Article – Compliance

The arm of the law is not only long but patient and painstaking. This month, the U.S. Department of Justice charged a former account manager for Swedish telecom giant Ericsson with conspiracy to violate the Foreign Corrupt Practices Act (FCPA). The one-time Ericsson employee facilitated the payment of $2 million to two high-ranking officials in Djibouti between 2010 and 2014. The charges come 21 months after a subsidiary of LM Ericsson pleaded guilty on a charge of conspiracy to violate the anti-bribery provisions of the FCPA, and Ericsson itself paid more than $1 billion for this and other violations. So what exactly is the FCPA, and what does it have to do with accounts payable? The Foreign Corrupt Practices Act of 1977 (FCPA) is a federal law against bribery and false accounting. And bribes, like every other payment outside of payroll, exit the organization through accounts payable (AP). It is illegal for U.S. citizens and companies to offer a foreign official anything of value to gain an unfair advantage or influence business decisions. And FCPA’s accounting provisions make it a criminal offense to falsify books and records and fail to maintain internal controls. False Contract and Invoices In the Djibouti case, an Ericsson account manager participated in...

COVID-19 has made it harder for organizations to focus on third-party risks. So says a new report on the effects of COVID-19 on risk and compliance. The pandemic has resulted in "more opportunities for criminals to defraud consumers and companies." As the pandemic seized everyone's attention, a consequence was relaxed pressure to sustain compliance and prevention efforts compared to 2019. Reorienting and enabling work by remote workers, not compliance, was top of mind. Meanwhile a host of bad characters sought to exploit the disruptions. Among the report's findings: 60 percent of 2,900 respondents agree that the pandemic forced them to take shortcuts with know-your-customer and due diligence checks. In the specific area of sanction screening, there is good news and bad. The good news is that 40 percent of respondents actually made sanctions screening a greater priority during Covid. Yet, in the broader picture, 56 percent admit that they “have not fully managed risks related to sanction screening.” The report points out that while COVID-19 has been disruptive, compliance gaps were a problem well before the pandemic. For example, a 2019 risk survey found that 49 percent of third-party relationships had been subjected to due diligence checks, compared to 44 percent in this...

IRS Adds Multi-factor Authentication As is widely known, organizations with 250 or more 1099s must file them electronically. To do so, they first must register on the IRS FIRE (Filing Information Returns Electronically) System site and apply for a Transmitter Control Code (TCC), which is necessary to file 1009s and other tax forms via the FIRE System. To obtain a TCC, they complete IRS form 4419. Now, the IRS is adding greater security to its Information Return Application TCC. The improved security will involve multi-factor authentication (MFA). The IRS plans to deploy the new system on September 26th of this year for new registrants. It’s a result of the 2019 Taxpayer First Act, which requires the IRS to improve its taxpayer service and modernize its technology, including greater security. In the FIRE application process, new registrants will have to authenticate their identities as they create a new account through the IRS Secure Access Account. Then, they access the Information Returns (IR) Application for TCC. The new application for a TCC replaces IRS form 4419. Keep an eye on IRS.gov and fire.irs.gov. Initially, this newly added layer of security is only for new registrants. However, existing registered filers will gain enhanced protection next year. The...

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...

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...

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...

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...

A Refresher What is a non-U.S. person? You need to know the answer to that in the context of payment reporting to the IRS. What income of a non-U.S. person do you have to report? These are just two of the many questions that arise when you gather tax IDs and classifications in preparation for 1099 and 1042-S reporting. Did you know the U.S. tax code does not explicitly define non-U.S. persons? Rather, the code defines them by exclusion. The code defines a U.S. person. If one is not a U.S. person, then by definition of exclusion, they are a non-U.S. person. Easy! We should point out here that “person” has a broad definition that includes entities as well as individuals. Entities are corporations, trusts, partnerships and estates, as well as individuals. Any entity formed under U.S. laws is considered a U.S. person, and for our purposes here, is subject to 1099 reporting. (Said persons should submit a W-9 to your organization.) Oh, and one more thing. Resident aliens are considered U.S. persons too. Those persons and entities that do not fall within those are non-U.S. persons. You report the payments you make to them on a 1042-S. They should submit their tax information and...

