The P2P Certification Program

Transcription

1 The P2P Certification Program Developed by: Institute of Finance & Management 121 Free St Portland ME,

2 P2P Certification Program Overview For professionals in both accounts payable and purchasing, business has never been more dynamic or more challenging. Today s world is one of continual change, where financial pressures are an overriding consideration. Doing more with less is a common theme in many organizations. Not only has change been a constant, but also the rate of change has been accelerating. While technology has been a significant driver of this change, even organizations that have not implemented advanced technology have been confronted with the need to change in response to changes in the way their business partners operate. Other factors are also responsible for significant changes in the way organizations do business. Globalization, rising labor costs, volatility in the pricing of commodities, and sustainability issues all are factors that, increasingly, even smaller organizations must take into consideration. And there is every reason to believe these trends will continue. Historically, accounts payable and purchasing have been structured as separate entities within the organization and have done little if any partnering with other departments or third parties. This business model no longer serves the needs of organizations that wish to succeed in today s climate. Today s business model requires flexibility and speed in addressing client demands. In addition, it must provide for integrated end-to-end solutions, responsive cost structures, and business processes that adapt to emerging technology. Whether referred to as Procure-to-Pay, Purchase-to-Pay, or simply P2P, alignment between procurement and payables is the state of things to come. P2P enables organizations to solve perennial problems that manifest in payables as a result of unaligned policies and processes. It enables purchasing and payables practitioners to speak with one voice, operate from one set of policies and procedures, reduce inefficiencies and costs through thoughtful application of automation, enhance vendor relations, analyze and manage spend, and provide additional value to their organizations. 5

3 THE P2P CERTIFICATION PROGRAM The concept behind the AP & P2P Network s P2P Certification Program is to assist procurement and payables leaders and practitioners in understanding purchase-to-pay, thinking end-to-end, analyzing and redesigning their processes, and introducing and managing change. The mission of the program is to prepare procurement and payables professionals, through education and instruction, to benefit their organizations by redesigning and restructuring their organizations and to acknowledge, recognize, and certify those leaders who have already successfully established, and work within, an integrated procure-to-pay process. This study guide represents an important step in accomplishing this goal. 6

4 The P2P Certification Program TABLE OF CONTENTS P2P CERTIFICATION PROGRAM OVERVIEW...5 INTRODUCTION...17 SECTION 1. THE EXPENDITURE CYCLE, AKA PURCHASE TO PAY...19 Identifying a Successful Expenditure or P2P Cycle Automating P2P SECTION 2. ALIGNMENT OF PURCHASING AND ACCOUNTS PAYABLE Common Issues That Alignment Resolves Silos vs. Collaboration Involving AP From the Get-Go Breakdowns in the Vendor Relationship Streamlining Processes and Sharing Data to Provide Value to the Organization Bottom-Line Advantages of an Aligned Process Opposition Orientation/Guiding Philosophy Communication Collaboration Customer Service Process Improvement SECTION 3. AGREEMENT ON SCOPE Vision and Mission Vision Mission Statement What Is P2P and What Is it Not? How Do We Procure? When Is a PO Required? How Do We Receive? How Do We Pay? How Efficient Are We? Partnering With External Service Providers Processes That Are Candidates for Out-Sourcing Consideration SECTION 4. STRUCTURE Where Does P2P Belong in the Organizational Structure? One Department vs. Two Changing Physical Space Assists in Changing Mental Space Upper Management Support CFO or CPO vs. CP2PO Does the Title Make a Difference? Shared Services... 42

5 THE P2P CERTIFICATION PROGRAM SECTION 5. TRANSITION Reengineering Mapping From Recognition of Need Through Settlement Creating New Business Partnerships Relationships Outside the New P2P Department Modifying Policies & Procedures to Reflect New Partnership & Processes Designing Systems and Forms for Ease of Use SECTION 6. ADAPTING TO CHANGE Adapting to the New Structure Training System Training Inside P2P Internal Control/Internal Audit Requestors and Approvers in Business Units and/other Departments SECTION 7. PROCUREMENT HOW ORGANIZATIONS BUY GOODS AND SERVICES...55 Total Cost of Ownership (TCO) Organization of the Procurement Department Direct vs. Indirect Spend Areas of Potential Impact by the Purchasing Department Outside Purchasing s Area of Impact Buying Channels Implementing a Buying Channel or Commodity Strategy Vendor Selection/Sourcing Vendor Qualification Preferred Vendors Establishing the Vendor Relationship Contracts Oral Contracts and Oral Agreements Terms and Conditions Vendor Onboarding Purchasing Documents Requisition Purchase Order (PO) Blanket Purchase Order (Order-up-to PO) Order Acknowledgment/Receipt of Order Purchasing Policy Managing the PO Process Delegation of Authority Who Can Buy What? Approvals PO Policies and Procedures

