AP Premium Checklists

8/12/2019 AP Premium Checklists

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Pam Miller: Editor

RD Whitney: Executive Director

David Beck: Group Publisher

Monique Nijhout:Desktop Editor

Chris Horner: Copy Chief

2013 IOFM, Diversified Business Communications. No part of this

publication may be reproduced, stored in a retrieval system or transmitted

by any means, electronic or mechanical, without prior written permission

of the Institute of Finance & Management.


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Why We Created This Special Report

Responsibility for running an accounts payable operation can be a daunt-

ing task.

There are a multitude of jobs that require your attention on a daily, weekly,

and monthly basis. Keeping up with the best known methods of dealing

with all of these jobs is a function that IOFMs AP Intelligence Team has

been performing for years. We have been providing AP professionals like

you AP best practices in the form of our reports, newsletters, webinars,

and conferences.

But sometimes all that information, as good and as valuable as it is, is hard

to digest on an ongoing basis. So what weve done with this publication iscondensed the best of the best practices into a series of checklists of ideas

and recommendations that you can scan and put into practice immediately.

The content in this handy special report was distilled from some of our

lengthier publications.

This report is designed to save you valuable time. It is organized in sections

that represent the foremost activities in an accounts payable operation:

invoice processing, payment processing, AP automation, master vendor file,T&E, p-cards, regulatory & tax issues, internal control, cash management,

managing operations, organizational strategy, customer relations, and staff

management.

A final reminder: should you need more detailed information and guidance

on any of the subject matter covered in these checklists, please remember

to visit our Accounts Payable Exchange website at ap.iofm.com.

IOFM AP Intelligence Team


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Checklist of Best Practices for Invoice Processing

Invoice Receipt

Have all invoices sent to AP first. Insist the invoices be addressed to AP.

Inform the mailroom.

Add a generic e-mail address forinvoices.

Insist that vendors send invoices in oneformat only.

Insist on buyers name or PO# on

the invoice. Require the vendors include their vendor

number on invoice.

Date and time stamp invoices uponreceipt.

Set up a tracking system.

Dont forget about internally generatedinvoices.

Orphan Invoices Examine whats billed.

Keep a list of what each buyeris responsible for.

Send it to purchasing.

Contact the vendor.

Return invoice to vendor.

Work with vendors.

Keep a red file. Use a suspense account.

Matching Match it three ways.

Match it two ways.

Match it four ways.

Match it four-plus ways.

Dont match small-dollar invoices.

Handling Exceptions onPO-Based Invoices Insist on complete POs.

Maintain cheat sheets.

Take the better price.

Contact purchasing.

Keep a daily file. Set tolerances.

Contact receiving.

Contact the vendor.

Issue an adjustment.

Pay off the PO.

Flip the PO.

Implement e-invoicing.

Track problem vendors.

Invoice AdjustmentsShort-Paying or Over-Paying Invoices Dont just adjust.

Use a form.

Give the vendor the details.

Keep good records.

Dont ignore e-payments. Know the deduction threshold.

Internally Generated Invoices Create forms.

Move past paper forms.

Set up numbering systems.

Provide clear guidance.

Create a process. Insist on solid backup.

Recurring Invoices Use your systems recurring invoice

process.

Consider creating your own recurringinvoice process.

Set up a review process.

Centralize the process.

Outsource to a third party.

Invoice Approvals Eliminate approvals for PO invoices.

Get a list of approvers.


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Time-Saving Checklists of AP Best Practices

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Prepare signature cards.

Set up a process for keeping approverdata up to date.

Escalate approvals.

Use a log. Develop a process for invoices already in

the pipeline.

Eliminate unnecessary approvals.

Keep a list of people in otherdepartments who do AP-related work

Small-Dollar Invoices

Analyze spending. Use purchasing cards.

Move to electronic.

Request summary billing.

Consolidate payments.

Use Excel.

Pay via expense reports.

Dust off petty cash.

Coding and Entering Data Standardize.

Keep it simple.

Set policy for invoice numbers.

Set policy for invoices without invoicenumbers.

Create a style guide and use it.

Use pick lists. Avoid using the mouseuse hot keys

instead.

Link systems.

Use double data entry.

