For AP professionals, including Controllers and CFOs, year-end is a race against the clock. If you’ve ever gone through a year-end closing, you know exactly how happy you are to see the end of January arrive. I have a few ideas for getting you prepared so that when this December rolls around you’ll be strolling through the month versus sprinting at the bitter end.
Master Vendor File Cleanse
First, it’s summertime and maybe your task list and email traffic is a bit lighter (at least for another few weeks). Take advantage of the summer slump, make year-end closing easier, and streamline enterprise-wide processes by simply cleaning up your master vendor file. See below for the top 10 questions to ask as you put yourself or a team member to task.
- Have you consolidated all your vendor data, standardized company names, addresses and other vendor information based on global standards?
- Have you verified addresses, banking information and other critical data with external sources to ensure accuracy?
- Did you obtain a W-9 or an equivalent form before setup and payment?
- Are you familiar with the IRS Taxpayer Identification Number (TIN) matching system to validate the TIN against the vendor name?
- What is your process for avoiding duplicate payments? Have you considered adopting a vendor payment policy that requires an official invoice, including an invoice number that references a contract number to avoid this issue?
- How many vendors have been inactive for the past 15-18 months? Perhaps it’s time to remove them from the system.
- How many data gaps are there in your files? When is the last time you scrubbed your files and took the time to fill in phone numbers, email addresses and most importantly, corporate linkages? (Duplicate vendors and payments can occur due to external activities, such as mergers and acquisitions, so be sure to familiarize yourself with parent and subsidiary relationships between suppliers.)
- Are you inundated with inbound calls and emails regarding receipt and payment status (i.e., are you looking for a way to free up your staff to dedicate time to high-level, strategic tasks)?
- Are you seeking a method for individual vendors to update their own information, improving accuracy and minimizing issues with missing data? If you answered “yes” to #8 and 9, consider a self-service portal for suppliers.
- Do you have an accounts payable automation solution so you can create a standardized vendor setup process with internal controls that will ensure your organization’s compliance with regulations and 1099 tax legislation? By the way, if you do, you’ll also eliminate IRS B-notices and fines by ensuring business isn’t conducted with companies on federal watch lists.
Next thing you know, you’ll be in Q4 and December will be upon you. That’s when you’ll be ready for this checklist to plot on your calendar. Start right after Thanksgiving.
Year-End Checklist for Accounts Payable
- Establish a calendar that contains all deadlines and due dates
- Review vacation schedules to ensure adequate AP staffing
- Remind employees of invoice and T&E deadlines for 2017
- Review 1099 supplier information to make sure it’s complete
- Perform open PO analysis of what has been received, but not invoiced
- Assign year-end tasks to appropriate team members
- Research and properly account for any outstanding checks
- Establish proper procedures for invoice and T&E accruals
- Make sure all invoices that have been received are entered into the system
- Review all invoices received shortly after the new year to determine if they should be accrued
More best practices may be found in AvidXchange’s new e-book.