Summer 2004
Welcome to your summer issue of Profit Search eNews. We are very pleased to bring you the latest commentary and news on A/P matters from Profit Search Inc., an accounts payable audit firm in Massachusetts, online at www.profitsearchinc.com.
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In this issue, we feature the following:
Industry News
IAPP national conference draws big vendor crowd in the imaging and data management area.
At the annual conference of the International Accounts Payable Professionals (IAPP) in Orlando this past April, 32 vendors out of 78 represented imaging, data management and procure-to-pay products and services. Without a doubt, there are a lot of vendors focusing on the needs of larger companies who are looking for faster better - cheaper ways to input invoice data, get it approved and get it paid.
The solutions begin with simple, backend scanning of invoices, internally or externally, then move to front end scanning and electronic routing for approval. Data capture is a big leap from there. The latest enhancement is web-based invoice presentment, generally through a hosted service, whereby vendors submit invoicing data which is electronically downloaded by the customer.
Profit Search Insight:
Some systems are quite elaborate and can totally manage the procure-to-pay process. Send us an email at: info2@profitsearchinc.com and we ll send you a listing, with web addresses, of all the imaging/data management vendors who attended the conference.
You can learn more about the IAPP online at www.iappnet.org.
Fraud Patrol
Secrets from Frank Abagnale, the great imposter featured in the movie "Catch Me If You Can"
Frank Abagnale, the subject of last year s movie Catch me if you Can , starring Tom Hanks and Leonardo DeCaprio, spoke at the Seaport Hotel in Boston last December. Mr. Abagnale remarked how easy it is to obtain a company name, logo, bank account number and have official-looking checks printed through the mail. He noted, from experience, There is no foolproof system to prevent identity theft nowadays".
What did he say were the best ways to protect your corporate check disbursements?
- Positive pay - Mr. Abagnale said that positive pay is the best way to reduce check frauds, but said that only about 50% of companies use it. Positive pay involves providing check issue data to the disbursing bank prior to check presentment. If the check clearing information doesn t agree with the issue data, the check is rejected and the bank will contact the issuer for clearing approval.
- Special Check Paper He noted that there are certain paper features that will make it more difficult to alter issued checks, such as:
- controlled paper - not available commercially
- prismatic paper - multi-colored
- chemically-sensitive - harder to alter
- toner-grabbing - to prevent erasures
- Distinctive Check Features. Other security enhancing features include:
- using pre-numbered check stock - to control release of check stock
- large printing fonts - special styles are available directly from a check supplier
- reverse printing - harder to alter
If you are interested in special check stock for your personal needs, go to
www.supercheck.net.
Profit Search Insight:
Never, but never, ever, use a rubber stamp or have one available to sign checks. The writer once worked in an accounts payable department where a contract employee obtained blank check stock from an insecure storage area and used a rubber stamp to issue $350,000 worth of checks. This ongoing fraud would never have been detected (he had an accomplice who reconciled the bank accounts) except that the local bank where he made deposits became suspicious because he had worked there as a temp for low wages! Check on how your check disbursement process is controlled.
Found Money
A recovery example from a recent Profit Search engagement
The client consolidated its offices into a new building. Their former offices had been renovated to suit their biotech engineering activities. They were able to sublease those offices at rents substantially higher than they were paying. The original lease allowed for a sharing of such excess rent receipts with the landlord, after deduction of direct leasing expenses. When it came to the first time to split the excess rent with the landlord, no deduction was made for any of the leasing expenses. It turned out that substantial brokerage fees and legal costs were incurred by both the client and landlord. Upon presentment of the findings of the lease review, the landlord agreed to rebate past overpayments.
Profit Search Insight:
Remember that favorable terms and conditions are sometimes buried deep in documents executed with landlords and vendors. It is worthwhile to examine these documents periodically to search for favorable terms that may have been missed.
Tax Talk
New sales tax rules for Mass R&D companies
Were you always bothered by the fact that an R&D company couldn t get a sales tax exemption for purchases of R&D equipment unless more than 2/3 of its revenues came from R&D, which was nearly impossible for an early stage company? Well, be bothered no more! The MA legislature has expanded the R&D exemption, to also be effective where 2/3 of expenditures are R&D related. However, if you qualify under the expenditures test, you are not allowed an investment tax credit under G.L. c. 63, 31A. This change is effective as of 11/26/03.
Profit Search Insight:
Remember that if you are a corporation engaged in manufacturing you automatically qualify for a sales tax exemption on purchases of property used in research and development and there is no revenue or expenditure test.
We hope you enjoyed this issue of Profit Search eNews and found something here that you can put to good use in your job. We know that sometimes it is difficult to stay current on A/P issues, and that is why we bring you Profit Search eNews.
Doug Costello, CA MBA CAPP
President
Profit Search Inc.
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