Review information entered on a dailybasis.

Make the review meaningful.

Name vendors using a convention. Create code cheat sheets.

Monitor spreadsheets.

Question odd coding.

Use a suspense account.

Consider e-invoicing.

Invoices Without Invoice Numbers Use a dummy number.

Create a style guide and use it.

Pressure the vendor.

Vendor Statements Use for small-dollar invoices.

Ask for periodic statements.

Ask for a complete aged statement.

Prioritize the statements.

Use a cutoff for research.

Reconcile the statements.

Develop a process. Do a spot check.

Look for orphaned credits.

Work credit balances.

Watch out for masqueraders.

Consider working with a third party


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Checklist of Best Practices for Payment Processing

Smart Payment Strategies

Know what it costs. Consolidate payments.

Avoid pay alones.

Migrate to less expensive methods ofpayment.

Check Printing

Communicate the schedule.

Use laser checks.

Prepare a log.

Limit the players.

Secure the signature device.

Secure the printer and any checkstuffing or folding equipment that isused.

Account for damaged checks andreprints.

Regularly review frequency.

Segregate duties.

Review system security regularly.

Create a process for check signing and/orsecond signature.

Create a process for remittancedocumentation.

Mail checks the same day they areprinted.

Test check formatting,

Have a backup plan.

Investigate outsourcing.

Find alternatives to paper checks.

Check Signing

Have board authorize signers.

Dont use top-level signers.

Keep the list close to the vest.

Go digital.

Use a two-signature policy.

Dont advertise the two-signature policy.

Spot-check manual signatures.

Establish a process for signers to ensure

this step adds value to the process. Segregate duties.

Keep track of where the checks are.

Storing Check Stock

Lock it up.

Limit access.

Keep stock far from the printer.

Control the reorder process.

Be wary of off-site warehousing of checkstock.

Store check stock properly.

Distributing Checks

Set policy as mail all checks.

Keep a log of checks not mailed.

Be sure address matches vendor file.

Secure the finished checks.

Enlist mailroom help to maintainsecurity.

Pick the right envelope.

Hitch a ride.

Keep an eye out for unnecessary courierexpenses.

Rush Checks Say No to all.

Require extra approvals.

Require all rush checks go through APmanager.

Allow only for emergencies.

Charge for the service.

Explore alternatives.

Use rush check requests as anopportunity to educate.

Do your homework first.

Keep a separate file.

Issue a report.

Review check run frequency.


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Petty Cash

Set limits.

Have one custodian.

Guard against theft.

Segregate the fund.

Use as a last resort.

Get backup first.

Inspect backup before replenishing.

Inspect approvals.

Replenish exactly the amount that wasspent.

Cancel vouchers.

Do a periodic review.

Reconcile regularly.

Set up the petty cash custodian as avendor in the AP system.

Make check payable to custodian.

Firmly enforce usage rules.

Electronic Payments

Identify likely candidates. Set up an enrollment site.

Use a form.

Sell it.

Maintain banking information securely.

Tie it to your main system.

Allow for remittance data.

Limit payment methods assigned to

vendors. Establish testing procedures.

Establish a process for handling failedpayments.

Implement e-payment controls.

Consider using separate bank accountsfor electronic payments.

Renegotiate terms.

Limit wire payments to one department. Record wire payments in accounting

system as soon as possible.

Identifying Duplicate Payments

Insist that vendors send invoices in oneformat only.

Consider adding another PO box for

invoice receipt. Establish rules around paying from

copies.

Do not ignore your systems duplicatechecking system.

Require your vendors to include theirvendor number from your system on allinvoices.

Maintain a clean vendor master file.

Account for multiple remit addresses.

Deactivate or purge expired vendorsfrom the system regularly.

Create a style guide for entering invoicenumbers and use it.

Create forms for internally generatedinvoices.

Decrease the number of check requests.

Be careful when using spreadsheetuploads.

Resolve exceptions promptly.

Do not pay statements.

Flag vendors who are paid by statementor auto upload.

Flag vendors who are always paid byp-card or wire.

Review data keyed into the system.

Run duplicate reports.

Do not stretch payments.

Work to eliminate the use of blanketpurchase orders.

Improve processes around back orders.

