Have You Called Customer Service Recently?
Why Vendor Self-Service Is Better “The winner of worst response time to a customer phone call goes to ...
20 July, 2021
Articles
Bill Includes Money for IRS to Increase Enforcement
The U.S. government has a problem called the tax gap. The tax gap is the difference between total taxpayers' liability and the actual amount of taxes paid. It is tax revenue that should be collected according to the tax code but is not. The gap comprises unfiled taxes, unreported income and underpaid taxes. The IRS can recover some of that. The net tax gap is the portion that is not recovered through enforcement or late payments. The IRS currently reports that the gross tax gap for tax years 2011-2013 was $441 billion. (According to the IRS, “Estimating the tax gap is inherently challenging and requires assessing the merits of alternative methods, assumptions, and data sources.”) Expecting to collect $60 billion of that ultimately, the IRS projects that the net tax gap for the period would be $381 billion. A Treasury model extrapolates from those figures to project a gross gap in 2019 of $584 billion. Supposing the IRS collects $80 billion, it leaves a net gap of $500 billion. To be clear, that's 500,000 million! Even for Washington D.C., that’s a lot of money. The IRS wants to close that gap. The Tax Gap and 1099s A large part of that gap is unreported...
06 July, 2021
What Are Your Risks in Vendor Information Management?
Managing vendor information entails risk. The vendor master file is the key to vendor payments. Errors in the vendor master can lead to costly mistakes, and the master file is a prime target for fraud. There is also a risk of non-compliance with particular government tax, sanction and exclusion programs. Further, some of the vendor information, such as social security numbers and bank account numbers, is sensitive and subject to theft and exploitation. Policies, processes including internal controls, technical protocols and encryption, and staff awareness and understanding are all necessary to mitigate the risks. The breadth of vendor information and vendor onboarding represents a challenge to risk management. Guardianship of the processes and information falls to frontline staff—most commonly accounts payable staff. All this raises two questions. The first is: Does your organization have adequate controls? The second is: Do the people responsible for managing vendor information understand the control policies, their reasons and do they follow them? Like many things, what looks simple on the surface is not. The list of controls and precautions is longer than one might suppose. How well does your organization manage the risks associated with vendor information management? Financial Operations Networks (FON) wants to help you find...
22 June, 2021
Anatomy of Business Email Compromise Fraud
Criminals Steal $650,000 from Non-profit Organization. It was a heartbreaking discovery. A non-profit organization paid out an amount equating to 26 percent of its annual revenue over a month in what the organization thought was legitimate project payments. When the executive director later spoke to the group that was to hire architects and engineers for a low-income housing project, she expected confirmation that things were underway. But the contractor had not received any of the payments made—only an email from the non-profit the previous month stating that it had to delay payment. The three payments had gone elsewhere. By the time the executive director reported the loss to the FBI, the U.S. Attorney’s office would not investigate. The trail was already cold, and the amount was relatively small. After all, the FBI received 19,300 such reports in 2020. The non-profit managed to recover only a pittance remaining in a shell account in a bank in another state. How did it happen? The bookkeeper, in this case, a third-party serving the non-profit, was the initial victim of business email compromise (BEC). Once the hackers had gotten into the bookkeeper’s email system, they infiltrated existing email chains. Then they gathered the information needed to imitate...
07 June, 2021
What To Do When a Vendor Doesn’t Submit a W-9
Vendor onboarding best practice includes getting a vendor's tax identification number and classification on a W-9 or equivalent W-9 upfront with other vendor information. But what do you do if the vendor fails to give you that information? You're going to need it. Ask Again Here are steps to take. The first is to ask the vendor again. Be sure to send a copy of the W-9--it's part of your responsibility, even though the vendor can easily download the form from https://www.irs.gov/pub/irs-pdf/fw9.pdf. Document your solicitations so you can prove your attempts to the IRS. Let the vendor know in your W-9 solicitation that you will have to withhold 24 percent (currently) and remit to the IRS unless the vendor provides a valid tax identification number. Refer them here: https://www.irs.gov/taxtopics/tc307. That should motivate them to comply. A few bad-faith vendors out there might avoid responding, or they may reply with inaccurate information. Whether you use it directly or have a third party do it for you, the IRS TIN Match program will determine whether the vendor's TIN is valid. Using TIN Match, you can uncover incorrect TINs before 1099 filing rather than when the IRS sends you a CP2100. Note that you can also...
24 May, 2021
OFAC Update: A Busy 2021
The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury has been busy in 2021. Voice of America catalogs new targeted sanctions imposed on a host of individuals by the Biden Administration since January 2021. Targets include individuals in Russia for interference with the U.S. election, Myanmar generals involved in the overthrow of the government there, Saudi Arabians involved in the killing of a journalist, China for undermining civil rights in Hong Kong and its human rights abuses against China’s Uyghur minority. Those are the headliners. There are more. “What does that have to do with me?” you ask. “We don’t deal with North Korea!” Well, U.S. Government prohibitions go beyond the "headliners," and companies without compliance procedures can get caught unaware. There are many individuals and entities on OFAC's SDN list. The targeted sanctions list fills 1,500 pages. The prohibition against dealing with the sanctioned parties applies to all “U.S. persons,” whether you are a civilian individual working overseas for a U.S. Army (recently fined $5,000), or your company’s name is “Amazon.” Those working in procure-to-pay encounter risk every day, and compliance issues are a fact of life. Among these is sanction compliance. OFAC maintains and enforces U.S. sanctions. Its...
