Excerpted from the January 2010 issue of Accounts Payable Now & Tomorrow.

Paper checks are costly, inefficient, and a huge headaches for those toiling away in accounts payable. Yet they remain the tool used to pay the majority of invoices, even at many organizations with the ability to pay electronically. To change this situation, it may be necessary to go on the offensive and find ways to grow your ACH program. It’s certainly worth the effort, given the nuisance of paper checks. What follows are seven assertive techniques to grow an ACH program be it one that is languishing or one that’s thriving but could use a little extra oomph.

Don’t overlook your Web site. Publish ACH information on the company Web site. Occasionally a vendor you might not have approached will want to participate. Make it easy. Also, if you are going to take this approach, include your vendor enrollment form on the site. Do this only if you are willing to include all vendors in the program. Otherwise, you may find your p-card vendors signing up for the program—and there goes your rebate.

The rest of this article, along with articles on: bank account takeovers that lead to unrecoverable transactions, AP New Year’s resolutions and how to keep them, 1099K (a new proposed IRS form), the Procurement/Finance Gap (an excerpt from a fine Baseware white paper), a naming convention check list you can use for your master vendor file, a look at recovery audits, and a overview of advanced 1099 issues for W-9s, are all in the January issue of Accounts Payable Now & Tomorrow. Of course, the issue also includes two pages of tips and strategies you can use to fine-tune your AP process.

You can purchase the single issue using the link below or subscribe for one or two years and receive our quarterly podcasts as part of that subscription.

Purchase an electronic copy of the January 2010 issue of AP Now newsletter.

(c) 2010 Accounts Payable Now & Tomorrow and CRYSTALLUS, Inc.

Do you have written policies and procedures that explain exactly how you classify workers? If not, you are already headed down the wrong worker classification path. At Accounts Payable Now & Tomorrow’s Worker Classification Webinar  Balance Consulting’s Steve Mercatante, Esq. alerted the audience to the dangers of not having one. Before we started, he told myself and Kathie, our intrepid managing editor, that he was apprehensive that he would sound too lawyerly and that would bore the audience. 

As incredible as this may sound, especially given the topic, Mercatante was anything but dull. He started out by quoting a Wall Street Journal article that indicated in the last six years, there were 11,000 audits that resulted in 483,000 workers being reclassified and costing the organizations that employed them three quarters of a billion dollars (yes, billions) in back taxes and penalties.

He also pointed out that the IRS no longer strictly follows the 20 Factor Test (remember that?). CDs of the event are available for sale.

To make sure you get your TIN Solicitation procedures right, please join us on April 2 as Mercatante’s colleague, Denise Johnson, Esq., addresses the issue of W-9 & W-8 TIN Solicitations: A Best Practice Program for 2009 and Beyond.

First off, as most everyone who works in accounts payable knows, it is a BEST PRACTICE to get a W-9 from every new vendor you do business with. Do not take their word that they are a corporation and you don’t need one (for that may not be true within the next few years). Additionally, and more to the point, they might not be a corporation (even if it says so in their name) and your organization could be on the hook for their taxes not paid, along with penalties for inaccurate reporting. 

Yes, let me reiterate before I start talking about the TIN Matching Program, that within the next few years it is very likely that a W-9 will have to be issued for ALL payments made for services.

Once you get the coveted W-9 (ideally before the first payment is released to the vendor), you can check that the information on the W-9 is correct by verifying it using the IRS’ TIN Matching Program. Everyone should sign up and use it. Those who do report something like a 98% drop in the number of B-Notices they receive each year. Imagine having to deal with 2 B-Notices instead of 100. Not only that, it helps flush out fraudulent vendors who were bold enough to supply a falsified W-9 in the first place. Note: Just requiring a W-9 is enough to scare off a high percentage of the crooks.

So, given the obvious benefit of using this FREE service, why hasn’t everyone signed up? The problem comes with a misconception about the sign up process. Before using the service, the IRS requires a high level organization executive with the authority to bind the organization to sign the organization up for the program. Once the sign up is complete (and none of that information is ever seen by anyone at the organization again), the day-to-day operation of the Matching Program can be turned over to someone in accounts payable.

So, what’s the problem. The IRS wants to make sure that the person signing the company up is who he or she says they are. In order to do this, the IRS requires a little personal information - namely the person’s social security number and their AGI from their last tax return. Now keep in mind, you are not giving the IRS this information - THEY ALREADY HAVE IT. It is just being used by the IRS to verify that the person signing the company is who they say they are.

The tax return number appears to be the problem. Despite be assured that this information can never be accessed by anyone once the application is completed, some CFOs and Controllers drag their feet. This is unfortunate because the service is excellent and companies are being held back by what amounts to an old wives tale. In fact, in some organizations, the accounts payable manager fills in as much of the application as possible and then leaves the room while the sensitive tax information is entered.

In a few organizations this responsibility is delegated in writing to the accounts payable manager by the CFO or the Controller.

Use of the IRS TIN Matching Program is a best practice advocated by all who are interested in running an efficient accounts payable operation. Don’t let the imaginary concern regarding your tax information stand in the way of your organization using what is probably one of the finest developments to come out of the IRS in a very long time.

Want to learn how to use the TIN Matching Program? You can read all the information on the IRS website OR you can listen to the AP Now CD on Using the TIN Matching Program.

Return to the AP Now homepage.

© 2008 Mary Schaeffer