[Webinar] Implement Simple Best Practices with AP Now & Tomorrow

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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

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Mary Schaeffer, Editor of AP Now and Tomorrow presents - A More Efficient Accounts Payable Function: Implement These Simple Best Practices. 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 session, Mary Schaeffer will discuss: The true bottom line cost of ignoring best practices; Changing best practices and the importance of identifying these changes; 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 accounts payable

Transcript of [Webinar] Implement Simple Best Practices with AP Now & Tomorrow

Page 1: [Webinar] Implement Simple Best Practices with AP Now & Tomorrow

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

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Agenda

Changing best practices and the 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

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AP Best Practices: Overview

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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

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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

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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)

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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

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Invoice Handling

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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

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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

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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)

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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

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Invoice Handling: Technology Solutions

E-Invoicing

Escalating approvals

Track disputes/resolutions – so there are no black hole

invoices (or only a few)

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Payments

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Check Processing: Problems

Check fraud – still biggest type of fraud

Check costs

Check printing/signing/mailing

Rush checks

Returning checks to requisitioner

Uncashed checks

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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

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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

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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

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Electronic Payments

Separate PC used for online banking only

No email

No surfing Internet

Nothing else

Turned off when not in use

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Regulatory Issues

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Regulatory Issues

1099/1042-S,

Unclaimed Property and

Sales and Use Tax)

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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

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IRS Audits

For data collection

Focus:

Worker classification

Expense reimbursement

Exec comp

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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!

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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

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Master Vendor File

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Sudden Master Vendor File Attention

Healthcare reform

W-9s from everyone

Where to start …. The Master Vendor File

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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

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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

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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

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Technology in AP

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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

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New Technology in AP

Tablets Smartphones

Boarding passes What else???

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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

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AP: Yesterday vs. Tomorrow

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#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

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Future of Best Practices in AP

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AP Best Practices: Future

Changing

Continue to have their place

Strong internal controls

Efficient process

Regulatory compliance

Fraud resistance

Your Challenge:

Keeping up

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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.

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Thank you/Questions

Questions always welcome.

To share your thoughts and insights

Mary Schaeffer

[email protected]

302 836 0540

Sign up for our free weekly ezine at

www.ap-now.com/ezinesignup.html

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About Mary Schaeffer

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.ap-now.com) a fee-based newsletter published by CRYSTALLUS, Inc.

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://ap-now.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.

She can be reached at [email protected]

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Let Go and Gain Control

Visit www.anybill.com/ today!

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