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CONFIDENTIAL 2015
Improve Regulatory Compliance & Risk Improve Regulatory Compliance & Risk Management using Best PracticesManagement using Best Practices
February 26, 2015February 26, 2015
LIVE WEBINAR
Speakers: Joe Flynn, Lavante Inc.Mary Schaeffer, AP Now & Tomorrow
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Left side of your console• Submit questions privately• We will answer them during the presentation as
well as at the end
Listen through your computer. • There is no dial in number
2
Mary SchaefferEditorial Director & PublisherAP Now and TomorrowEducation Director & [email protected]://www.linkedin.com/in/accountspayable
Introductions – The Panelists
Joe Flynn
Co- Founder of Lavante, Inc
http://www.linkedin.com/in/jflynn10
Agenda
• Introduction
• Strategic Objectives
- Challenges- Solution
• Main Elements of a Supplier Management Process
• Top 6 Best Practices
• ROI Calculator
• Q&A
4
Main Elements of Supplier Management
1. The Communication Gap
2. Data Collection
3. 3rd Party Integration & Validation
4. KPIs and Reporting
Communication is the Foundation to Regulatory and Risk Reduction
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Main Elements: #1 Communication Gap
• Multiple internal locations &
divisions
• Numerous departmental needs
• Many documents and data required
• Diverse supplier population
• Supplier data constantly decays
• Compliance to internal controls
requires multiple manual touches
Manual Intervention – Poor Compliance
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The Vendor Master File Solution – Simplified
• Internal controls configuration
• Establish configurable workflows
• Leverage contact information
• Utilize multimode outreach
• 3rd Party integration / validation
• Cross company visibility
• Real-time reporting
• Auditable process
Automated Controls – Great Compliance
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3rd Party Validations
Main Elements: #2 Data Collection
• Multiple contacts details
• Document collection
• Regulatory details
• Diversity information
• Tax documents
• Contracts
• Other…
Deploy configurable, time based workflows
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Main Elements: #3 Third Party Integration
• IRS – Tin validation
• OFAC -Terrorist watch list
• EPLS – Excluded parties list
• W8 Collection - management
• USPS address validation
• International ID collection
• Other…
Define Controls to Mitigate Risk
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Main Elements: #4 Reporting and KPIs
• ROI
• Reporting
• Configurable workflow
• Configurable fields
• Communication engine
• Cross department visibility
• Other…
The benefits of the changes must outweigh the costs
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Supplier Management: 6 Best Practices
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Improve processes and controls
1. Vendor Master File cleanse process
2. Close the supplier communication gap
3. Automate compliance and validation
- IRS, OFAC / SDN, USPS, EPLS
4. Define internal risk tolerance
- TIN Verification
- W8 FATCA compliance
5. Review supplier statements for open credits
6. Deploy supplier portals
• Managing suppliers is a process, not a project.
• Severely limit editing access to the vendor master file.
• Role-based SoD (segregation of duties) controls can prevent fraud.
• Do not share IDs and passwords.
• Vendor change reporting by user.
• Deactivate old suppliers while maintaining old data.
Best Practice #1- Cleanse the Vendor Master File
Best Practice #1
Ongoing Vendor Management / VMF Cleansing
Eliminate duplicate suppliers– Advanced duplicate supplier algorithms
– Multiple scans
Associate related suppliers– Eliminate duplicate vendor master files created
– Identify related suppliers: parent and subsidiary
– Manage suppliers’ multiple addresses
Existing vendor file – Request aged data, such as insurance certificates
– Portal to accept data changes
– Document management
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Best Practice #2 - Close the Communication Gap
• Good information flow to suppliers, leads to good supplier relations and an efficient AP department
• Provide information via internet for suppliers
• Make a welcome letter available spelling out terms and where to find information
• Inform the supplier of their various contacts
Best Practice #2
Establish a repeatable process to communicate relevant information to vendors
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Best Practice #3 - Define your Internal Risk Tolerance
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Best Practice #3
•Create companywide risk-tolerance plan with defined controls.
•Automate supplier outreach to collect data accurately and efficiently.
•Leverage filtering tools to determine document and data accuracy against internal control set.
•Use auto-validation service to continually check supplier data against TIN, OFAC, SDN, address and other databases, providing alerts when suppliers are non-compliant.
•Deploy dashboard to track progress on strategic projects.
Understanding Your Risk Mitigation Strategy
Which validations are right for us?•TIN collection and matching— EU VAT
•W-8 collection— FATCA compliance
•OFAC (Office of Foreign Assets and Controls)
•SDN (Specially Designated Nationals)
•SAM (System for Award Management)
•OIG — LEIE (List of Excluded Individuals and Entities)
•Regulatory compliance
•Bank routing validation
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Organizational alignment
Best Practice #4 - Automate Compliance
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• Automatically collect, store and manage all supplier data
• Patented communication engine automatically performs outreach to collect supplier data accurately and efficiently
• Auto-validation service continually checks supplier data against TIN, OFAC, SDN, address and other databases, providing alerts when suppliers are non-compliant
• Track progress on strategic projects
• Dashboard tracks progress on strategic projects such as ACH, COI collection and tracking
Best Practice #4
IRS TIN Matching
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Foreign Account Tax Compliance Act
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OFAC Screening
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Best Practice #5 – Review Supplier Statements
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• A vendor credit is money held by the vendor which rightfully belongs to the customer.
