Financial Operations Network | Vendor Compliance
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Vendor Compliance

Any U.S. business issuing payments of U.S. source income to either U.S. payees or foreign payees is required to solicit and obtain valid certification of the payee’s TIN, name, residency and status as required in the manner set forth by IRS regulations. Each payer is required by the IRS and many state tax regulations to solicit and certify the TIN (tax identification number or Social Security number), legal name, citizenship and corporate or individual tax status from each payee to which they issue any payment that is subject to the income test or otherwise fall into the regulatory definitions of reportable payments. This means that each payer must be able to request the proper documentation and/or be able to track the event of requesting such information or documented proof from each payee. Solicitation and Certification Requirements For several forms (payment types) the payer is required to send a Form W-9 (if a U.S. resident) or one of the Form W-8 series (for any payee that is domiciled in a foreign country), receive the completed documents, validate that the document is correct and retain for future access. The correct Form W-8 must be received from the foreign payee and required areas on the form...

Get It Right or Face Fines As most readers of this newsletter will know, the deadline for reporting 1099-MISC forms that report non-employee compensation (NEC) in box 7 is now January 31 (for both paper and electronic filing). It is no longer February 28th for paper or March 31st for electronic filing, as in the past. This change applied to 2018 reporting of 2017 payments, and of course will apply in 2019 for 2018 payment reporting, and on into future years. What you may not know is that if you are late sending in 1099s with NEC and you combine the none-NEC reporting with the NEC reporting (a mixed submission), the whole batch is considered late and subject to penalty. That’s why for 2018, the IRS recommended that you separate your NEC filings from your non-NEC filings, and if submitting on paper, you complete separate 1096s for the separate batches. In 2019, you will be required to separate late 1099-MISC NECs from other 1099-MISC filings. And if you have the less common situation of having paid two types of income to one entity, and you file after the January 31 deadline for NEC, you will have to file two 1099-MISCs with the IRS, separating the...

Should You Care? In keeping with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (sic), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has increased the maximum fines for civil violations. The 2015 Act’s intent was “to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect.” Translation: Penalties are increased to keep pace with inflation. The latest increases amounted to approximately two percent for each of the types of fines, and became effective March 19, 2018. Meanwhile, OFAC activity in August so far has related to Iran, North Korea and Magnitsky Act designations against two Turks. For a complete list of 2018 OFAC Actions to date, see this resource page on the U.S. Dept. of Treasury website. Why should you keep up with OFAC? Aren’t sanctions something that only banks and insurers have to worry about? No. In fact according to SanctionsAlert.com, financial institutions average just 39. 8 percent of total OFAC enforcement actions — sizable, but by no means all. Yes, the annual number of enforcement actions is down considerably from the anomalous early years after 9/11. Nevertheless, enforcement actions go on all the time. In assessing risk, it’s instructive to know...

IRS TIN Matching   Often with a task or project comes the temptation to shortcut it. This is especially true if the task involves an “extra” step to ensure we’ve got it right when we think we already have what we need. The temptation creeps in when that extra step to double check seems a mundane thing that takes time we don’t have. For example, suppose you are building a deck. Experienced builders warn DIY’ers to “measure twice, cut once.” The point is to ensure you have the dimensions correct before you start cutting the wood because once the wood is cut, you can’t uncut it. And if you do cut wrong, it’ll cost you time and money to replace. Imagine Mr. Do-it-himself out there in the sun, measuring and cutting. He’s competent. He starts out measuring twice and then cuts. But after a while, it gets tedious. He’s knocking out the work, it’s repetitive, and he thinks it’ll go faster with less tedium if he just measures once and cuts. After all, he hasn’t measured wrong yet. But sure enough, maybe because the sun has gotten hotter, or because he has begun to get tired, he measures once and cuts. But when he goes...