11 May, 2021
Another Big Event Brings Change, Opportunity
Significant events cause change. Sometimes they produce innovation. They can drive new legislation, which has its own effects. Many times, events boost changes already underway, particularly in terms of applying technology. The 21st century has already seen several large-scale events that have impacted business. At the start, accounting scandals were underway at Enron and WorldCom that would bring about the Sarbanes-Oxley Act. SOX, aimed at publicly traded corporations, impacted every organization. Nearly simultaneously, the terrorist attacks on 9/11 led, among other things, not only to a surge in disaster recovery and business continuity planning but also to the Check Clearing for the 21st Century Act. The attacks had led to the grounding of all planes for several days. That caused a major disruption to the country's financial transactions. Checks sat on the ground in the cargo compartments of aircraft. In the days following 9/11, the Fed holdover became an estimated $47 billion, compared to the usual several hundred million. Check truncation, already in the works, got the boost needed to become law two years later. In 2008 the global financial crisis damaged worldwide economies and, in the U.S., led to the Dodd-Frank Act, which dramatically increased regulation of banks. Following on bank...
27 April, 2021
How to Eliminate the Tedium in Vendors’ Inquiries
In Shakespeare’s Much Ado About Nothing, the slow character Dogberry has no idea what “tedious” means when the governor of Messina applies the label to him.[1] Ask your P2P staff, however, and they’ll tell you what “tedious” means: Answering “Has our invoice been paid?” for the hundredth time this month! A central challenge in providing good “customer service” to your vendors includes managing the volume of inquiries. The bulk of those inquiries, upwards of 80 percent, are the same few, straightforward questions. They are about invoice receipt, approval or payment status—easy enough questions to answer with a quick look in the system. But of course, stopping what you are doing to look it up can be a frustrating interruption. While setting aside a block of hours each week to do nothing but look up and reply can be, well, tedious. Despite Dogberry’s good intention, no one particularly enjoys such tediousness bestowed upon them. In the book The AI Advantage, Thomas Davenport writes, "Many human employees don't really enjoy answering the same questions over and over, so they might not mind losing this responsibility." He's talking about applying technology to handle repetitive tasks in the realm of customer interaction. The same applies to vendor interactions....
12 April, 2021
One Stone, Two Birds
Dealing with Vendor Inquiries Has your vendor master file decreased in size? Chances are, the answer to that question is no. Not only because it's been a while since you cleansed the vendor master file, but because your organization keeps adding new vendors. With new vendors come the same problems—inquiries about getting paid. Vendor calls and emails may be creeping up, especially as the overall economic outlook is brighter as vaccinations increase. The company has to keep up with those calls and emails to keep vendors happy. But it’s interrupting your procurement staff or keeping accounts payable staff away from actually getting the bills paid! Responding to vendor inquires takes time, which costs money and opportunity. Answering questions and solving problems is part of the process, but not all questions involve problems to be solved. Most vendor inquiries are of a more straightforward kind. Surveys show that a vast majority of vendor inquiries comprise about a half dozen common questions, such as “Did you receive our invoice?” and “When will it be paid?” These are questions that are easy to answer, but they still take time. Meanwhile, the vendor’s AR personnel are busy too. And they’re not crazy about leaving voicemails nor necessarily even...
29 March, 2021
Cyber Risk Statistics and the Need to Secure Sensitive Information
Hackers continue a relentless barrage Last December, the U.S. government announced a major cyber breach by Russian hackers. Before we even have fully understood the impact of that attack on 18,000 organizations and government agencies, we learn “holes” in Microsoft’s email software have led to the compromise of 30,000 U.S. organizations. This latest attack is by Hafnium, a group operating from China. But cyberattacks are not all by foreign actors, nor about espionage. Financial gain is the motive in 86 percent of breaches, according to the 2020 Data Breach Investigations Report by Verizon1. And in the majority of cybercrime, the perpetrator and victim are located in the same country. Further, due to error and “privilege misuse,” 30 percent of cyber breaches in North America stemmed from people inside an organization. That 30 percent includes inadvertently "leaving the door open" as well as malicious intent. Hackers of all kinds continue a relentless barrage of attacks on everyone. According to a University of Maryland study2, hackers attack computers connected to the internet every 39 seconds. On average, your computers are under attack 2,244 times a day. In the first half of 2020, data breaches exposed 36 billion records. It seems there’s nowhere to hide. Do you doubt...
16 March, 2021
