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

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. 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
© 2012 Accounts Payable Now & Tomorrow and
2 Mary S. Schaeffer

3. AP Best Practices: Overview
© 2012 Accounts Payable Now & Tomorrow and
3 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
4 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
5 Mary S. Schaeffer

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)
© 2012 Accounts Payable Now & Tomorrow and
6 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
7 Mary S. Schaeffer

8. Invoice Handling
© 2012 Accounts Payable Now & Tomorrow and
8 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
9 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
10 Mary S. Schaeffer

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)
© 2012 Accounts Payable Now & Tomorrow and
11 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
12 Mary S. Schaeffer

13. Invoice Handling: Technology Solutions
 E-Invoicing
 Escalating approvals
 Track disputes/resolutions – so there are no black hole
invoices (or only a few)
© 2012 Accounts Payable Now & Tomorrow and
13 Mary S. Schaeffer

14. Payments
© 2012 Accounts Payable Now & Tomorrow and
14 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
15 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
16 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
17 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
18 Mary S. Schaeffer

19. Electronic Payments
 Separate PC used for online banking only
 No email
 No surfing Internet
 Nothing else
 Turned off when not in use
© 2012 Accounts Payable Now & Tomorrow and
19 Mary S. Schaeffer

20. Regulatory Issues
© 2012 Accounts Payable Now & Tomorrow and
20 Mary S. Schaeffer

21. Regulatory Issues
1099/1042-S,
Unclaimed Property and
Sales and Use Tax)
© 2012 Accounts Payable Now & Tomorrow and
21 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
22 Mary S. Schaeffer

23. IRS Audits
 For data collection
 Focus:
 Worker classification
 Expense reimbursement
 Exec comp
© 2012 Accounts Payable Now & Tomorrow and
23 Mary S. Schaeffer

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!
© 2012 Accounts Payable Now & Tomorrow and
24 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
25 Mary S. Schaeffer

26. Master Vendor File
© 2012 Accounts Payable Now & Tomorrow and
26 Mary S. Schaeffer

27. Sudden Master Vendor File Attention
 Healthcare reform
 W-9s from everyone
 Where to start ….
 The Master Vendor File
© 2012 Accounts Payable Now & Tomorrow and
27 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
28 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
29 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
30 Mary S. Schaeffer

31. Technology in AP
© 2012 Accounts Payable Now & Tomorrow and
31 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
32 Mary S. Schaeffer

33. New Technology in AP
 Tablets
 Smartphones
 Boarding passes
 What else???
© 2012 Accounts Payable Now & Tomorrow and
33 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
34 Mary S. Schaeffer

35. AP: Yesterday vs. Tomorrow
© 2012 Accounts Payable Now & Tomorrow and
35 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
36 Mary S. Schaeffer

37. Future of Best Practices in AP
© 2012 Accounts Payable Now & Tomorrow and
37 Mary S. Schaeffer

38. AP Best Practices: Future
 Changing
 Continue to have their place
 Strong internal controls
 Efficient process
 Regulatory compliance
 Fraud resistance
 Your Challenge:
 Keeping up
© 2012 Accounts Payable Now & Tomorrow and
38 Mary S. Schaeffer

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.
© 2012 Accounts Payable Now & Tomorrow and
39 Mary S. Schaeffer

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
© 2012 Accounts Payable Now & Tomorrow and
40 Mary S. Schaeffer

41. 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 marys@ap-now.com
© 2012 Accounts Payable Now & Tomorrow and
41 Mary S. Schaeffer

42. Let Go and Gain Control
Visit www.anybill.com/ today!
© 2012 Accounts Payable Now & Tomorrow and
42 Mary S. Schaeffer