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Administering One-Time Payments to Non-Vendors

Introduction

In the world of Accounts Payable processing for large companies with billions in annual revenue, streamlining processes and eliminating complexity wherever possible is critical.  In some cases, the efforts required don’t seem to be justified based on the nature of the transactions performed.  For example, the process for administering one-time payments to non-vendors is defined as special one-off transactions to process refunds or purchase rebates to a customer or a customer’s customer.  The transaction won’t be repeated, and the nature of the relationship doesn’t support the rigorous validation steps that characterize the setup process for trade vendors, where tax IDs are provided, signed W-9s are collected and filed, with addresses and other pertinent information are independently reviewed and verified. 

This topic is an example of the hundreds of processes that exist in Shared Services, where the nature of the transaction suggests there must be a better way than the traditional approach.  Fortunately, for Peeriosity members, it’s easy to draft an iPollingTM question and instantly find out how other members tackle the problem, with the ability to directly follow up with other participants for further discussion and dialogue.   If you went to your supporting consulting firms for the answer where the minimum charge is several thousand dollars, you’d get a response that is packaged beautifully, based on insights from a handful of clients the consultant was able to reach for input.  With Peeriosity, your poll will go to hundreds of members for a possible response, with those that have knowledge providing inputs that are likely to be directly on point to solve your issue, all at no cost to you.  Plus, the exchange is completely private, with only members whose companies provided an answer to the poll questions able to access the detailed results and findings.

iPollingTM Results Review

Regarding this particular issue, a recent Peeriosity iPollingTM question was created by a member company’s Director of Process Improvement, to ask how companies administer one-time payments to non-vendors.  The results indicate that 68% of member companies add these special payment “vendors” to the vendor master file and pay them through the normal Accounts Payable process.  None of the responding companies indicated they fully outsource these types of transactions, and the remaining 32% follow another type of process to complete the transactions.  Here are the details:

iPolling: How the company is administering One-Time Payments to Non-Vendors

Here are a few of the comments from responding companies that provide additional insights into the approach member companies take to these types of transactions:

  • Our Customer/Supplier master data is shared so Accounts Receivable can create their own payment batch for refunds.
  • We add the supplier to our system for audit and tax compliance purposes. Payment is issued based on invoice approvals and processed on the next payment cycle.
  • Today, we add the payee to the master vendor file, but we are looking at outsourcing these types of payments.
  • We have the ability to make a one-time payment without adding them to the vendor master.
  • These are handled through direct bank payments with the necessary control procedures embedded.
  • For AP, it must have an invoice. For this scenario, there isn’t any invoice, hence this would be a Cash Management process whereby CM will be making payment by coding the transaction to a GL account. If it is a payment to an existing customer, AR will be able to put through an automated entry in SAP to transfer the amount to AP and pay.
  • This unfortunately is quite a varied process, as customer payments are not really managed by our AP/P2P group. In some countries that are done via AR directly within the AR transactions. In LA we do a deduction between AR & AP, and in others, we have an interface from AR to AP using a one-time vendor for an ad hoc customer, with ongoing customers set up as vendors.
  • This unfortunately is quite a varied process, as customer payments are not really managed by our AP/P2P.
  • We are considering a couple of options (1) For consumer affairs-related payments under $400 we are considering using a Zelle-type application. (2) For external candidates, we are evaluating using a 3rd party administrator for payments under $200.

Closing Summary

Large multi-billion-dollar companies must process hundreds of thousands of transactions, with the cost of compliance to sound business controls which can be excessive for transaction types that are unique and non-standard.  Rather than continue down a path of following processes that don’t cleanly fit, Peeriosity members can quickly and easily check in with their peers to openly explore alternatives, with all interactions completely free of consultant or vendor influence or bias. 

How does your company process one-time payments to non-vendors?  When you have a process constraint or bottleneck where you know there has to be a better way, do you have a way to connect directly with peers at leading companies to explore options that might work better?

Who are your peers and how are you collaborating with them?

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“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated 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.

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