accounts payable sales guide - challenge · benefits statements for automated accounts payable...

Canon Solutions America

Accounts Payable Sales Guide Version 2.2

ESS Marketing 11/18/2013

FOR CSA INTERNAL USE ONLY

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Table of Contents

Who Should Read This Guide? .....................................................................................................................................5

What topics are addressed in this sales guide? ...........................................................................................................5

Who is Your Target Audience? .....................................................................................................................................5

Paper, and How it is Still Used in Accounts Payable Departments ..............................................................................6

Manual Steps for Accounts Payable Processing ..........................................................................................................7

Opportunities for Optimizing the Manual Process ......................................................................................................9

What Your Customers Will Care Most About ........................................................................................................... 10

Electronic Steps of Accounts Payable Processing ..................................................................................................... 11

Benefits Statements for Automated Accounts Payable Processing .......................................................................... 12

Volumes and Processing Costs .................................................................................................................................. 13

Conclusion ................................................................................................................................................................. 13

Appendix – Glossary of Terms ................................................................................................................................... 15

Table of Figures

Figure 1: AP Manual Process ........................................................................................................................................8

Figure 2: Electronic Steps of AP Processing .............................................................................................................. 11

Figure 3: What are the biggest drivers related to AP and AR processing in an organization? ................................. 12

Figure 4: Top Performers Earn Best-in-Class Status .................................................................................................. 13

Figure5: A Simple yet Powerful Combination ........................................................................................................... 14

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WHO SHOULD READ THIS GUIDE?

This guide is relevant for sales professionals and analysts with customers and/or prospects in any industry that struggle with a manual accounts payable process. This discussion is non-technical in nature and is suitable for anyone interested in simplifying daily tasks and exploring solutions that can lower expenses associated with the accounts payable processes.

WHAT TOPICS ARE ADDRESSED IN THIS SALES GUIDE?

This guide will discuss common situations regarding the accounts payable processes which exist within many organizations, regardless of their size. Companies using a manual paper based workflow are likely incurring a significant amount of unnecessary expenses. Invoices from suppliers and other business partners arrive at the company as regular mail and must be reviewed, forwarded, approved and paid within a short period of time. Unfortunately, many companies lack adequate technical support and are under pressure to get all invoicing processed on a timely basis. Loss of early-payment discounts and unnecessary penalty fees are examples of additional costs that can be sustained by delayed invoice processing.

The automated process discussed in this sales guide provides selling opportunities to help buyers overcoming these issues, focusing mainly on scanning paper invoices and moving them electronically through workflow management systems in digital format.

WHO IS YOUR TARGET AUDIENCE?

The first step toward success is understanding who your target audience is and their role within the organization. You have to sell to all levels and you must adjust your value proposition so that it is compelling and is relevant to what they care most about. Depending on the size of the organization your typical target buyer can be the CFO, Director of Payment Services, Manager of Accounts Payable, and in smaller organizations it could be the business owner or even a part time book keeper.

CHIEF FINANCIAL OFFICER (CFO) The CFO provides overall strategic financial guidance for an organization and plays a key role in the company’s ongoing financial direction. They typically provide the type of guidance that balances financial risk with opportunity.

DIRECTOR, PAYMENT SERVICES The Director of Payment Services typically manages existing processes and controls, leading the effort to improve the end-to-end accounts payable workflow. The Director of Payment Services will inherently strive to maintain an environment where excellence in effectiveness and efficiency; strong supplier focus; customer service; and risk mitigation are all promoted.

MANAGER, ACCOUNTS PAYABLE The Accounts Payable Manager is responsible for managing the accounts payable department and is ultimately

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responsible for the management of the purchase ledger function and the payment of all company invoices in a timely fashion.

THE ACCOUNTS PAYABLE CHALLENGE

Accounts Payable specialists at most organizations know the pain of manual invoice processing all too well, as almost 80% of all vendor invoice activity is still paper-based. AP departments who rely on manual processes find that adding staff does not solve the inherent problem. Manual processes are not only expensive, inefficient and error-prone; they also expose organizations to serious risks that can affect their credit rating and regulatory compliance standing.

AP departments often suffer from paper overload but are too close to the problem to see that there is one. Admitting the problem exists is the first step toward better AP practices.

The Complexity of the Accounts Payable Process

The Accounts Payable challenge resides in the tedious, manual steps of invoice capture, review, coding, and approval. Below is a brief summary of all the difficulties faced by AP specialists in each step of the process:

• Multi-format and decentralized receipt - Collating invoices that come from different suppliers or cost centers in many different layouts and delivery formats — mail, fax, email, EDI, etc.

• Erroneous data capture - Errors associated with manual data entry in accounting systems. Labor- intensive processes required to input data further compounded if linked to different costs centers and possibly involving currency conversion.

