Accounts Payable Tip of the Week!     

Drop by periodically for tips that will help you run a more efficient and effective AP department!

Passed over for a promotion – again! If you’ve been passed over for a promotion you think you deserved, consider it an opportunity to learn. Ask your in a non-confrontational manner senior management why you were passed. Be open to what they have to say and listen objectively. You may not like what you hear, but it is their perception that you have to deal with and change. It is quite possible they didn’t realize you wanted the promotion and the simple act of asking will put you on their radar next time.

Assuming that is not the case, don’t try to rationalize or defend yourself, bite your tongue and listen. Listen to what they have to say and incorporate their suggestions into your work process. It’s not easy but it can make all the difference.

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 New Scam. There’s a new scam making the rounds and our readers should watch for it. It comes in the form of an email that has a subject line saying “ACH Payment Canceled” or some similar topic. There is an attachment to the message that purports to have the details. Do not download the attachment. It is malware and will unleash software that will help crooks take over your bank account. If you suspect such a message might be legitimate, call you bank. This is just one more reason why a separate PC should be used for all banking activity – but not reading email or surfing the Internet. If you were to open this email on a computer where no banking activity took place, the information gathered by the malware would be useless to the crooks!

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

* Don’t let your check fraud vigilance down. Attempted check fraud at the nation’s banks has more than doubled in the past three years reaching an estimated $12.2 billion in 2006, according to the latest American Bankers Association Deposit Account Fraud Survey Report. While attempted check fraud continued to rise, the increase in actual dollars lost was less dramatic—$969 million compared to $677 million in 2003, the last year of ABA’s survey. Banks’ check fraud prevention systems were credited with keeping actual losses significantly lower than the attempted fraud numbers. Attempted fraud totaled $5.5 billion in 2003. As you can see, the losses, while significant, are only a small fraction of the actual attempts. What’s your best defense? Without a doubt, positive pay remains one of the best tools any organization can use to defend itself against check fraud. And, if you haven’t looked into the newest version, payee name positive pay, it might be a good time to do so. This version matches not only the dollar amount with the check number, it also matches the payee name. This tip comes from our short, Tips, Tactics and Strategies section of our Accounts Payable Now & Tomorrow newsletter.

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* Improve Departmental Productivity: Tip 3. Have all invoices sent to accounts payable first. There are two benefits from this approach. First, you will be much better able to earn early payment discounts if they apply. Second, your processors will be aware of all invoices received at the company as well as where the invoice is, i.e. out for approval, scheduled for payment etc. They will be able to answer vendor inquiries much faster and the number of requests for emergency checks should plunge as approvers learn they can no longer forget to approve invoices and then point the finger at accounts payable.

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

* Improve Departmental Productivity: Tip #2. Use the IRS TIN Matching Program to verify the name/TIN match on all W-9s received. This assumes, of course, that you are already getting a W-9 from every new vendor before making the first payment to them. Companies who take this step report getting only a few B-notices each year compared with hundreds in the past. You can read the whole article this was excerpted from (and eight others) for only $19.95. Purchase the issue by clicking here and selecting January.

* Improve Departmental Productivity. Tip #1. Use strict coding standards for both invoices and master vendor file. With all processors using the same standards, the number of duplicate entries will nosedive. In fact, a number of duplicate audit firms confirm that organizations making this one simple change have virtually no duplicate payments. Now let me warn you, if you’re not currently using a coding standard it will take a little bit of time to get your processors accustomed to it. And in the first few months extra care will need to be taken to ensure you don’t increase the number of duplicates as your processors adjust to the new process.

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

* Internal Controls and Paper Checks. Once the checks are signed and ready to be mailed they should be held in accounts payable until the last possible moment. They should only be taken to the mailroom at the end of the day right before the mail is being taken to the post office. Otherwise there is the potential for the wrong person to get their hands on your checks. Temporary employees as well as delivery personnel from all sorts of companies providing services to your company pass through your mailroom. While most are excruciatingly honest, a few are not—and you have no way of knowing who’s who.

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

* Complete POs. While accounts payable may realize the importance of filling out purchase orders completely, and purchasing will probably concur, the odds of getting a complete PO slip drastically if the purchasing staff is overworked and there is no corporate policy. When trying to cram ten hours work into an eight-hour day, the details on a PO is one way to cut corners and get back a few minutes. So it’s an uphill battle for accounts payable. This only causes problems when special terms are negotiated and purchasing forgets to put them on the PO.

