If there’s one thing that drives me crazy (okay - there’s quite a few things, but I’m only going to talk about one issue here) it’s the resort fees charged by certain hotels which are mandatory. And, these often present problems in accounts payable - but I’ll get to that in a bit.

To my way of thinking, if the resort fee is mandatory, it’s part of the price and I’d prefer the hotel tell me the ‘real’ price instead of pretending it is lower than it actually is. I recently was making a reservation and was presented with a ‘mandatory resort fee’ and asked the person taking the reservation why they didn’t just include it in the price and be done with it. This is what I was told (and I’m not making it up). “The reason the hotels break out the ‘mandatory resort fee’ is their customers prefer it this way.”

Yeah, that’s right, I thought. I’m sure every professional traveling on company business is just delighted to go back home and explain to a questioning boss why he or she has a resort fee on their hotel bill.

And, it’s not a picnic down in accounts payable either. Because, the bill rarely says mandatory on it. It just lists the resort fee. Then when doing policy compliance for T&E expense reports accounts payable is faced with an expense that is often not allowable under the T&E policy. I know of few organizations that will pay spa or gym fees for their traveling employees - and unfortunately that’s what the resort fee looks like.

What this customer would like from hotels she stays at is honest pricing -without the hidden extras. What about you? Does this issue create problems in your organization? If you have thoughts on this matter that you wouldn’t mind being posted, please either post here (registration required) or send them to marys@ap-now.com If you want to remain annonymous, simply say so in your note and I’ll leave off your name when I post you thoughts.

In addition to serving as editorial director of Accounts Payable Now & Tomorrow, Mary Schaeffer is the author of over a dozen business books published by John Wiley & Sons including Travel & Entertainment Best Practices. She has spoken on T&E issues on several webinars and created the T&E toolkit to help those looking to implement best practices in their Travel & Entertainment operations.

© 2008 all rights reserved Mary Schaeffer, Accounts Payable Now & Tomorrow, a CRYSTALLUS, Inc. publication

I was recently asked to give a talk on one of my favorite subjects: The Future of Accounts Payable. The person asking had no idea how much I like talking about this issue.  In fact, I even wrote a small book about it.

For a long time I have wanted to write a book for accounts payable professionals - to help them with their careers. I was adamant that the cost of this book be under $10 because I wanted virtually everyone who wanted it to be able to afford it. When I broached my editor at John Wiley with this suggestion he was not exactly encouraging. In fact, he told me that his organization could not do it at the price I wanted.

So, Accounts Payable Now & Tomorrow published it. We conducted a rather extensive survey of both accounts payable professionals and controllers. We asked each about their perception of the status of the accounts payable manager within the organization. Controllers were asked what skills, experience and education they would like in the next accounts payable manager they hired.

We compiled this data into a small 52-page book and managed to publish it at the cost I wanted. Perhaps one of the most interesting results related to the college education issue. While most wanted their new AP managers to have a college degree, it was not rated high on the list of what was important. From this we deduced that the college degree might be necessary to get you in the door (or an interview) but once there, other things were more important.

Perhaps the skill most prized by Controllers was the ability to solve problems.

For more information about this book go to the bottom of http://www.ap-now.com/special.html An order form is available for download for anyone who needs to order it and pay by check.

To purchase this $9.95 gem go to http://www.shop.ap-now.com/product.sc?productId=58&categoryId=4

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On June 23, 2008, the IRS increased the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008.

Readers of the AP Now free ezine, e-AP News received this news shortly after the announcement as the staff rushed out the weekly issue a day early. We’d been watching for an increase, given the horrific rise in gasoline prices, and were alerted to the news by several of our readers. [By the way, if you are not currently receiving our weekly ezine, you can sign up for it using the form on the right hand side of the AP Now blog or by going to http://www.ap-now.com/ezinesignup.html 

© 2008 Accounts Payable Now & Tomorrow, CRYSTALLUS, Inc. and Mary S. Schaeffer

In many accounts payable and accounting articles, the statement is made that taking the early payment discount of 2/10 net 30 is equivalent to a 36% rate of return. I’ve had more than a few questions about this so we thought we’d post the math behind it. Now, before you start to skip this, let me tell you that it is relatively simply. If you know how to multiply and divide, you have all the mathematical skills you need for this analysis

Let’s look at a $100 invoice with terms of 2/10 net 30. This means that if the invoice is paid before the tenth day, a $2 (or 2% discount) can be taken.

The formula is:

Amount of discount/Discounted Price     x    Number of daysin the year/number of days paid early

 Begin by dividing 2/98 and then multiply it by the number of days  in the year divided by the invoice was paid early (20 days). For this type of calculation, analysts tend to use 360 days in the year. The discussion of why exceeds the limits of this example.

2 divided by 98 = .020408
360 divided by 20 = 18

18 times .020408 = 36.7%

Hope this helps.

Mary Schaeffer
Accounts Payable Now & Tomorrow
author Controller & CFO’s Guide to Accounts Payable

I’ve just finished putting together the final material for Accounts Payable NOw & Tomorrow’s Thursday’s webinar and I am pretty excited about it. It focuses on one of my pet peeves. Poor practices in accounts payable can cost organizations a lot more than they realize. It’s that simple.

