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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…)
Technology Posts
Check Payment Software Requires Due Diligence
Tuesday, July 13th, 2010Maintaining Supplier Data and Information to Maximize ERP Systems and 1099 Reporting Compliance (Part 1)
Monday, July 12th, 2010Supplier 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.
AP Departments Steadily Automate
Thursday, July 8th, 2010Increasingly, 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.
Leaders in AP Continue to See Reduced Costs
Tuesday, June 29th, 2010When it comes to accounts payable, best-in-class companies continue to forge ahead, streamlining processes and cutting costs. In fact, a recent study, “Global Payments: Maximizing Cash Flow with Electronic Payments and Process Automation,” by Aberdeen Group found that top firms need less than five days to process a transaction. That compares with more than nine days for average performers, and nearly 16 for laggards. The top performers also have seen their AP processing costs drop by more than 14 percent annually, versus an average decline of 3.3 percent, and a slight increase in annual processing costs among the bottom 20 percent of companies.
Several attributes are common to many high-performing AP departments. For starters, they are 21 percent more likely to have established centralized processing or a shared service center for accounts payable than other firms. In addition, these firms are 37 percent more likely to have fully automated their procure-to-pay processes. (more…)
Unlocking trapped working capital from your supply chain (Notes from Spendmatters.com analysis of Basware and Lavante partnership announcement)
Thursday, June 24th, 2010Lavante’s recent activities were covered this week by an industry expert.
Jason Busch of SpendMatters.com spent some time exploring the new Lavante/Basware partnership diving a little more deeply into why such a partnership would take shape. Astutely, Busch points out that neither firm has played at “superficial Barney deals” (read: “I love you, you love me”) which frequently dot the partnership landscape. So why should these two groups, which may seem to have otherwise disparate backgrounds come together?
From his review of the deal announcement, Busch quickly connect dots, and highlights a marquee quote from the release, “the combination of Basware’s enterprise purchase-to-pay solutions and Lavante’s suite of Supplier Information Management (SIM) tools will enable Fortune 1000 companies to drive efficiencies throughout the purchase-to-pay process and maximize their return on investment.” If I may add a little more self-serving color around this quote… For years, Lavante has delivered vendor file management in tandem with its flagship supplier recovery services and has recently expanded vendor file processing into ongoing on-demand SIM. Basware customers, attempting to install enterprise-wide P2P solutions are often gated by poor quality of their resident supplier data and there really is no quick fix for this dilemma. Although a supplier cleanse project can prove helpful to improve data quality in the short term, that information begins to deteriorate rapidly. Lavante benchmarking demonstrates that at least 50% of suppliers will change some relevant attribute on an annual basis and the Institute of Management Accounting estimates that up to 7% of companies annually change their name. Long story short: Lots of constant change. The solution to this constant data drift may start with a project, but truly requires an ongoing process to sustain the data quality, and that is where Lavante SIM comes into play and provides that ongoing quality (as well as many other services).
Another of Busch’s accurate observations (which was not mentioned as directly in the release) is how Basware can leverage Lavante’s recovery services to decrease the barriers of entry for clients that run into budget difficulties. Busch writes, “Lavante can serve as a means to generate the working capital to fund investments in invoice automation solutions such as Basware.” For years Lavante has refined its platform for communicating with and driving compliance throughout a company’s vast vendor population. In that process, Lavante is able to perform a near-effortless review supplier AR ledgers. It is with this ongoing visibility that Lavante is able to unlock working capital from within the supply chain and return it back to the enterprise. These dollars which average about $600,000-$900,000 per $1Billion spent by an enterprise can quickly add up to millions of freed up working capital and can be applied to fund any number of investments in the P2P space and beyond.
Mobile Payments Are Slowly Moving Into The B2B Space
Friday, May 21st, 2010When it comes to paying their bills or checking their bank balances, consumers increasingly are relying on their cell phones. More than one-quarter of consumers with Internet-capable cell phones have used them to access banking records, up from 22 percent a year ago. What’s more, 20 percent had used their phones to pay bills, nearly double the 11 percent that had done so in 2009. The findings are the result of a recent survey by NACHA and several other organizations.
