[Whitepaper] Emerging Concerns in Accounts Payable

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Anybill.com | info@anybill.com
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Introduction
The business landscape in general, including and especially accounts payable,
is changing at a pace not seen in a long time, if ever. When asked to identify hot
topic issues for the next year for accounts payable it wasn’t difficult. After very little
investigation the following five issues quickly rose to the top of the list.
++ New types of fraud focused on the payment function have become such an issue
the FBI has issued warnings.
++ AP automation has really taken off and shows no sign of abating with applications
for organizations of all sizes.
++ Invoice receipt, a seemingly staid static process, is evolving with new approaches
now becoming commonplace.
++ The master vendor file has gained increased prominence given the increased need
for vendor communication.
++ Career responsibility continues to shift to the individual, with organization’s taking
less responsibility.
Interestingly, all had a huge technology influencer. Unfortunately, technology while
putting productivity improvements within the accounts payable function within the
grasp of just about every organization also makes it easier for thieves to defraud.
Thus, the task of continuing to learn about new payment frauds and the protections
available to fight those swindles is now added to the long list of areas professionals
concerned about payment issues need to be concerned about. Let’s look at each
issue in a little more depth.
Fraud
It’s an ugly issue but one every organization needs to address. It can and does happen
to just about everyone at one time or another. But just because someone tries to
steal from you doesn’t mean they are going to be successful. Their victory depends
to a large extent on the protections you put (or don’t put) in place. What many people
don’t realize is that many frauds begin with an honest mistake. Hence your very
best first step to protect your organization against payment fraud is to employ best
practices incorporating strong internal controls throughout your payment function.
It’s that simple.
Emerging Concerns in 2012
for Accounts Payable
By Mary S. Schaeffer

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Strong internal controls are important for an often over-looked reason. Your
employees know where the weaknesses are within your system. And, like it or
not, a few employees will steal from their employers. Making this matter even
more distressing is the fact that your biggest risk is with your long-term trusted
employees. The statistics reveal over and over that when fraud is committed, the
most frequent offender is a long-term trusted employee. Hence it is imperative that
controls be across the board and appropriate segregation of duties be maintained
at all times.
The newest frauds appear to be coming out of Eastern Europe although that is
not apparent until the frauds unravel after the money has left the country. These
sophisticated crooks are zeroing in on the ACH and the professionals working in
accounts payable to facilitate their crimes. Organizations need to be on top of this
fraud as they have only 24 hours to notify their banks of unauthorized transactions
in order to have the transactions reversed. After that it is unlikely the money will
be recovered.
To guard against these frauds, talk to your banks about the services they offer to
prevent unauthorized transactions. You might also consider daily bank reconciliations
(remember the 24 hour limitation) and using a separate computer for online banking
activity and online banking activity only.
Accounts Payable Automation
When automation first came to the accounts payable function, it was something
that only the very biggest companies could afford. But, all that has changed.
Technology itself has gotten cheaper with applications now available for almost every
pocketbook. Not only are there third-party applications, but many accounts payable
departments are using common technology to create a semi-automated process.
Accepting invoices via email and e-fax are simple examples.
As previously mentioned, third-party invoice processing systems are no longer costly,
with many having pay-per-use options. Impending changes at the US Post Office
make it likely that we will see at least a one-day increase in postal time for all first
class mail. While this may not mean much to consumers, it will mean an awful lot to
businesses relying on the mail for both receipt of their invoices and payments. It is
expected that mail volume will drop 50% by 2020.
For accounts payable departments dependent on US mail this means less time
to process invoices and the possibility of more lost early payment discounts and
additional late fees. And while many organizations think they are not impacted,
some vendors have been accruing late fees and unearned early payment discounts.
When an open credit becomes available, they are being used to offset these accruals.

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Receipt of Invoices
As alluded to above, best practices for the receipt of invoices has started to change.
Given the changes coming to the US Post Office we expect a growing number of
companies to move away from snail mail for the delivery of invoices.
Best practices for invoice receipt include use of a third party invoice processor
such as Anybill and the centralization of the receipt of invoices not delivered by the
processor. This centralization means:
++ One postal address,
++ One email address, such as invoices@abccompany.com, and
++ One fax number.
Automation of the receipt of invoices is the first step towards a more efficient, fraud
resistant invoice processing approach. It also translates into a greater number of
earned early payment discounts and fewer late fees.
If the fax number is combined with an e-fax facility, the benefits of the process
increase as the fax is converted to an electronic document.
Master Vendor File
The classic Warren Buffett metaphor “It’s only when the tide goes out that you learn
who’s been swimming naked,” aptly described the corporate world and its master
vendor files in the late winter and early spring of 2011. With the specter of corporate
reporting looming, many companies went to their master vendor files to get data to
begin a massive solicitation of their vendors’ taxpayer identification numbers. What
they found was not pretty.
While a few had kept their master vendor files in tip-top shape, most had not. The
hysteria that ensued underscored the importance of the master vendor file and the
need to follow best practices. These will help avoid duplicate vendor entries which
can lead to duplicate payments, make fraud more difficult while simultaneously
making it easier to communicate with vendors.
Best practices to keep your master vendor file in tip-top shape include:
++ Use of a rigid coding standard for data entry,
++ Regular cleansing deactivating inactive vendors and
++ Incorporating appropriate segregation of duties when assigning responsibility for
entering new vendors and updating information in the master vendor file.

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About Anybill
Built on the premise that all payments are critical, Anybill was created in 2001 to transition any AP transaction to an automated solution.
We combine our proprietary technology with unmatched customer service to deliver a complete Software-as-a-Service solution. Clients retain
efficient workflows while gaining greater visibility and control, better cash flow management, streamlined approval processes, 24/7 accessibility,
and increased auditor confidence. Anybill works with clients ranging from non-profit associations to some of the largest multinationals. We are
headquartered in Washington, DC, and are SSAE 16 SOC compliant.
Your Professional Future
We are each captains of our own ship when it comes to our careers. Companies are
allocating fewer and fewer dollars for employee training. Thus the responsibility
for keeping up to date is left mostly to the individual employee. To be fair, many
organizations do have small training budgets and will often spend the funds if
the employee makes a strong case for attending. This means finding the learning
opportunity and presenting management with the benefits the organization will
receive if you attend. It is critical that the event be tied back to improved performance
helping the organization.
You can take charge of your career by looking for free and low-cost learning
opportunities. They abound today, especially given the technology that makes online
learning affordable. Free electronic newsletters, free webinars sponsored by vendors
and of course, numerous websites loaded with information all make it possible for
those looking to stay ahead of the game to do so. Additionally, there are many low-
cost learning options.
We can’t close off a discussion about career advancement without mentioning the
value of networking. Not only are networks important sources of information about
job openings, your peers can provide valued input when you have one of those
thorny technical questions about an accounts payable issue. One of the best ways to
network, especially if you don’t know many other professionals in the field, is to sign
up for LinkedIn and then join several groups. You can post questions and answer
them as well. It is a way for others to get to know you and it’s free.
Concluding Thoughts
Bob Dylan probably wasn’t thinking about the accounts payable and payment function
when he wrote, “the times, they are a changing,” but the lyric applies. The challenge
facing every professional is to keep up with those changes.
© 2012 Mary S. Schaeffer and Accounts Payable Now & Tomorrow

[Whitepaper] Emerging Concerns in Accounts Payable

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[Whitepaper] Emerging Concerns in Accounts Payable