AFP Blogs

The Heritage Foundation was experiencing rapid growth and wanted to improve its manual A/P process without increasing overhead. In 2008 it determined that its best solution was to outsource A/P to a third party, in this case API Outsourcing, Inc. As a result, the Heritage Foundation experienced a 29 percent increase in A/P volume over the prior year.

Mark J. Schreiber, Chief Accountant at the Heritage Foundation, offers the following advice to improve your A/P processes:
• Do your research
• Project five to 10 years down the road to account for growth and change in your organization
• Determine how this project relates to your organization’s overall needs both now and into the future
• When looking to renovate or improve upon an internal process, don’t be afraid to think of solutions outside your organization, and for the opportunity to reconstruct a process from the foundation up.

Read more of this “Problem Solved” case study in the next issue of Payments.

On Friday, new NACHA rules governing International ACH Transactions take effect. Identifying each payment that enters or exits the U.S. as an IAT will offer a much clearer view of the amount of international traffic in the system. However, complying with the new rules could mean more work for corporate practitioners and bankers alike. (more…)

Rob Olsen, VP/Chief Risk Officer, Wright Express Financial Services Corp., is the focus of the “Problem Solved” column in the September issue of Payments. Olsen offers three tips to improve collections:

• Expect bumps when you customize your collections scoring. “The biggest frustration we ran into was because we asked SunGard to customize the scoring piece,” says Olsen. “That did create a longer implementation timeline.”

• It’s the data, stupid. “The biggest mistake is sticking to the old way,” he says. “There’s enormous gains that could be made if people could make data-driven decisions with a predictive score, and when you marry that with an efficiency tool customer service and collections improve significantly.”

• Look beyond DSO. “The other big mistake is basing the efficiency of any collections operation on DSO, and this is common among treasury people,” he says. “It’s so biased toward sales. DSO is great for understanding the overall quality of the portfolio, but not as a collections efficiency tool. It’s a barometer.” Instead of DSO, use a collections-effectiveness index to determine the efficiency of the collection team.

This was supposed to be a good week for SWIFT, but it’s not turning out that way.

First, it rained on SWIFT’s party — literally. A typhoon hit SWIFT’s annual Sibos conference in Hong Kong, forcing many exhibitors to cancel their events. Attendees stayed in their hotel rooms as rain and winds approaching 140 mph lashed the city Tuesday.

To make matters worse, SWIFT’s CEO announced that layoffs are inevitable, as Lazaro Campos said SWIFT was grappling with declining volume and efforts to cut costs by 20 percent. SWIFT is likely to report its first decline in year-on-year volume in its 37-year history, according to reports. Year-to-date volume is down 2.5 percent, and 11 percent off the projected forecast for the year.

Wal-Mart announced plans earlier this month to take its payroll paperless by urging its more than 1.4 million U.S. workers to accept direct deposit into a bank account or take pay via MasterCard-branded debit cards. About half of its employees still receive paper checks. Paperless payrolls aren’t new, but coming from the nation’s largest private employer, the move could hold sway, persuading many more companies to follow suit, experts have been predicting. (more…)

U.S. corporations prefer ACH and card payments to checks when making or receiving B2B transactions, according to new research from the Federal Reserve and comments from AFP’s Payments Advisory Group and senior executives with the Fed’s Financial Services Support Office. That’s a notable change in their views since the two groups held a similar meeting held in 2004. (more…)

Treasurers and controllers are the targets of cyber-fraud, according to the Financial Services Information Sharing and Analysis Center, receiving e-mails that contain a virus-laden attachment or a link that installs mal-ware designed to steal passwords upon opening. The scammers then conduct wire-transfer fraud in increments of less than $10,000 to avoid banks’ anti-money-laundering reporting requirements. (more…)

Consider using risk-based collections instead of targeting the largest and oldest dollar amounts first. That’s the advice from Rob Olsen, VP/Chief Risk Officer, Wright Express Financial Services Corp.

The result: Wright’s DSO is 19, helping to minimize costs and maximize cash flow. (more…)

The next time you grumble about your treasury department’s big challenge, consider the Herculean task the City of Los Angeles Office of the Treasurer faced when it updated its processes:

- A $17 billion annual budget with 50,000 workers
- A 30-year-old payments system
- A highly politicized office environment
- The largest budget deficit in the city’s history
- An overwhelming resistance to change.

Despite all that, the Los Angeles Office of Treasury succeeded, winning the 2009 AFP Pinnacle Award for strategy along the way. Here’s what it accomplished:

- Reduced unidentified deposits from 1,220 to less than 20 per month
- Automated general ledger posting, resulting in the reduction of 107 FTE hours per week
- Realized annual float savings of $1,127,000 from implementation of four controlled disbursement accounts
- Decrease compensating balances with an associated increase in return on investment of $4,025,000.

LA’s Treasury Department will be honored for its effort at the AFP’s Annual Conference, Oct. 4-7.

Read more about it in the next issue of Exchange.

How long do you wait until contacting a vendor or customer who hasn’t paid? The answer, according to C.J. Wimley: It depends.

Wimley, EVP of Corporate Solutions with SunGard, advocates risk-based collections. Some customers and vendors are riskier than others, he says, so they merit closer scrutiny.

“Don’t wait until 15 days late; call three days before payment is due,” Wimley says of high-risk customers and vendors. “When you properly do credit in trade receivables you assign a risk rate with customers. It’s as important as the credit process.”

According to the Credit Research Foundation, only about 20% of companies use risk-based collections.

Look for more from Wimley in a future issue of Payments. Wimley also will speak at AFP’s Annual Conference, Oct. 4-7, in San Francisco.