Page 60 - Accounting Best Practices

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3–23 Shrink the Supplier Base
payable on its own accounting software, because these transactions must be com-
pleted on the company’s software package. The best way to resolve this problem
is to give the supplier remote access to the company’s computer system, so that it
can process accounts payable as though it were an on-site service. However, this
arrangement will require an extra expenditure to train the supplier’s employees in
how to use the system. Another option is to have the supplier perform only the
most mundane accounts payable tasks, such as matching documents, and leave
any data-entry or check-cutting work to the in-house staff. This option eliminates
the worst drudge work from the function, while still allowing for greater control
over it. Yet another variation is to allow the supplier to cut checks in payment of
accounts payable, though this reduces some company control over cash flows.
The best way to resolve the problem is to have company management approve
check runs before they are printed and mailed. Clearly, there are a variety of
approaches to the extent to which the accounts payable function can be out-
sourced.

Cost: Installation time:

3–22 OUTSOURCE VAT RECLAMATIONS

It is in the best interests of all countries that collect value-added taxes (VAT) to
retain these remittances as long as possible, even if a company is entitled to a
refund for various reasons. To this end, the reclamation process is not only long,
but also varies from country to country. In many cases, a company does not want to
go through the effort of reclaiming funds, choosing instead to ignore the problem.
The aggravation of reclaiming VAT taxes can be shifted to a third party that
specializes in VAT recoveries. Such parties usually charge a minimum fee per
collection effort, as well as a percentage of the amount collected. Since a com-
pany would otherwise rarely collect the money at all, paying this fee is a reason-
able way to reclaim VAT. Examples of VAT reclamation companies are Ireland-
based Fexco (www.fexcotaxreclaim.com), Meridian (a subsidiary of PRGSchultz
Inc., located on the Web at www.meridianvat.com), and England-based The VAT
Clearinghouse (www.thevatclearinghouse.com).

Cost: Installation time:

3–23 SHRINK THE SUPPLIER BASE

Part of the job of the accounts payable staff is to maintain a complete and accu-
rate database of suppliers, which typically includes address and payment infor-
mation. If data is entered incorrectly, the accounting staff is usually notified by a
supplier that has not received a payment (because it was sent to the wrong