6 Table Of Contents Commodity Shopping Making Changes to a PO Before Receiving Making Changes to a PO After Receiving Segregation of Duties PO Maintaining up-to-date Costs Unit of Measure Issues Logistics Inbound Freight Spend/Management Purchasing Indirect Goods and Services Managing the non-po process Segregation of Duties Non-PO Maverick Spend One-Time Vendors SECTION 8. RECEIPT OF GOODS AND SERVICES Receipt of Goods Four Steps in the Receiving Process Automation Receiving Documents Receiver Advanced Shipping Notice (ASN) Bill of Lading Packing Slip or Packing List PO-Based Goods Receipt Process Blind Receiving vs. Invoice Receiving Blanket POs or Standing Orders Returns ERS/Pay on Receipt (POR) Non-PO-Based Goods Receipt Process Receipt of Services SECTION 9. ACCOUNTS PAYABLE AP Documents Invoice Check Request (aka In-House Invoice) POD (Proof of Delivery) Vendor Statements Invoice Receipt Invoice Processing Invoice Numbers Sales and Use Tax Issues VAT/GST

7 THE P2P CERTIFICATION PROGRAM 9.4 Reconciliation PO vs. non-po Three-Way Match Requires a PO Purchase Order Revisions Two-Way Match May or May Not Require a PO Approval by Purchaser, Department Head, or Other Designee Negative Assurance/Assumed Receipt Tolerances The All-Important Remittance Advice Short Payments Coding Issues Who, When, How? Coding Complexity Delegation of Authority Approval Matrix Who and How Much? Non-Standard or Special Payment Types/Classes Utilities Telecomm Freight Payments Leases and Other Recurring Payments Travel and Entertainment Errors in Accounts Payable Duplicate Payments Erroneous Payments Minimizing Duplicate and Erroneous Payments Recovery or Post Audits The AR of AP AP Automation SECTION 10. PAYMENT FOR GOODS AND SERVICES Payment Methodologies Advantages of Paying Electronically Purchasing & AP Teaming up to Convert Vendors to EFT Check Positive Pay Electronic Payment Methods ACH (Automated Clearing House) Wire Credit Cards Single Use Virtual Payments Electronic Payment and Settlement Networks Letters of Credit International Transactions Currency Exchange Considerations Foreign Exchange Market International Payment Methods

8 Table Of Contents SECTION 11. PURCHASING CARDS Vendor Selection Types Travel or Corporate Card Purchasing Fleet Relocation Project One Card Ghost Single Use Virtual Payments Ownership Controls What Types of Purchases Are P-Card Eligible? What Are Cardholders Allowed to Buy? And From Whom? What Types of Limits of Expenditures Are Optimal? Who Should Have a Card? Process Administration Cardholder Agreement Policies and Procedures Training Card Statements Data, Flow, and Coding Payment Rebate Management SECTION 12. CASH MANAGEMENT Cost of Cash/Working Capital Days Payable Outstanding (DPO) Assigning Different/Appropriate Payment Methodology to Appropriate Vendor(s) Terms and Discounts Ownership Availability and Acquisition of Discounts Negotiating Terms Payment Timing Dynamic Discounting Supply Chain Finance (SCF) Reverse Factoring SECTION 13. VENDOR MANAGEMENT Ownership Vendor Selection

9 THE P2P CERTIFICATION PROGRAM 13.3 Managing the Vendor Relationship Partnering With Vendors Service Level Agreement (SLA) Monitoring Vendor Performance and Vendor Scorecards Customer Service Vendor Self-Service Portals Master Vendor File Master Vendor File Ownership Determining the Rules of the Game Access and Segregation of Duties Data Requirements and Data Gathering New/Change Vendor Form Vendor Verification Complying With Laws and Regulations Minimizing the Likelihood of Fraud Minimizing the Number of Duplicate Vendors and Duplicate Payments Approvals Vendor Welcome Letter and Information Packet File Maintenance Keeping the File Up to Date File Clean-Up Identifying Inactive and Obsolete Vendors Reviewing Active Vendors Duplicate Vendor Identification and Consolidation Putting the Master Vendor File to Work Automation and the Master Vendor File SECTION 14. COMPLIANCE AND REGULATORY REPORTING Sanctioned Entities, Countries, and Individuals Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDNs) and blocked persons list Foreign Terrorist Organizations (FTOs) System for Award Management (SAM) The Sarbanes-Oxley Act (SOX) Section Section Section Information Reporting 1099 and 1042-S Form 1099-MISC Independent Contractor vs. Employee Form 1042-S Taxpayer Identification Numbers (TINs) Foreign Account Tax Compliance Act (FATCA) Obtaining Taxpayer Information The W