Ready, set … check your vendor tax IDs. We’re well into the 4th quarter. It's time to think about 1099 reporting. That means having correct tax IDs for your vendors. First, you need to be sure you have a tax ID for each vendor. Second, you will save trouble later if you take the time before you file 1099s to verify your vendor TINs through the IRS TIN Matching program. (It’s better to have done this at vendor onboarding!) And as you get set for 1099 reporting, be aware. This time around (as you read here a year ago) you have a new form 1099 to file. 1099-NEC To report non-employee compensation for 2020, you must file the newly revived form 1099-NEC (non-employee compensation). The change is an effort to sort out the confusion resulting from the shift in reporting deadlines enacted in the 2015 PATH Act. The Act required you to submit 1099-MISCs by January 31 if they included non-employee compensation reporting in box-7. “NEC” reporting now has its own form. Never fear, our old friend 1099-MISC is also still required. Use the 1099-MISC to report royalties, rents, health care payments, etc., as before. Those are due to recipients by January 31st and to...

Have you gotten yours? Not tricks or treats, nor a political surprise. The other October surprise: CP2100s! Twice a year, in spring and fall, the Internal Revenue Service (IRS) sends out forms CP2100 and CP2100A. They address missing or incorrect taxpayer-identification numbers (TINs) on 1099 payment reporting. Whether you get a form 2100 or 2100A depends on the number of bad TINs. If you are a recipient, you must act. Your response depends on the particulars of each notice. Here’s a quick refresher on what to do. Incorrect TINs First, check the vendor TIN in the IRS notice against the TIN in your records. Are they different? Then an error was apparently made in the 1099 filing. Correct your records as necessary. You do not have to send a B-notice to the vendor, but ensure you report the vendor’s correct TIN next time. However, if the TIN in the CP2100 matches what you have as the vendor’s TIN, the TIN is incorrect. In that case, you have 15 days to issue a “B Notice” (“B” for backup withholding) to the vendor. The B-notice explains that they need to send you a corrected TIN (stat!) or you will begin backup withholding. If you do not receive a...

Stop Calls and Emails, Enhance
Service and Increase Profit!

InvoiceInfo saves labor hours and cost by helping suppliers and internal staff easily and instantly get answers online to their invoice-payment questions.

If you are like many finance leaders today, you are being challenged to reduce costs more quickly. InvoiceInfo delivers real bottom-line results almost immediately, allowing you to deploy your customer service staff to focus on more productive, bottom-line oriented tasks.

Let us show you how InvoiceInfo's vendor self-service portal can help your organization eliminate invoice inquiry emails and calls while enhancing service to your accounts payable customers.

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Get Up and Running Quickly and Seamlessly

InvoiceInfo and VendorInfo are standalone applications that can be up and running in as little as two weeks, with little or no IT resources required.

The faster your online portal is up and running, the sooner you will start reaping the benefits. InvoiceInfo and VendorInfo are dedicated solely to helping AP and procurement departments slash the time and expense of servicing vendors, while improving customer service for their suppliers.

InvoiceInfo and VendorInfo are simple solutions with big results. They are easy to implement and easy to use. Here’s how one customer described the process: “You give vendors a URL, provide instructions about what they need to know and tell them to go use it.” It really is that easy.

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Improve Productivity with a Self-Service Solution

For most organizations, deploying a technology solution is a significant investment, and like most investments, the decision point ultimately comes down to the expected return on that investment.

According to a recent benchmark study by The Accounts Payable Network, 60% of AP customer service calls are from vendors while 40% are from internal customers. Vendor issues actually make up even more of the AP call volume than the 60% identified. Many times when a vendor has an issue, the vendor contacts their buyer or purchasing representative, who in turn contacts AP. Even though the call comes from an internal customer, the question originated with the vendor.

Vendor calls affect productivity in your organization exponentially. When vendors call the requisitioner, they are affecting that person’s productivity. Your internal customer’s productivity shrinks when fielding the vendor’s call and again when making the follow up call to AP and getting back to the vendor. Finally, AP’s productivity suffers as a result of the internal customer’s call, the payment status research and the follow-up communication.

With a minimal investment of IT time and talent, you can start reducing customer service calls and expense in a matter of weeks. In addition, you improve vendor relations since you are giving your vendors what they want — answers to their questions immediately — a win-win for everyone involved!

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Easy and Economical Solution to Serve Vendors Around the World

InvoiceInfo can help you provide best-in-class customer service to your vendors around the world at a fraction of the cost.

Many organizations today have offices and operations throughout the world and are dealing with many time zones, different languages, and in some cases multiple ERP systems. InvoiceInfo currently supports different languages and can easily work with multiple ERP systems in different locations.

