Financial Operations Network | Articles
135
archive,paged,category,category-articles,category-135,paged-4,category-paged-4,ajax_fade,page_not_loaded,,qode_grid_1300,footer_responsive_adv,hide_top_bar_on_mobile_header,qode-theme-ver-16.8,qode-theme-bridge,qode_header_in_grid,wpb-js-composer js-comp-ver-6.1,vc_responsive
 

Articles

What comes to mind when you hear that? Maybe a particular gift you’ve received yourself, or one you chose carefully to give. Then again, these days you may be more likely to hear it as a droll comment about something that provides ongoing surprises and frustration (new ERP system anyone?). But the phrase intends to define a gift that is enjoyed continually over time. Commercially, if you’re old enough, you might remember Kodak advertising its camera with that slogan. Your parents or grandparents might associate the phrase with RCA’s color televisions! But its first use in advertising was much earlier than even that. According to YourDictionary.com and other internet sources, the first commercial use was nearly a hundred years ago by the Victor Company advertising its radios. Whoever first coined it was clever. Its application to electronics — radios and televisions — captured a key benefit of investing in those technological advances: the return would be ongoing. Such has been the promise of technology since, and in fact, it has and continues to deliver. In the realm of computing, Moore’s Law has driven an exponential increase in computing capabilities as size and cost fall. Physicists tell us that Moore’s Law cannot continue forever, but...

There are risks inherent in bringing in new vendors to your organization that must not be overlooked. There is a continuum of risk according to types and consequence of products or services. But even office supply vendors should be validated, as victims of printer-toner scams can attest. Supply chain and corporate procurement researcher Jonathan Webb, in an article that appeared in Forbes magazine entitled How to Onboard a New Supplier warns that “to forgo an onboarding process can expose the company to unnecessary risk." Webb identifies four steps in an onboarding process: [unordered_list style="circle"] Develop an approval process Develop a vendor checklist Develop additional governance for more strategically important vendors Add the vendor to an approved-vendor list [/unordered_list] In the first point, he offers a common example of establishing a mandate that all new vendors above a certain monetary threshold require sign-off by procurement. Purchasing departments, sometimes with input from operations, finance and legal, will typically be responsible for developing the approval process. New Vendor Checklist The second point is to have a checklist, particularly focused on risk, along with practical information gathering. Particular responsibilities for items on the list may belong to employees authorized to purchase, the purchasing department, the accounts payable department, or perhaps a master file group. Reviewing a...

It’s the end of October and there are just two months left in the year. In terms of calendar-related responsibilities, your unclaimed property reporting and escheatment should be done. Now you’re looking towards year-end, and right around that corner, 1099 reporting (with its January 31st deadline). That means it’s time to check on the state of your tax information records for vendors. Do you need to get tax ID numbers (TINs) and tax classifications (sole proprietor, partnership, corporation)? Hopefully this is not a worry. You implemented best practices years ago, requiring right up front a W-9, 8233 or W-8 from every large and small vendor your company engages. And you’ve gotten them. True, you got them on paper forms, but you got them, and they’ve been input into the vendor master file long before the first invoice ever showed up. Congratulations. Of course, every now and then there is the odd purchase made without advanced notice to procurement or payables, and it was not made on a p-card. That one. So yeah, this time of year, it’s necessary to do a check to see that you’ve got a TIN and tax classification for everyone so that when you roll out the 1099s, you’re ready. On...

Vendor invoices arrive daily in all manner of formats from PDFs to EDI and more. And still you get paper invoices (no two alike). You wrangle these diverse documents into your system for processing. But format is just a part of the story. What about volume? How many invoices do you receive in a month? Did you know that however many you get, an industry survey suggests that on average you should expect to get a vendor inquiry on 11 percent of those invoices? Vendors send invoices; but discontent with merely having sent the invoice, they call or email you about an invoice more than one out ten times. That’s a lot of inquiries. Inquiries take time to address, i.e. time away from processing, or compliance, or analysis, etc. Most of these inquiries — about 80 percent — are simple questions like “Did you get our invoice?” “Has our invoice been paid?” or “When will our invoice be paid?” These questions can be quickly answered once AP staff has stopped what they’re doing to look it up. How long does it take for an AP staffer to handle a vendor inquiry? On average, it takes eight minutes. However, that does...

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...

You interact with vendors every day. You do it in the context of specific, necessary functions like gathering requisite information, processing invoices, issuing payment, and answering inquiries. Your focus may be on just that. Getting those things done as well as your team and conditions allow. Any thought of the actual vendor is merely a second thought. As long as they get paid and don’t cause trouble, they’re fine — and you’re good. But whether they’re having a very good day isn’t really a concern of yours. Understandable. If they have a problem, well it’s theirs, not yours. Here’s another view. Your organization wants vendors that provide on-time delivery of products of consistent quality, with good service and attention to detail; it wants vendors that guarantee their products; vendors that are financially sound, and that will be there in the long run. Your company wants good relations with good vendors it can trust and rely upon. That makes sense, right? That view is the big-picture one, which can sometimes get lost in the day-to-day work that consumes your attention. But that larger view is the context in which the day-to-day should operate. Creating and sustaining good relations with good vendors requires intentionality on your part....

Vendors. You need them. More accurately, you need what they provide, be it product or service. And therefore you interact with them as the providers of the things you need to do what you do. They are anxious to interact with you — to provide services or products — in order to generate revenue. The term “vendor” can encompass everything from major material suppliers to various service providers, to the local bagel shop supplying food for team meetings. How you engage them will vary according to their role. But to transact business involves not only validating them as a going concern but also obtaining information from and about them. That is not just information on how and where to remit payment (which they’ll probably be sure to put on the invoice). It includes agreeing to terms and payment method; ensuring that they are not a sanctioned entity; and it includes understanding their tax status and obtaining their tax ID number (TIN). Bottom line upfront: The time to validate a vendor and gather their tax and payment information is before the vendor has provided a product or service, not after the invoice has been received and is to be paid by accounts payable. Those who’ve re-designed...

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...

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.

VIEW ALL BENEFITS
close-link

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.

VIEW ALL BENEFITS
close-link

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