Facts, Figures, and Recommendations
from Disbursement Services
Ever wonder how much it costs to process an invoice, how long it takes for vendors to cash checks, or how many duplicate payments are erroneously made?
Disbursement Services has compiled some interesting facts and figures about the University’s Accounts Payable operations, including a number of helpful and important recommendations.
Analysis Period Dec 1, 2010 - January 27, 2011
During this period (just short of two months)
- 270 checks were returned to Disbursement Services by the Post Office.
- 85 of the returned checks were processed as SPV with incorrect addresses entered.
- 185 regular vouchers had the incorrect address or vendor selected on the payments tab.
On an average it takes an hour to research and resolve a returned check. The delay in payment may impact delivery of goods and could have a negative impact on vendor relations.
- Verify and match the 'Remit to' address that appears on the invoice with the 'Remit to' address that appears on the Voucher Payments tab.
- If using the SPV vendor, please validate that the payee's current address is being used.
- Use standard US Postal Service abbreviations when entering addresses for SPV payments. For example, instead of entering 1234 WEST MAIN AVENUE APARTMENT A, use 1234 W MAIN AVE APT A. Using the standard USPS abbreviations (Publication 28 - Postal Addressing Standards) will help ensure that the complete address line prints on the check.
Low Dollar Invoices
1,224 vouchers for less than $10 each were entered (totaling $7,642, excluding credits). The American Productivity and Quality Center reports that the median cost for processing an invoice is $7.75.
Additional consideration should be given to consolidating purchases or using the PCard where applicable to reduce the number of small dollar transactions.
41 Stops/Cancels were requested by the departments or vendor due to duplicate payments. The International Accounts Payable Professionals and the Institute of Management & Administration estimate that duplicate payments average one-tenth of one percent of spending.
- Follow the Invoice Numbering Standards in the Vendor Payments Manual, Appendix B.
- Verify that PCard or VCPS payments have not been processed for the same payment.
- Clearly mark VCPS documents “For Imaging Only”, when being sent for imaging.
These actions will help minimize the risk for duplicate entry.
Late Voucher Entry and Payment
On average it takes 60 days from the date of invoice until the vendor cashes the check. The following is the breakdown:
- Invoice Date To Entered Date - 25 days
- Entered Date to Voucher Post Date -11 days
- Voucher Post Date to Payment Date -16 days
- Payment Date to Cash Date - 9 Days
- Lost discounts due to late processing - $4,300
Delays in entering, approving and resolving match exceptions can have a negative impact on vendor relations and can result in lost discount. Department and Cluster business processes and expectations should be clearly communicated to all involved in the Procure to Pay process.
Departments that receive a Vendor Statement should promptly review it to determine if there are any vendor credits that have not yet been posted to the vendor record in PeopleSoft.
All unrecorded statement credits or credit memos should be researched and posted to the vendor record as a separate transaction.
Unrecorded statement credits can be due to duplicate payments, returned merchandise or vendor allowances.
Do not deduct the credit amount from a pending invoice, as the vendor may post that invoice as a short payment and leave the credit memo balance open on their system.
Any credits that can't be resolved by departments should be forwarded to Disbursement Services at 640 WBOB, 1300 S 2nd Street, Minneapolis, MN 55454 for research and resolution.
1,500 vendor requests/changes were processed during this two month period. Approximately one-third of the Vendor Authorization Forms required additional follow up with the department, resulting in delays in set up and unnecessary corrections.
- All vendor forms should be typed. Handwritten forms are extremely difficult to read and can result in incorrect vendor information.
- If the business type is an Individual/Sole Proprietor (US Citizen), Employee, or Student, the Independent Contractor Authorization Form UM1650 must be completed and submitted with the VAF.
- The "Requested By" section at the bottom of the page is critical for vendor set up requests. If this information is not completed or legible, the Vendor Maintenance staff does not know who to contact if there is a question regarding the form. Most importantly we do not know who to send the vendor number to if this information is missing.
- Do not submit a separate fax cover sheet with the VAF form because the cover sheet may get separated and takes up space in the imaging system.