The title of the webinar says it all:  Controller & CFO Crash Course: Simple Ways to Maximize AP Productivity  I’m going to start the webinar by quickly going through the math to show people just exactly how much the poor practices cost. We’re going to show how to bring it right down to the bottom line – so that everyone gets the full impact. I really don’t think some people realize just how much some poor practices hurt their bottom line.

Then we’ll go through the individual issues that are often ignored and demonstrate the financial impact, wherever possible. The fact of the matter is, as most reading this are well aware, there are many simple things that can be done to improve both AP and the bottom line.

While I don’t think I have anything earthshattering to share I do believe that by looking at these practices from a different point of veiw, controllers, cfos and other high executives will get some appreciation for the financial impact poor practices have on their bottom line. While many do get it, there are still a good number out there who do not realize the full financial impact of these practices.

Okay, I’ve ranted enough. I’ll get off and finalize my notes for the lecture. The webinar is scheduled for Thursday, June 19th and CDs will be available two weeks later. I hope to see you there.

Mary Schaeffer

Accounts Payable Now & Tomorrow

author 12 John Wiley & Sons books including The Controller & CFO’s Guide to Accounts Payable

Oh my goodness, did we get questions regarding the introduction of Accounts Payable Now & Tomorrow’s new Top 100 Most Wanted Duplicates products. They broke down into two groups: the auditors wanted to know why we offer such a product and deprive them of some of the cream of their income while their potential customers wanted to know why the auditors wouldn’t cap their recoveries at, say $10,000 per item. The purpose of this post is to address some of the concerns/questions.

I’d like to start by explaining the product and our philosophy for developing it. I am a strong advocate of using duplicate payment auditors. I believe it is a best practice and adds to the bottom line. Yet, most experts estimate that only one-third of all organizations use outside audit firms to recover duplicate payments.

Whenever I talk to Controllers and other professionals involved in accounts payable, I hear the same reasoning over and over again. The controllers are adamant that the auditors are too expensive. Most wouldn’t mind paying the recovery fee on smaller recoveries but fear the auditor will find a million dollar duplicate necessitating a payment of several hundred thousand dollars for the one recovery. This is probably the main obstacle when it comes to hiring auditors. Of course, if you look at the matter from the auditors standpoint, these are the recoveries they want to make.

After discussing this concern with many people I slowly came to the conclusion that if there was a way we could eliminate these large payments from the landscape, more companies might be willing to hire third party auditors. But, how to eliminate these payments from the picture? After discussing the matter with our data analyst, we came up with our Top 100 list.

For a modest fee, you give us your data and we give you back a report that identies the largest top 100 potential duplicate payments. The company that purchases the report then takes it and researches the items to see if they are truley duplicate payments. This work will mirror what the auditors do and should eliminate most of the largest payments from the equation.

The goal of the work is two-fold. First, as already mentioned, the largest payment should be recovered by the organization itself and second, by doing the research themselves, the organization will gain some understanding of the amount of work the auditor must go through before actually identifying a payment that is a duplicate. My hope is that after doing the work, the company will begin to understand the amount of effort it takes to recover funds.

So, in response to the auditors who are clamouring that if their clients were to purchase this report we are taking away their most lucrative recoveries we can only say that we believe in the long run the auditor will end up with more business as potential clients (currently not using third party auditors) become more comfortable with the concept and become clients.

As to the end users who want to know why the auditors won’t cap their per item recovery fee, let me offer several insights. First, some will lower the percentage on higher recoveries. Second, it is a game of averages for the auditors. They need to earn more on certain recoveries to offset the work they do on smaller dollar recoveries. And third, if you are convinced a cap is the way to go, ask potential auditors if they will agree to such an arrangement. You may find a few who will. But, remember, in all fairness, the people who work at recovery firms are professionals and need to earn a living wage - or they won’t stay in the business.

© 2008 Mary S. Schaeffer, Accounts Payable Now & Tomorrow & CRYSTALLUS, Inc.

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I spent most of yesterday working on the Index for my book Preventing Fraud in Accounts Payable (John Wiley & Sons August 2008) - and finished just in time to meet my deadline - which, if I am going to be honest, is par for the course for me. Heaven forbid I worked on it before my back was to the wall!

As I went through the manuscript I was amazed at how much effort certain people will put into something rather than just doing an honest days work. I read a story in the last few days about an enterprising fellow who noted that when an online bill payment account is set up, usually the financial institution will send you a few cents to make sure the account data is correct. They do this before the account goes live. This man set up over 58,000 accounts and netted himself a little over $8,000. He wrote some sort of a program so he didn’t actually have to enter all the data for each account. Now, maybe I’ve missed something, but it seems to me that if he was smart enough to figure this out, he could have figured out how to earn an honest living - and had a heap less trouble for it along the way.

There is some interesting stuff in this book. I am especially pleased about the information I collected from PinPoint Recovery’s Bob Lovallo on spreadsheet fraud - something I never would have thought of if it hadn’t been for my conversations with Bob and Telecom fraud information provided by BottaBoom’s Mark Evans.