10 Table Of Contents TIN Matching the W B-Notices Notice 972-CG Obtaining Taxpayer Information W Withholding U.S. Sales and Use Tax, VAT/GST Sales and Use Tax Nexus Sales Tax and the Internet Sales Tax Exclusions Sales Tax Exemptions Externally Legislated Exemptions Direct Pay Permit Compliance Audits Record Retention The Streamlined Sales and Use Tax Project (SSTP) Value Added Tax (VAT) VAT/GST Refund Opportunities for Organizations in Non-VAT Countries VAT Reclaim Outsourcing Minority & Women-Owned Reporting and Outreach Rules Regarding Doing Business With Board Members and/or Their Companies U.S. Foreign Corrupt Practices Act (FCPA) & Other Anti-Bribery Efforts Bribery and Corruption The Foreign Corrupt Practices Act of 1977 (FCPA) Privacy U.S. Privacy Act of The Health Insurance Portability and Accountability Act of 1996 (HIPAA) The Gramm-Leach-Bliley Act of 1999 (GLBA) Other Rules/Regulations Regarding Privacy Escheatment A Combination of State and Federal Law Governs Escheatment The Basics Dormancy Period Due Diligence Reporting Remittance Penalties Record Retention Avoiding Unnecessary Escheatment Unclaimed Property Audits Benefits of Compliance Records Management Electronic Data Retention Requirements Record Destruction Impact of Globalization

11 THE P2P CERTIFICATION PROGRAM Transaction Type and Industry-Specific Regulations and Reporting Specialized Reporting The Physician Payments Sunshine Act Dodd-Frank Section 1502: Conflict Minerals SECTION 15. CONTROLS, FRAUD & FRAUD PREVENTION, AND RISK MANAGEMENT What Are Internal Controls? Three Critical Controls Types of Controls Preventive Controls Detective Controls System Controls Compensating or Compensatory Controls Policies and Procedures Purchasing-Specific Policies and Procedures Receiving-Specific Policies and Procedures Accounts Payable-Specific Policies and Procedures Fraud and Fraud Prevention Internal Fraud Internal Fraud Payment Fraud Internal Fraud Expense Report Fraud Internal Fraud Vendor Fraud Internal Fraud Identity Theft Internal fraud Intellectual Property Theft Preventing Internal Fraud External Fraud Payment Fraud External Fraud Vendor Fraud The Internet Cyber Security Identity Theft Phishing Account Takeover Fraud Intellectual Property Fraud Risk Management Supply Chain Risk Business Continuity/Disaster Recovery (BC/DR) SECTION 16. AUTOMATION Evaluating Automation Solutions The P2P Automation Marketplace Cloud Computing Communicating Electronically Extensible Markup Language (XML) Universal Business Language (UBL) Factors to Consider in Choosing a Software Solution

12 Table Of Contents 16.2 Security Enterprise Resource Planning (ERP) System e-procurement E-Catalogs Electronic Document Exchange the Many-to-Many Problem Electronic Data Interchange (EDI) E-Invoicing A Question of Control Proliferation of Vendors Faux-e-invoicing Direct Connect/File Transfer Procure-to-Pay (P2P) Solutions Vendor Portals Automated Workflow Imaging Electronic Content Management (ECM) Travel & Entertainment (T&E) Automation Moving to Mobile Automated Receipt Handling Contract Lifecycle Management (CLM) The Contract Management Challenge Contract Lifecycle Management (CLM) SECTION 17. EFFECTIVENESS Sharing Metrics Measuring the Impact of Change Defining Metrics Key Measurements for P2P Gathering Data Analyzing Data Activity-Based Management (ABM) Benchmarking Impact of the Internet on Benchmarking Benchmarking Approaches The Benchmarking Process Spend Analysis Challenges to Effective Spend Analysis Effects of Automation on Spend Analysis

13 THE P2P CERTIFICATION PROGRAM SECTION 18. MANAGEMENT/LEADERSHIP What Makes a Good Leader? Leadership Defined Leadership as a Product of the Individual Doing the Leading Characteristics of Good Leaders According to Those Being Led Trust and Respect Giving Staff a Say The Power of Empowerment Delegation vs. Empowerment Communication Within the Department Meetings Within the Rest of the Organization Communicating Upward External Communication Customer Service Collaboration How to Establish and Ensure it Continues Building a Collaborative Culture Decentralization Requires Collaboration P2P Personnel Hiring Interviewing Job Descriptions What Makes a Good Buyer or Purchasing Agent? What Makes a Good AP Professional? Training Coaching Assessment Motivation and Recognition Dissolving the Relationship Building the Team Steps to Build an Effective Team SECTION 19. CHANGE MANAGEMENT The Change Challenge Managing Change Communicate Early and Often Modify Formal and Informal Agreements Ways to Manage Change Include Staffing Considerations From the Outset Moving to P2P