While consumer acceptance of mobile bill payment is growing strongly, B2B may not be far behind, according to this story in American Banker. According to the article, cells phones soon may be able to convert checks to ACH payments. That would work well in the B2B space, where checks still dominate. In fact, they account for between 65 and 80 percent of supplier payments, according to a 2007 survey by the Association for Financial Professionals.
MasterCard R&D
Wednesday, May 12th, 2010In yet another sign of the critical role technology plays in today’s payment processes, MasterCard last month announced the launch of MasterCard Labs, a new R&D organization within the company. Garry Lyons, group executive of research and development, will oversee the Labs, which will be located within MasterCard’s existing facilities in Singapore, New York, and St. Louis, Missouri. According to this article in Bank Systems & Technology, the company will be spending tens of millions annually on the Labs.
The Labs will allow the company to deliver new products and innovations more quickly and efficiently, Ajay Banga, MasterCard president and chief operating officer indicated in the announcement.
That will be key in the company’s quest to get out in front of innovation, analysts in this American Banker story indicated.
Growing Use of SaaS in Accounting
Wednesday, May 5th, 2010A survey released by the research firm, Gartner, Inc. last month indicated that software-as-a-service ( SaaS) applications have boomed in popularity. In fact, 72 percent of the 270 respondents indicated that they expected to increase their use of SaaS applications. That compares with 45 percent for on-premise applications.
One of the top SaaS implementations, also according to the survey, is expense management. Other popular applications are email, accounting, sales force automation and customer service. More than 30 percent of respondents reported using these applications on a SaaS platform. (more…)
Payment Fraud Remains an Issue, Survey Shows
Friday, April 30th, 2010It may be small consolation, but if your organization experienced some sort of payment over the past year, it certainly has company. Nearly three-quarters of companies – 73 percent, to be precise – experienced attempted or actual payment fraud in 2009, according to the 2010 AFP Payments Fraud and Control Survey.
What’s more, thirty percent of respondents said that incidents of fraud at their organizations increased between 2008 and 2009.
Perhaps not surprisingly, checks remain a trouble spot. In fact, checks played a role in nine out of ten organizations that had experienced fraud. That put checks far ahead of other payments vehicles, such as ACH debit, which was cited by 25 percent of respondents, and consumer credit and debit cards, where were cited by 20 percent of survey participants.
In their efforts to thwart would-be fraudsters, organizations increasingly are moving to electronic payments. In fact, 88 percent of respondents indicated that they were boosting their use of electronic payments in B2B transactions; 83 percent were doing the same with business-to-consumer payments.
Despite the increase in fraud, not all is doom and gloom. Of the organizations that experienced attempted or actual payments fraud last year, a large majority – 70 percent – escaped without any financial loss. Another 18 percent had losses of less than $25,000.
That’s not to suggest this a time for complacency. For 53 percent of respondents, the potential fraud loss could have topped $25,000. Clearly, effective fraud controls can pay off.
A New Type of Cash Machine
Tuesday, April 27th, 2010If you think LEGOs are strictly for the sippy-cup and coloring book set, guess again. Ron McRae built a functioning ATM from LEGO bricks. According to the description on www.MOCpages.com, a website dedicated to LEGO aficionados, the machine is built completely from LEGO parts. That includes the internal systems, such as an RFID sensor, that are sold through LEGO.
McRae’s Brick Bank can accept deposits, dispense cash and make change. It also can be calibrated to accept any type of bank note, sports a functional numeric keypad, saves the customer database after each transaction and will keep the user’s ATM card if the wrong password is entered three times.
According to this video on YouTube, McRae spent four months, used 8,000 LEGOs and wrote 1,800 lines of code to build the machine. Its weight is estimated at 22 pounds.