While I was aware of Telecom fraud, I did not know the extent of the problem nor how it was done. Now I do - and so will you after reading what Mark told me. He has also agreed to speak on an Accounts Payable Now & Tomorrow webinar on this topic on June 26th. We’ll have the CD available for sale shortly after. He’s agreed to include some cost saving tips as well.

Mary Schaeffer, author Preventing Fraud in Accounts Payable, editorial director Accounts Payable Now & Tomorrow

© 2008 Mary Schaeffer, Accounts Payable Now & Tomorrow, CRYSTALLUS, Inc.

Information about all Accounts Payable Now & Tomorrow webinars.

Order any John Wiley & Sons book and get a 15% discount by clicking on the Wiley link on the bottom of AP Now’s Resource page.

Accounts Payable Now & Tomorrow received the following inquiry from a reader in the healthcare industry whose company is considering the purchase of a new computer system. “According to the demos I have attended”, she wrote, “Most of the work and verification is done in purchasing. This is going to be a big change for that department and for accounts payable. 

“I am wondering,” she continued, “how other companies divide job duties and how they went about implementing procedures/systems the first time around. Right now in our company, purchasing places the order and receives the shipment.  AP gets a copy of the PO and when the packing slip comes in purchasing verifies and codes what they know then passes it along to AP.  I then verify what they have done and key it into the system.  I correct any errors and hold items that are questionable until a manager can verify them.”

I responded that typically – and I use that word loosely – there are three parties involved. The receiving is not done in purchasing but in a separate receiving unit. I hope that the person purchasing is not the one receiving the goods and verifying the packing slip. If so that would be a serious slip in internal controls. The verification and matching of the three documents is almost always done in accounts payable. I also said I’d ask readers how they handled this issue. Responses can be posted to the Accounts Payable Now & Tomorrow blog (registration required) or sent to marys@ap-now.com for anonymous posting.  

Those interested in this issue might also be interested in the Accounts Payable Internal Controls CD or the Accounts Payable Best Practices CD.  Return to the Accounts Payable Now & Tomorrow home page.

When preparing to write my new book, Preventing Fraud in Accounts Payable, to be published in late August 2008, the newsletter, Accounts Payable Now & Tomorrow, conducted a survey. One of the questions we asked related to how many of the participants organizations had experienced fraud in the last ten years.

As the preliminary results rolled in, I was astounded and concerned that the only ones responding to the survey were those who had experienced fraud and those who had not were not responding. So, we went back to the potential participants and clearly invited those who had not experienced any fraud to answer the survey.

And, guess what happened to the results when we did that? ABSOLUTELY NOTHING!! The response rate stayed the same. Over 90% of the organizations of those responding had experienced some fraud in the last ten years. To be clear, participants (controllers, CFOs, accounts payable managers and accountants) were instructed to exclude things that might be considered petty theft - like putting in for a movie reimbursement on their travel and entertainment expense reimbursement report.

In the past I have always felt that fraud numbers understated the problem as people can only report frauds that have been uncovered and some people are too embarrased to admit fraud happened on their watch. Clearly the second issue has all but evaporated.

I related these figures to a colleague at a recent conference. Her response: “the rest haven’t found the fraud!” While only a tiny percent of people will steal given the opportunity, it is the job of those responsible for an organization’s financial well being to guard against those few - and apparently every organization has at least one employee, vendor, customer or third party who will try and get their hands of some of that organization’s assets - be if money or goods!

One of the most interesting parts of the survey mentioned above is the stories participants shared. Over 50 of them are included in the book - and many of them prove that “life is stranger than fiction.” I couldn’t have made some of the stuff up, if I tried!

Those wanting a head start on fraud prevention might try one of Accounts Payable Now & Tomorrow’s two fraud prevention/detection CDs. There is a link to all our CDs currently available for sale at the bottom of http://www.ap-now.com/webinar.html  

I wish all readers the best of luck in thwarting them - and hope that my new book, Preventing Fraud in Accounts Payable helps, at least a little, in that regard.

Mary Schaeffer
www.ap-now.com

© 2008 Mary S. Schaeffer, Accounts Payable Now & Tomorrow, & CRYSTALLUS, Inc.

I recently wrote a story in our weekly ezine (signup at http://www.ap-now.com/ezinesignup.html) about being stuck at the airport (AGAIN - but that’s another story). While I sat and enjoyed a dinner purchased at Ben & Jerry’s, an industrious young man spread out his receipts and started doing his expense report - ahh, that I should be so industrious.

After that story ran, I had a note from a reader inquiring if I had noticed what software the young man was using. Needless to say I hadn’t - I mean which would you focus on T&E software or Coffee Coffee, Buzz Buzz Buzz ice cream?

Luckily, a few of our readers were more observant and wrote with descriptions of products that could be used away from the office. They are posted in the comments section after this piece.

Interested in Travel & Entertainment Best Practices? Take a look at our T&E resources at http://www.ap-now.com/travelandentertainment.html

© 2008 Mary S. Schaeffer, Accounts Payable Now & Tomorrow, & CRYSTALLUS, Inc.