The pervasive use of local manual checks for everything from employee recognition awards to urgent vendor payments has been the nemesis of Accounts Payable organizations for decades. Difficult to control and manage, and costly to administer, the hope was that with the introduction of improved processes and efficient centralized payment systems, the need for local manual checks could be completely eliminated. Good news! For many companies, this is exactly what has happened.
Peeriosity’s iPollingTM functionality was recently used by a member who needed accurate and objective feedback from their peers regarding the use of manual checks in local offices. In the words of the member: “Somewhat contrary to our company’s overall Shared Services objectives (consolidation, efficiencies, and controls), we are considering having checkbooks in some of our local offices, including internationally. This will allow local leaders to issue checks manually outside the primary Accounts Payable system. We would like input from other major corporations that have evaluated this approach and have either implemented it or decided against doing so. “
This Peeriosity member used iPollingTM to draft two questions that examined this issue. Responses were posted real-time, with visibility to company responses available to all Peeriosity members, allowing for direct communication with peers using Peeriosity’s integrated Peer MailTM capabilities.
The first question asked about the current status of allowing local offices to issue checks manually outside of the primary Accounts Payable system. At 84% of the companies, the idea was either never considered (28%) or evaluated and denied (56%). Of the remaining 16% of responding companies, 8% are currently evaluating, 4% report that, while they have implemented, they are not satisfied with the current process and controls, with the remaining 4% indicating that they are satisfied with their implementation.
The second question asked how companies address the need to make urgent payments locally. Interestingly, at 81% of responding companies some combination of Purchasing Cards issued to local leaders and the overnight delivery of paper checks to a local office were effective at eliminating to need for manual checks. Here are the details:
Unlike traditional benchmarking, Peeriosity’s iPollingTM capabilities allowed members to examine this issue in detail very quickly, providing a range of experiences and viewpoints that could be reviewed to develop an appropriate and workable answer. Tapping into the experience of peers eliminates the guess-work and allows members to quickly access the collective experiences of a large community of users who are facing the same challenges.
Here are some of the comments from responding companies:
- We mainly perform overnight delivery of a paper check to the local office. However, we do issue Purchasing cards that could be used as well depending on the circumstance and what is being purchased.
- We have a couple of accounts that are standalone where local offices issue checks. Our general policy is to have all A/P be processed and paid from the Shared Services. However, a business case was made for the two accounts out of scope. The first business case was the area we do business is 99% cash basis. Suppliers are paid in cash locally as is the custom for that area. In order to accommodate, we allow a local account to write checks. However, we have strict guidelines for this process and the check along with the backup are submitted to the SSC to have the check put on positive pay with the bank. The second case is much the same where, due to local customs and laws, they pay all of their bills in cash. This is setup as a petty cash account, whereby at the end of the month they submit all documentation to SSC for audit and petty cash reimbursement.
- What few local checks are needed should be printed and mail out by the bank. We also use PCards as needed. Suggest using the ISO20022 global payment format, which will allow for check issuance from the bank.
- We use a combination of PCards issued to local leaders, P-Cards within AP, and overnight delivery of paper checks.
- We’ve moved all disbursements centrally purposefully to get away from issues caused by locations issuing their own checks. People in locations can use a corporate card for low-value purchases (“LVP”). If the vendor won’t accept credit cards (which is a but surprising in 2016 that those people still exist) we do have a vendor in SAP called “One Time Vendor” where we can enter a check request and the address of the payee. There is an approval by the AP manager, then the requestor’s manager, and the check is mailed from the home office to the payee’s address.
- We encourage the use of PCCards. If PCard is not an option, then we will overnight courier a payment to the vendor after the vendor is set up and verified in SAP.
- We have increased payment run frequency to daily and have issued PCards. We can print at two main sites in the US for immediate distribution as well.
- This is an exception-based process only – where cheque books have been issued we are satisfied with the process and controls. But many other applications have been denied. Cheque books are only issued where the time allowed for customs duties to be paid after arrival of healthcare products cannot be covered by other means.
- In addition to the overnight delivery of paper checks, we have issued a small number of PCards to certain leadership at our facilities that can also be used for smaller-dollar urgent items.
- We don’t actually let the local Finance offices cut paper checks, but rather they can make manual wire payments via CitiDirect.
- Depending on the situation, we would overnight a paper check, have the business unit use their P-Card, or send a bank wire.
What approach does your company take to the address the need for manual checks in local offices? Are you using Purchasing Cards, overnight delivery of checks, or some other option to address this business need?
Who are your peers and how are you collaborating with them?
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.