Posts from July, 2010

More on IBANs

Tuesday, July 27th, 2010

Following last week’s post on international payments, today’s will go into more detail on the IBAN, or International Bank Account Number. The IBAN contains all the info a bank receiving a cross-border payment should need in order to correctly apply the funds.

IBANs consist of four groups of alphanumeric characters:

a)    The country code

b)   Check digits, calculated via an algorithm of IBAN

c)    The bank code

d)   The account number

IBANs can have more than 30 characters, although not all do. The exact length is set by each country’s banking sector, and all IBANs within a country must be the same length, reports the United Nations Centre for Trade Facilitation and Electronic Business.

The IBAN is being used as the primary means of identifying accounts in Europe; as a result, international payments without IBANs often take longer. If you will be paying an organization that’s located within Europe, you’ll want to make sure you receive its IBAN information. The IBAN Registry prepared by SWIFT also provides IBAN formats for several countries outside Europe, including Israel, Saudi Arabia and the United Kingdom. At the present, the IBAN is not being used for payments within the U.S.

Not sure about an IBAN? Several organizations offer online tools that payers can use to validate the structure of an IBAN.

Posted in AP Industry | No Comments »

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International Payments Continue to Pose Challenges

Tuesday, July 20th, 2010

Nearly three-quarters of the 700 respondents to the Travelex Global Business Payments Report, which was released in June, made and received international payments. That’s good news, of course.

At the same time, international payments can be difficult to complete. For starters, 81 percent of the survey participants said that payment patterns varied from one region of the world to the next. Because just about every country has its own payments systems and rules, standardization becomes difficult, says Adam Tiberi, senior vice president of global product management with Travelex. One-fourth of respondents said obtaining confirmation of payments and/or receipts was their greatest challenge when it came to international transactions, and 20 percent cited the lack of visibility into their cross-border payments and receipts.  (more…)

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Check Payment Software Requires Due Diligence

Tuesday, July 13th, 2010

If you see ads touting software that you can download to immediately start writing checks and paying your vendors, you’ll want to tread cautiously. The provisions of the Bank Secrecy Act require that sellers of payment software complete several steps that will enable them to verify the legitimacy of their customers, says Richard Rogers, president of yourfavorite.com, publisher of checkwriter.com and several other payment applications. The reason? Payment software that’s available on demand and doesn’t require any verification of the purchaser’s legitimacy, could be used by anyone, anywhere in the world, to defraud others or commit terrorism. (more…)

Posted in AP Industry, Technology | No Comments »

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Maintaining Supplier Data and Information to Maximize ERP Systems and 1099 Reporting Compliance (Part 1)

Monday, July 12th, 2010

Supplier information is integral to optimizing your relationships with your suppliers and for maximizing the value from your ERP system and other automated solutions.  Used correctly, a well kept supplier master data file is a strategic asset that can be leveraged into time savings, resource savings and dollars to your company’s bottom line.

The biggest challenge to maintaining the quality of your supplier data is its near immediate decay after being recorded.  Suppliers constantly undergo mergers, purges, acquisitions and employee churn that challenge the integrity of their data.  Dun & Bradstreet (D&B) reports its database of businesses experiences annual changes of 20% for addresses, 17% for business names, and 18% for phone numbers underscoring how quickly and frequently supplier data decays.  ERP systems perform some data quality measures at the time a supplier is set up, but they do little to preserve the integrity of the data over time.  ERP systems are reliant on quality data, but they do not ensure it.

Allowing your supplier data to decay over time is very costly to your enterprise. Inaccurate data delays implementation of ERP systems and other automated solutions and can prevent those solutions from achieving their optimal ROI, effectiveness or their value over time.  Failure to identify overlaps or relationships within your supplier population can lead to missed volume discounts or rebates as well as an increase of duplicate payments by up to 300%.  Poor supplier data quality is also very costly in terms of lost efficiency and time.  Bad addresses alone can lead to miss-sent shipments and checks.  Quality supplier data is also vital to stay in compliance with various external regulations and internal controls.  Failure to achieve this compliance can be both disruptive and very costly while causing great exposure and risk.

Collection and management of supplier data is more important now than ever.  New 1099 tax legislation included in the funding provisions of the Patient Protection & Affordable Care Act (March 2010) requires companies to collect valid Tax Identification Numbers (TINs) on a much larger scale than pre-legislation levels.  Today most companies are expected to perform 1099 reporting for less than 10% of their supplier population. When the new law takes effect, companies can expect reporting levels to rise above 90%.  Companies will need to implement new policies and potentially even new systems to manage supplier information more accurately in pursuit of staying in compliance.

The question arises: How are you going to ensure the ongoing quality of supplier information to achieve optimal project ROI and on-going efficiency while maintaining compliance with controls and regulations?

Check back for part two.

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Posted in 1099 Reporting, Supplier Information Management, Tax ID Numbers, Technology | No Comments »

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AP Departments Steadily Automate

Thursday, July 8th, 2010

Increasingly, the AP department is seen as a strategic element within companies and an area that can contribute to profits; perhaps as a result, it’s being monitored more closely. These are several of the findings of a recent study of 550 AP and finance professionals around the globe, which was conducted by Basware Corporation.

At the same time, manual processes within many accounts payable functions adds time and cost to the system. For instance, 30 percent of respondents said they’ve missed early payment discounts within the past twelve months, while another 27 percent incurred late payment fees. Similarly, about one-quarter of survey participants said mistakes by their customers meant their firms had not received a payment due them.

Human errors, either in AP or procurement, are behind more than half the mistakes, such as missing early payment discounts, survey respondents said. Lack of communication between the AP and procurement departments is the reason for another one-quarter of mistakes.

Perhaps because of this, a majority of companies are steadily moving to streamline their finance processes. More than half (56 percent) of the processes surrounding spending are now automated, versus 50 percent in 2009. In addition, 46 percent of indirect spending is captured in companies’ PO systems, up from 42 percent a year ago. Finally, 44 percent of respondents predicted that electronic invoices for B2B purchases will replace paper-based invoices within the next five years.

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