Be careful when implementingtechnology.

Review statements periodically.

Do a recovery audit.

Centralize AP.


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Preventing Payment Fraud

Use positive pay.

Use payee positive pay.

Add check stock security features.

Move to electronic payments.

Use ACH debit blocks and filters.

Monitor accounts daily.

Set up separate accounts.

Avoid providing payment instructions byphone or fax.

Use a dedicated PC to communicateelectronic payments.

Insist upon the best security tools andkeep them up to date.

Review and strengthen user ID andpassword controls.

Consider using a UPIC (universalpayment ID code).

Use surprise audits.

Set up a tip hotline.

Consider outsourcing.


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Checklist of Best Practices for Accounts Payable Automation

Overall Planning

Know your invoice cost structure. Benchmark your operations.

Analyze your invoice process.

Flowchart the existing process.

Identify major pain points.

Start an ongoing discussion.

Examine existing tools.

Determine requirements.

Expand the horizon.

Find the right technology match.

Right-size your solution.

Figure project costs and benefits.

Recruit a champion or sponsor.

Predict future obstacles.

Partner with IT.

Formulate a project plan.

Acquisition Options Build it yourself.

Buy it.

Rent it.

Outsource it.

Offshore it (with great caution).

ERPEnterprise Resource PlanningSystems Compare ERP processes to AP processes.

Avoid modifications.

Scope unavoidable modificationscarefully.

Implement gradually.

Review available reports.

Imaging

Evaluate the document types. Determine where scanning will be done.

Test scanners.

Determine image quality needs.

Establish a quality control process.

Develop document preparation process.

Determine document access needs.

Develop indexing requirements.

Store in a searchable format.

Allow for workflow.

Dispose of the paper.

Data Capture Sort out the acronyms.

Understand minimum scan qualityrequirements.

Determine what data should becaptured.

Explore data integration.

Find out the accuracy rate.

Question the method.

Understand the correction process.

Electronic Invoicing

Know your options. Segment vendors.

Get software vendors help withsuppliers.

Mandate use of e-invoicing.

Help vendors sell it.

Offer to offset costs.

Set realistic goals.

Obey the law of diminishing returns.

Offer a vendor portal.


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Workflow Assess data availability.

Think of your processes in terms ofrules.

Look beyond the buck. Look for key features.

Examine existing systems.

Consider a stand-alone solution.

Piggyback on a larger system.

Use e-mail.

Developing a Business Case

Make an initial pitch. Sell, but dont oversell.

Figure the costs.

Calculate the hard-dollar benefits.

Estimate the intangible benefits.

Learn the process.

Gather your team.

Work with your champion or sponsor.

Prepare and evaluate RFP.

Establish a method to monitor thesavings.

Selecting Solution Providers Investigate reputation.

Go beyond reputation.

Main business or sideline?

Question depth of vendors development& support teams.

Explore flexibility.

Understand the providersimplementation plan.

Assess personal compatibility.

Investigate support after the sale andimplementation.

Look into vendor recruitment. Check references.

Take advantage of site visits.

Conducting Provider Demos Prepare an agenda.

Write a script.

Consider a dry run.

Dont go into overtime. Use a scoring system.

Planning and Implementation Create a time line.

Map out the project.

Coordinate your plan with providersimplementation plan.

Create a communication plan. Fix the existing process.

Get started on modifications.

Test and test again.

Create documentation and trainingmaterials.

Train, train, train.

Manage change.


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Checklist of Best Practices for the Master Vendor File

Access and Control

Segregate duties. Restrict access.

Enforce segregation of duties and accesscontrol via the system.

Control access to information, too.

Raise awareness.

Establish and enforce an approval process.

Keep control in AP.

Adding New Vendors Require a W-9.

Make it easy for vendors to supply theirW-9.

Determine necessary data.

Avoid appropriating fields.

Take advantage of system classification

and flagging. Use a vendor add and change form.

Plan ahead when developing the form.

Determine the life cycle of the form.

Cross-check existing file.

Validate the vendors info.

Evaluating contact information.

Verify PO boxes.

Check all new vendors against deniedparty lists.

Manage state reporting laws.

Data Entry Formats Avoid punctuation.

Determine use of upper and lower case.