The Tax Cuts and Jobs Act, public law 115-97 aka the new tax law, includes a reduction in the backup-withholding rate starting with tax year 2018. Backup withholding is required when you do not have a valid taxpayer ID number for a payee on payments of rents, royalties or fees for service to independent contractors. The backup-withholding rate has been 28 percent for many years. However, the new tax bill reduces that percentage to 24 percent, effective as of January 2018. So if your company is backup withholding on rents, royalties or service payments, you should now be withholding 24 percent instead of 28 percent. When should you backup withhold? In these instances:: [unordered_list style="circle"] Your reportable payee has not given you their taxpayer identification number. You received a B-notice from the IRS than the taxpayer ID number of the payee is incorrect. [/unordered_list] Remit withholdings on IRS Form 945, as always. Backup withholding answers why you need to gather W-9s from payees. You don’t need the extra administrative burden of having to backup withhold. Nor do you want to face penalties for paying an entity without having secured their tax ID or failing to backup withhold. It’s a good reason to investigate implementing a supplier portal that...

If your accounts payable department wants a motto, it might go with Semper Vigilo — “always vigilant.” Threats to businesses abound and given that accounts payable issues payments, it is a prime target for criminal perpetrators of all kinds. In addition to prevention of myriad fraud schemes, AP must also ensure information protection as well as avoid unwitting payments to sanctioned entities. This, of course, involves compliance with the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC). OFAC keeps track of and enforces U.S. sanctions on countries, entities, and persons — including drug traffickers, WMD dealers, dirty diamond traders, organized crime syndicates and, of course, terrorist organizations. Sanctions aim to enforce U.S. policy, prevent criminal activity and combat terrorism. (It’s a real thing — see one shared services director’s story in Avoiding the Men in Black.) You’re familiar. And you’re compliant, right? Or do you just think you are? How are you managing your compliance? It’s not enough to run your list against OFAC’s SDN list once in a while, or even (you thought of this) to check your new vendors against the list. Of course, you are adding new vendors all the time. Those need to be checked and you’re doing...

Vendor Information Collection and Validation As she crossed the company parking lot early one morning, the director of shared services saw them. Men in black. Two of them. As she neared the building entrance, they approached and addressed her by name. She was afraid this day would come, and it finally had. They flashed their federal credentials, and she welcomed them up to her office. They were there to talk about a payment she had authorized. As it turned out, the payee was on a sanctions list of the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department, and the SSC director and her company were in trouble. This really happened. So maybe you’ve heard of OFAC’s sanctions lists? The U.S. government has lists of individuals, organizations, and countries with whom it is illegal to do business, including narcotics traffickers, diamond smugglers, rogue regimes, terrorist organizations, et cetera. Various lists are aggregated and published, and transactions monitored by OFAC. If you run afoul of the list, it’s going to cost you. Banks, in their compliance, effectively screen payments for the government. They’ll find out if you slip. So what are you doing about it? Are you screening your supplier list? The SSC...

InvoiceInfo invited readers to share their thoughts on who should be responsible for onboarding new vendors and ensuring compliance with federal and state regulations. Following are some suggestions received: “I believe onboarding should be done at the purchasing level. The purchasing party always knows ahead what contracts are coming down the pipe. They know prior to even an invitation to bid goes out. I have been trying to get our purchasing department to have vendors sign a new W-9 at the time the contract is awarded, as part of their contract package they must review and sign — PRIOR to work commencing — I haven’t been that successful, but some buyers remember to do so.” —Jane Swanson, Orange County Transportation Authority   “Our process is a centralized vendor master with a dedicated staff member having ownership. This works extremely well for us as that person has the responsibility for onboarding and is accountable for accurately maintaining the database. They take pride in making sure all documents are correct and good. We have a Vendor onboarding packet that is sent to all new vendors with a note stating they will not be paid until they complete and return the documents. Our packet includes a W-9, minority...

The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals, threats to national security, foreign policy or the economy of the United States. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope and involve close cooperation with allied governments. Sanctioned organizations, companies and individuals are listed on the Specially Designated Nationals and Blocked Persons (SDN) list and many other lists. Often companies and non-profit organizations are not aware that they are breaking laws by doing business with people or organizations on these lists and don’t check their vendors against them. As a result, many companies and non-profits, large and small, are fined for inadvertently transacting business with U.S. sanctioned organizations. Companies slapped with steep fines — many in the hundreds of thousands of dollars and even multi-million-dollar range — usually had no idea that their supplier was on one of these lists. According to the Treasury Department’s website, in 2017 OFAC levied $2 million in fines against ExxonMobil Corporation for violations of § 589.201 of the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589 (Ukraine-Related Sanctions Regulations). According...

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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