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Accounts Payable Productivity:
It's All in the Details
Mary Schaeffer
Publisher & Editorial Director AP Now
Author The Controllers’ & CFOs’ Guide to
Accounts Payable + 15 other business books
Agenda
Introduction
The Big Twelve
Closing Thoughts
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 2
Introduction
Accounts payable: not a big picture issue
Productivity in the details
Hidden costs – but all with a bottom line impact
Get rid of some of these … and spend more time on value
add tasks!
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 3
The Big Twelve
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 4
#1 Don’t Double Down: Correct
Handling of Credit Memos
The problem: processors don’t recognize credit memos
The think they are an invoice
“Pay” the credit memo
Now the vendor owes you twice as much
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 5
More on Credit Memos
The Escheat Issue
The Miscellaneous Income Issue
The Disappearing Credit Issue
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 6
The Credit Memo Solution
Train – especially new processors
Retrain - periodically
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 7
Prospecting for Gold: Finding All
Your Open Credits
Not as easy as you might think
Sometimes used for other charges
Sometimes companies supress open credits on statements
Are they sending credit memos?
If so, where?
Regular statement reviews –
Where are they sending them
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 8
Finding All Your Credits
Regularly request statements
All activity
All vendors
Unknown credits – often due to volume purchases from different locations
Review and reclaim – quickly
No time/resources – hire a third party to do it for you and LEARN from what they find
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 9
#3 Keeping Current: Vendor
Contact information
What information do you have?
The TIN Solicitation/Corporate Reporting debacle
The new ACH fraud problem
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 10
Vendor Contact Data Best
Practices
Make it part of the vendor set up
Update at least annually
Do it yourself
Outsource
Automate as much as possible
Vendor self service portals – and impact on ACH fraud
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 11
#4 The Overzealous Vendor:
Duplicate Invoices
New Problem: Make sure they got the invoice
Email it
Then mail it
About 75% have
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 12
Solutions to the Sending Invoices
Twice Problem
Identify these
vendors
Ask them to stop
Create an ACT
(Always Check
Thoroughly) List
Beef up duplicate
payment checking
routines © 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 13
#5 Unnecessary Expenses: The
Hidden Cost of Paper Checks
Expensive – anywhere from $2 - $10 or more
Prone to errors
Manual work – non value add
The Unclaimed Property Issue
The check lost in the mail
headache
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 14
Alternative to Paper Checks
P-card
ACH
Pay from statements
Limited controlled circumstances
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 15
#6 The Payment Emergency: Get
the Backup for Rush Payments
Documentation often scanty or non-existent
Three way match often not used
Looser controls
Return to requisitioner issue
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 16
Sweeping up after the Elephant: Make
Sure The Rush Doesn’t Create a Problem
Ask for backup
Follow up after the fact and get backup
Identify the associated PO and receiver and cancel them
Keep a file of rush payments and check 30 -60 days later to
make sure the original invoice didn’t show up and get paid
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 17
#7 The Sales Tax Dilemma: When
They Don’t Charge
Resist the urge to ignore the issue
At the end of the day, the buyer is responsible for sales and
use tax
Accrue use tax if appropriate – but before you do
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 18
The Best Practice Solution: When
They Didn’t Charge Sales Tax
Ask why
Maybe tax wasn’t applicable
Maybe the forgot and they’ll adjust
Maybe they don’t have nexus
If it was included, ask for a revised invoice showing the tax
separated out
If they forgot, ask for a new invoice showing separate amount
Don’t accept an invoice for the tax
You’ll forget when the auditors show up
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 19
Worst Practice: The Sales Tax Issue
Just add the tax to the invoice
It will get treated like a credit
You’ll have issues when you are audited as you
weren’t paying use tax
The one place it won’t end up: at the state
Don’t Do It
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 20
#8 The Internal Control Issue:
Returning Checks to Requisitioners
Inefficient for AP
Checks sometimes lost
Occasionally fraud
Can lead to duplicate payments
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 21
Handling Requests for Returned
Checks
Ask what the business reason is
Don’t make it easy
Create a form, requiring executive approval
Require electronic payments for rush items
Get your auditors involved
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 22
#9 The Receipt Conundrum: What
to Do with All Those T&E Receipts
Some employees play games with
receipts
Now almost 60% require all
receipts for expense
reimbursement
Over one-quarter are considering
now asking for detailed meal
receipts
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 23
T&E Receipts Best Practice:
Require All Receipts be Submitted
Routinely question
Spot check 5-10% randomly
All known envelope pushers
All C-level execs (assuming management
dictates this)
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 24
#10 The Silent Zappers:
Productivity Killers
Not having invoices go to AP first
Petty cash boxes
Not returning invoices addressed inappropriately
Not having strong coding standards for invoices and master vendor file
Invoices addressed to no one
Not using direct deposit for T&E reimbursement
for everyone
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 25
#11 Keeping Score: Tracking and
Resolving Discrepant Invoices
Discrepancies – Yuk
Tend to drag on
Without monitoring
Can go on for 30 days or longer
Second invoice sent
Sometimes paid
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 26
Discrepant Invoices: Avoiding
the Endless Life Problem
Track so no one forgets
Regular follow up
Make it a policy to resolve before the due date
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 27
#12 Where’s the Invoice: The
Visibility Factor
The he said-she said problem with
purchasing
The floating invoice problem
The “Where’s My Money” Calls
The “Did You Get My Invoice” Calls
The “When Are You Going to Pay Me” Calls
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 28
Practices to Ensure Complete
Invoice Visibility
Centralized receipt of invoices
Ideally in AP
The polite return of invoices addressed to no one
E-invoicing
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 29
How You Can Get Started
Talk to peers
Vendor demos
Ask Anybill
Email: [email protected]
Call: 877-426-9245
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 30
Thank you/Questions
Questions always welcome.
To share your thoughts and insights
Mary Schaeffer
302 836 0540
Sign up for our free weekly ezine at
www.ap-now.com/ezinesignup.html
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 31
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]
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 32
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 33