The key to good customer service is to provide the information that the customer wants when they want it. Whether your customer is a vendor waiting for a payment or a colleague that needs information on payment status, they want their information right away. If your organization has vendors and offices in other countries, they can be challenging and expensive to serve. But, with InvoiceInfo, your international vendors and internal customers can access the information they need when they need it.

With InvoiceInfo, you won’t have to staff your customer service team with 24-hour coverage in multiple languages to provide high-quality customer service around the world.

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Enhance AP’s Role As a Strategic Partner

Learn how InvoiceInfo can help AP do more with less while continuously improving productivity and bottom-line results.

Many automation technologies such as scanning, workflow, e-invoicing, ACH, and electronic invoicing require significant investments of money, time and talent, making it difficult to get buy-in from upper management. Not InvoiceInfo!

If your goal for your AP department is to reduce costs quickly, call or email us today to learn more about how InvoiceInfo can help you achieve this goal through a quick, inexpensive and easy implementation of a vendor self-service portal.

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Enhance Vendor Relationships

InvoiceInfo helps suppliers’ AR departments with simple and convenient access to invoice payment status online at a cost savings for all involved.

It may seem that the organization paying the vendor should hold all the cards in the relationship. But sometimes the opposite is true. Past-due payments and customer service perceptions can harm supplier relationships and disrupt the supply chain.

Your vendors and vendor relationship managers are living in a dynamic, fast-paced environment, so when invoice information is required, it is needed quickly and expected to be of high quality. With InvoiceInfo, your suppliers get answers to invoice inquiries real time, 24/7 with no need to leave messages and wait for responses. Studies show that confidence in data increases when suppliers access invoice and payment information themselves.

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Give Procurement and Buyers the Tool They
Need to Respond to Vendors Quickly

Not only can InvoiceInfo be used by suppliers to learn the status of invoice payments, it can also be used internally within your organization.

In addition to reducing calls from vendors regarding invoice status, you can also reduce internal emails and calls from co-workers wanting to learn the status of invoice payment, and save time and effort and boost efficiency and productivity across the organization. Studies show that 40% of AP customer service calls are from internal customers. Many of these are from requisitioners who have received calls or emails from the supplier checking on payment status. These calls are often more expensive for the company because the internal staff member has taken the call or received an email from the supplier, contacted AP for the payment status and had to return the call or email the supplier.

By providing the vendor with a convenient and credible online option to get the answers it needs regarding payment status, you can eliminate multiple calls/emails between the vendor and the requisitioner saving time and money.

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Eliminate Difficult Vendor Calls and See
Productivity and Staff Morale Soar

Reduce invoice payment inquiries and “promote” your vendor service team to more satisfying and profit-producing tasks.

By sharply reducing inbound calls and emails regarding receipt and payment status that your AP staff must handle individually, your staff can focus their efforts on more productive, cost-saving activities, learn new tasks, feel more confident and boost their careers.

According to a recent American Express survey on customer service, more than one-third of consumers have lost their temper with a customer service professional in the past year. Of those who lost their temper, three in ten “hung up the phone.” Your staff will no longer have to deal with difficult collectors who can be upsetting and disruptive. Your staff will feel that their time and talents are being put to better use and will feel better about themselves, their jobs and their organization. Reducing these calls can be a real productivity and morale booster for your AP department!

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Simplify and Streamline Vendor Onboarding

According to Price Waterhouse Coopers, the average organization spends about $20 in labor to file each paper document, approximately $120 in labor searching for each misfiled document and $220 in re-creation of a document.

Wouldn’t it be great to have all your W-9’s, W-8’s and other registration documents completed online and instantly filed online for easy access when needed? With Vendor Self-Service Onboarding Module, VendorInfo, you can onboard your new vendors in one convenient location and eliminate paperwork and hassles.

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Verify the Accuracy of Vendor Information and Stay in Compliance with IRS and Treasury Department Regulations

Government regulators are increasing the complexity of regulations and penalties associated with vendor-related non-compliance.

Penalties for incorrect 1099’s have more than doubled in recent years. Over the last several years, OFAC has levied more than $1 billion in fines against American companies or subsidiaries that did business with restricted businesses, organizations and individuals on its SDN list. In addition to fining these companies, the Treasury Department posts the names of infringing organizations along with fines paid.

VendorInfo Onboarding Module verifies the accuracy of vendor information and helps protect your organization by avoiding embarrassing penalties and fines.

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