Accounts Payable Now & Tomorrow, (www.apnow.com) a fee-based newsletter published by CRYSTALLUS, Inc. She can be reached at marys@ap-now.com © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
  42. 42. Let Go and Gain Control Visit www.anybill.com/ today! 42 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer

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