If you can’t get purchasing to agree to complete every PO, strike a compromise that will get you the most benefit. See if they will agree to fill them out completely during the month of December. Why December? Because for many organizations, December is their fiscal year end and the time of the year when the sales force is under the most pressure to bring in the big orders. Some will offer special extended payment terms during this time frame. They do this for two reasons. First, it gets the customer (that’s your organization) to buy more thus increasing their sales numbers and their commissions. The second reason is slightly more cynical. The salespeople making these offers know that many of their customers will forget to tell accounts payable and they really won’t have to deliver on the special terms.

This is a dirty little secret in certain industries, where some companies fall into this trap every single year. If your company has been snookered in the past, put an end to it this year. Make the December deal with purchasing—and don’t forget to adjust for the extended payment terms in January.

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

* A Return to Requisitioner Form. As most readers of this newsletter appreciate, returning checks to requisitioners is not a good practice, although occasionally it may be necessary. But how in the world is the already overworked accounts payable department supposed to figure out which requests are not legitimate and which, for some reason having absolutely nothing to do with an efficient payment process, are? Develop a form that must accompany every return request. It should have the appropriate information about which check is being returned to which requisitioner. Additionally, it should contain a box for the requisitioner to explain why the check must be returned and a spot for an approval by a senior-level executive. Of course, you must have management backing for this plan and the senior-level executive approving these requests should not automatically sign any request placed in front of them.

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

Accounts Payable Best Practices CD.

* Who approves new vendors in your shop?

In some organizations with extremely lax procedures related to their master vendor file, anyone can add a vendor to the file. In these cases, the accounts payable staff often adds a vendor when an invoice arrives approved for payment but there is no corresponding vendor in the master vendor file. This can be disastrous if a fraudulent invoice triggers the entering of the vendor into your master vendor file. What this effectively does is legitimize a vendor who never delivered goods to you in the first place.

While it seems unlikely that this would happen, it in fact does. When small-dollar invoices arrive, they are occasionally approved because no one takes the time to investigate, figuring the $25 or so on the invoice doesn’t warrant a vigorous inspection. Do you have a procedure in place to set up and approve new vendors or are they just added whenever purchasing buys from a new supplier?  Not only do fraudulent vendors slip through the cracks but sometimes vendors with less than stellar financial ratings do as well.

Policies should be established to perform at least a cursory review prior to approving new vendors. This can be as simple as accounts payable verifying that the vendor exists to a much more complex analysis of the vendor. This is a project that accounts payable and purchasing can work on together.

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

* Reduce 1099 issuance nightmares and B-Notices

Use the IRS TIN Matching Program to verify the name/TIN match on all W-9s received. This assumes, of course, that you are already getting a W-9 from every new vendor before making the first payment to them. Companies who take this step report getting only a few B-notices each year compared with hundreds in the past.

Advanced 1099 Issues: An Expert's Insights CD.

* Four common ways employees commit T&E Fraud. It’s a problem every organization has to face: employees using their T&E for their own enrichment rather than its intended purpose. They do it in any number of ways. Some of the most common include:

• Overstate expenses (mileage, items with no receipt);

• Characterize personal expenses as business expenses (computer equipment, outside meals, business trips etc.);

• Multiple reimbursements (submitting the same receipt more than once or charging an item on a company credit card and then putting in for reimbursement or multiple employees requesting reimbursement for the same item); and

• Fictitious expenses (through use of pre-numbered receipt pads and phony invoices).

T&E Fraud CD.

* Skills needed to take your career to the next level. What do you need to do to make yourself a more effective professional, the one who management thinks of immediately when a new opening or promotional opportunity arises? The answers come from a recent study conducted by Robert Half and just may surprise you. Being extremely competent about accounts payable and accounting issues is just the beginning. That is expected, a sort of baseline, and probably won’t do a thing to help you get promoted. It turns out that CFOs are looking for a lot more.  

According to Robert Half WorkPlace Pulse: Your Guide to Trends Impacting Today’s Accounting and Finance Managers, 75 percent of CFOs surveyed said that verbal, written, and interpersonal skills are more valuable for accounting and finance professionals now than five years ago. Unfortunately, only 38 percent of executives polled said their firms train employees in this area. So it’s up to each professional to enhance their skills on their own. After all, who else will manage your career?

We have two pages of short tips just like this in our monthly newsletter. You can subscriber here. (and we have a special six-month offer). 

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