• Vendor credits are created for a variety of reasons.
• Reviewing vendor statements should be looked at as a process not a project.
Best Practice #5
What is Statement Recovery?
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Statement Recovery: Identifies Overlooked Supplier Credits
• Duplicate payments
• Overpayments
• Returns
• Rebates
• Quantity Discounts
• Contract Discrepancies
• Overpaid Sales TAX
• Freight Overpayments
Implement an external Vendor Portal to reduce risk within your supply chain while
improving your internal controls.
It is better to crawl than to stand still.
• Identify your internal controls and risk tolerance profile.
• Automate the labor-intensive process of vendor communication
• Leverage the vendor communication for other important tasks:
- Vendor file cleansing
- Collecting W-9s and matching TINs
• For FACTA, collecting W-8s and determining 1042-S withholding
• Performing integrated supplier on-boarding
• Ongoing government validations for OFAC/SDN, SAM, EPLS, VAT
• More…
Empower your staff
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Best Practice #6 – Deploy Vendor Portal
Best Practice #6
A Vendor Portal is an online interface that allows you to exchange
data online with your suppliers electronically.
The 3-Step Deployment1) Establish your internal supplier communication controls and needs
• Data collection
• Document management
• Segregation of duties
2) Integrate workflow for data validation• Internal approval workflow
• External workflow — third parties to validate data
3) Enable E-commerce• Invoicing and discounting
Best Practice #6 – Steps to Success
Vendor Portal Obstacles Consistent
• Lack of money for AP projects (cited by 45.1%)
• AP is far down the overworked and understaffed IT department’s list of things to do and departments to please
– 44.4% cited limited IT resources
• Lack of management support (cited by 34%)
– The bills are getting paid
– They have no idea what’s going on behind the curtain
• Many respondents just don’t know where to start!
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3 Major Themes
• Managing the Vendor Master File is becoming the norm– Manual processes and lack of automation
– “Need” not a “want”
– Government regulations increasing
• Many competing strategic objectives– Needs as diverse as the companies themselves
– Cross-department workflows
– Each task labor-intensive
• No clear way to quantify cost/benefit of projects– Manual processes daunting – do not want to ask for
headcount
– No clear way to value compliance
– Lack of automation tool set
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Understanding Your Current Expenses and Processes
• Analyze current cost structureby department
• Identify targeted areas for improvement
• Establish level of investment against level of savings: Create ROI model
• Evaluate progress
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Supplier Management Cost Analytics
Closing Thoughts
• All business should use a Vendor Portal as part of their risk mitigation and control strategy.
• It is better to crawl toward supplier compliance than to stand still
• Supplier Management should be looked at as a controlled process not a project.
• Vendor Portals should reduce internal labor – High ROI
• Government regulations issues are increasing
• Know your strategic objectives
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Thank you / Questions
Q&A
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Mary SchaefferEditorial Director & PublisherAP Now and TomorrowEducation Director& [email protected]://www.linkedin.com/in/accountspayable
Joe Flynn
Co- Founder of Lavante, Inc
http://www.linkedin.com/in/jflynn10
About Lavante
13 years delivering supplier management software solutions
– 125+ Fortune 1000 customers
– Patented technology and processes
– Long-term customer relationships
Lavante Connect™ Platform– SIM: Reduces Risk & Enhances compliance
– Automation of supplier qualification and VMF cleansing
– Recovery: Identifies open credits and provides highest recovery rate quickly
– Open platform enables 3rd party development and integration partners
– >2 million supplier connections in database
Speed to Value– Ease of deployment
– Quick outreach and immediate vendor compliance
– Ease of use
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• SaaS Enabled
• Open API
• Multi-Language
• SSAE16
• SOC2 Type2
• ERP Integration
• User Controls
• SSO Integration
• Reporting & Analytics
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About Mary Schaeffer
• Publisher and editorial director of the Accounts Payable Now
& Tomorrow monthly newsletter
• Editor-in-Chief; Education Director IFO
• Publisher of weekly e-zine, e-AP News
• Nationally recognized accounts payable expert and consultant
• Creator of Institute of Financial Operations Accounts Payable
Innovation Certificate program
• Creator of numerous NASBA CPE courses for CPAs and AP
professionals
• Author more than 15 business books including the Controller
& CFO’s Guide to Accounts Payable and Fraud in Accounts
Payable: How to Prevent It
• M.B.A. Finance, NYU; B.S. Math, York College (CUNY)
• She can be reached at [email protected]