Use dropdown boxes.

Take a stance on initials.

Drop all titles.

Deal with The and A.

Develop a policy for And and &.

Use name of taxing authority.

Be wary of governmental entities.

Be judicious with the use of the second

line.

Manage multiple remits. Establish rules for entering addresses.

Establish rules for other fields.

Make policy comprehensive.

Managing the Vendor File Provide a vendor portal.

Exclude employees.

Carve out one-time vendors. Or automatically set expiration date for

one-time vendors.

Develop rules for establishing apermanent vendor.

Increase the use of p-cards.

Validate addresses.

Work all returned mail.

Set policy for obsolete addresses and sites. Involve other departments in vendor

master file maintenance.

Establish vendor merging guidelines.

Purge inactive vendors.

Cleaning Up the Master Vendor File Hunt potential duplicates.

Use Excel. Sort on TIN.

Sort on address.

Sort on vendor name.

Name or address search query.

TIN query.

Consider starting from scratch.

Management Reporting Changes to the file report.

New vendor additions report.

Inactive vendor report.

No-TIN report.

Dont limit access to these reports.

Spend management.


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Develop a missing receipt form.

Use a barcode.

Scan the receipts.

Use per diems.

Reimbursing Employees Push direct deposit.

Use an e-mail remittance forreimbursement via ACH.

Piggyback on payroll.

Decrease check reimbursementfrequency.

Mail all paper checks.

T&E Automation Look for an end-to-end system.

Provide enough training.

Build in business rules.

Pre-populate reports.

Allow for electronic submission.

Use workflow.

Image receipts.

Automate reimbursement.

Link to the general ledger.

Generate post-trip exception and lost-

savings reports. Generate trend reports.

Consider outsourcing.

Internal Control Use surprise audits.

Dont audit every report.

Pick your targets.

Establish guidelines for processing andauditing.

Establish guidelines for auditingreceipts.

Allow and encourage AP staffers toquestion expense reports and receipts.

Supplement auditing with reporting.

Terminate employees for fraud.


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Checklist of Best Practices for Purchasing Cards

Program Design

Be involved from the get-go. Determine executive attitudes to card

programs.

Obtain an executive sponsor.

Define the program.

Guesstimate the potential size of yourprogram.

Pick the right issuer.

Pursue competitive rebates. Design the program and the card to

minimize accidental errors and misuse.

Make it easy to use.

Take advantage of online tools providedby the card issuer.

Integrate p-card information into youraccounting system.

Designate a p-card administrator. Develop a thorough training plan.

Do a pilot.

Develop a marketing plan.

Roll out in stages.

Have a joint vendor recruitment plan.

Policies and Procedures Manual

Get it out there. Include the essentials.

Make changes annually.

Require initial and follow up training.

Enforce policies consistently.

Get backing from the top.

Increasing Usage

Make it accessible. Choose the right cardholders.

Use variable spending limits.

Use MCC blocking judiciously.

Look in your vendor file.

Flag p-card vendors in the mastervendor file.

Modify your new vendor welcome

packet. Explore new spend categories.

Integrate the p-card into orderingprocesses.

Track performance.

Consider a zero limit or virtual numbersystem.

Win over big-ticket vendors.

Reward for growth. Manage card refusers/implement a fee.

Put cards in AP.

Put cards in fixed assets.

Consider using a one card.

Go global.

Report on missed opportunities.

Include p-card transactions in AP total

spend analysis.

Rebates Speak up.

Share the rebate.

Increase dollar volume.

Make payments faster.

Understand and manage other hurdles.

Track individual cards. Review big-ticket purchases.

Do a rebate report.

Regulatory Compliance:Sales and Use Tax Take a sample.

Use a model.

Put the onus on cardholders. Consider card issuers tax solution.

Look at the receipts.


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Value Added Tax (VAT) Think beyond T&E.

Modify T&E receipt requirements.

Quantify your VAT exposure.

Watch your filing limits.

Watch the deadlines.

Send all at once.

Send original receipts.

Hurry up and wait.

Convert the payment.

Hire a specialist.

Outsource it.

Unclaimed Property (Escheatment) Come clean.

Develop policies and procedures.

Establish ownership of unclaimedproperty compliance.

Ensure bank accounts are reconciled in atimely manner.

Require complete addresses in mastervendor file.

Research all payments returned asundeliverable.

Establish a general ledger account.

Reduce the number of uncashed checks.

Investigate stale-dated checks.

Manage stops, voids, and re-issues.

Switch to electronic payments orpurchasing cards.

Review the process for intercompanypayments.

Review the process for recurringpayments.

Do your due diligence.

Avoid red flags in reports.

Maintain proper records anddocumentation.

Watch out for SOX interplay.

Claim funds owed to your organization.

OFAC and Other Federal LawsAffecting AP Compare your master vendor file to the

OFAC list. Make checking the OFAC list part of your

vendor set up process.

Sign up for change alerts.

Move more payments to purchasingcards.

Comply with privacy laws.

Comply with TIPRA.

Review employee expense reports.

Include these requirements in yourpolicies and procedures manual.

Include these requirements in training ofAP personnel.

Record Retention and Destruction Have an overall policy.

Use the Magic 7 rule.

Go electronic.

Throw out the paper.

Comply with Rule 26.


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Checklist of Best Practices for Internal Control

Overall Controls

Write clear policies. Create an AP desk manual.

Use cheat sheets.

Segregate duties.

Ensure accounting software mimicssegregation of duties setup.

Periodically review system access.

Require system security.

Install physical safeguards. Do independent checks.

Inquire about IT controls.

Monitor with KPIs.

Monitor AP clearing accounts.

Outsource some functions.

Invoice Handling Input immediately.

Avoid duplicates.

Take the credits.

Stamp and deposit incoming checkspromptly.

Close out POs.

Monitor invoices on hold.

Be on the lookout for orphans.

Pay attention to intercompany transfers.

Watch the coding.

Keep code sheets up to date.

Payments Beef up approval process.

Check signatures.

Monitor approval levels.

Use e-mail as a quasi-workflow system

for approvals. Use built-in workflow rules.

Avoid the T&E trap.

Manage the discount process.

Protect check stock and checks.

Move to electronic payments.

Ensure bank accounts are reconciledpromptly.

Establish a process for stops, voids, andre-issues.

Vendor Data Control access.

Set up an approval scheme for newvendors.

Search the file carefully.

Check new vendors against the employeefile.

Perform due diligence on the vendor.

Use a standard data entry format.

Do regular maintenance.

Run key reports.

Employee Reimbursements Develop and maintain a T&E policies and

procedures manual.

Establish policy that most senior employeein attendance pays authorized T&Eexpenses.

Mail all T&E reimbursement checks.

Move to direct deposit for expensereimbursements.

Enforce deadlines.

Invest in T&E automation software.

Train the approvers. Empower the reviewer.

Do a spot audit.

Dont play favorites.

Company Credit Cards Develop and maintain a policies and

procedures manual for cardholders.

Require a signed application and

agreement. Distinguish fraud from misuse.

Use controls based on limits.

Use controls based on merchantclassification.

Beef up internal auditing.

Institute more user and approver training.


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Checklist of Best Practices for Customer Relations

Overall Success Tactics

Train in customer service techniques. Set service level expectations.

Listen carefully.

Take responsibility if its yours.

Take action.

Keep your promises.

Move on.

Ask customers what they need.

Share with the staff.

Dealing With Vendors Use a welcome letter and information

packet.

Create FAQs and post them to the web.

Track problem vendors.

Have a plan for problem vendors.

Develop a playbook or a wiki. Establish a staff position.

Set up a generic e-mail inquiry address.

Use an IWR tool or vendor portal.

Working With Internal Customers

Communicate. Put it on the Web.

Assign a devoted staffer.

Maintain an open door policy.

Walk in their shoes.

Find the root causes.

Share the positive.

Celebrate together.

Partnering With Purchasing Foster a collaborative environment.

Explain the why.

Insist on accountability.

Dont handle dirty invoices.

Track the problems.

Establish a system.

Work with purchasing on delays.

Share information.

Join forces on a P2P system.


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Firing Ensure policy has been followed.

Do it face to face.

Act early in the week.

Be brief and to the point.

Take security precautions.

Have helpful information ready.

Communicate with the rest of the staff.


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