• Lengthy approval - Extended lead times due to manual routing, processing, and sign-off procedures involving individuals in different departments and possibly different countries.

• Costly payment processing - Inability to maximize financial benefits associated with payment schedules, such as discounts for early payments or avoiding fees for late payments.

• Inefficient reporting - Inability to easily audit invoice processing and payments to match up document flow with the accounting system.

• Disorganized filing - Risk of document loss or damage, as documents are received at multiple input points and may be routed or classified incorrectly. High archive costs for compliance and account audits.

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PAPER, AND HOW IT IS STILL USED IN ACCOUNTS PAYABLE DEPARTMENTS

Conventional and manual accounts payable processes usually involve paper documents that are delivered via an internal mail system. This mail system can result in long throughput times; cumbersome delivery of documents; and a lack of flexibility. This can often result in the loss of important documents.

When an invoice is received via regular mail, it is usually subject to preliminary inspection by the accounting department staff. There are typically questions relating to inconsistencies between the invoice and the actual order. At this early stage of reconciliation it may require the physical movement of the invoice to the purchasing department or the person who placed the order for validation. In most cases, the person who placed the order will receive the paper invoice for review and approval before it is finally entered into the accounting system in electronic format. The complete booking and payment process will be manually initiated only after all complete and relevant data is present. Once the process is complete, the invoice is physically filed into the company‘s archive.

Typically, paper is not what creates issues within accounts payable process; it is often the associated manual processes and policies that create challenges.

Manual Steps for Accounts Payable Processing

1. Invoice is received in mailroom 2. Invoice is manually distributed to AP 3. Invoice is manually associated to PO 4. Invoice is manually reconciled with PO 5. Invoice is manually distributed for approval 6. Invoice is manually distributed back to AP for payment 7. Invoice is entered in ERP application 8. Invoice is selected for payment 9. Check stock is manually loaded into printer 10. Check is printed 11. Check is manually retrieved from printer 12. Check is manually copied 13. Check is manually distributed to vendor 14. Check copy is manually associated to Invoice/PO 15. Check, Invoice and PO are manually stored

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Figure 1: AP Manual Process

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OPPORTUNITIES FOR OPTIMIZING THE MANUAL PROCESS

As illustrated in figure 1, the drawbacks of a manual accounts payable process are obvious. From a strategic perspective, manual processes have little ability to adapt to future requirements and can consume excessive amounts of internal resources. In the computer era, paper-based processes have become obsolete and uncompetitive in virtually every industry.

Operationally, manual processing of accounts payable can exhibit numerous weaknesses that may manifest high costs and low efficiencies, including:

• Slow internal movement of documents

• Limited ability to provide internal and external parties with important real-time information when paper documents are in transit from one person to another

• The risk of losing early-payment discounts if deadlines are missed due to delays incurred in the approval process

• Documents archived only at the end of the process

• No traceable recorded history of who did what and when without extra manual work (such as attaching a circulation list to the invoice)

• A paper-based archive typically takes longer to search than its electronic file and storage counterpart

• Document storage requires a large amount of space and can incur external expenses

• High costs for creating security copies of archived data, if possible at all

• The risk of data loss through destruction of the archive or improper sorting of the document

• Unappealing workstations when desks are overloaded with paper

• Environmental consequences caused by the creation and printing of unnecessary copies when documents cannot be immediately assigned to the proper person

Fast Fact Checks

Electronic invoice processing costs are 33%- 41% lower than manual processing costs.

Best in class enterprises enjoy 76% to 94% lower invoice processing rates than their peers

Best in class enterprises process 51% to 59% faster than other enterprises

Lower transaction costs drive enterprises to pursue outsourcing as a strategy for Accounts Payable

Source: Aberdeen- Accounts payable transformation- December 2007

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WHAT YOUR CUSTOMERS WILL CARE MOST ABOUT

Process efficiencies can offer significant improvements to an organization’s productivity in addition to having a positive financial impact to the bottom line. An automated capture and process AP solution can provide manual paper based AP departments with the opportunity for transformation. This transformation will deliver value to their organization through a combination of improved invoice handling time and a lower total cost of invoice processing.

Most invoices are computer generated, with an increasing amount being created digitally and sent in PDF. Regardless of whether the invoice is paper generated or electronically generated, both are likely to contain the same data. Developments in software have allowed us to provide solutions for accounts payable processing without the need for template based software. As an example, our IRISXtract solution enables a customer to use data from the finance or order processing system to directly verify recognition of an order, its part numbers and the supplier’s information.

The processing cycle for invoice payment also lends itself well to business process management. If the invoice and purchase order can be matched exactly, and delivery quantities have been confirmed (known as “3 way matching”) the payment process becomes straight forward. Triggers can be set for conditional approval at more senior levels if the sum involved exceeds a certain amount.

Automation of the accounts payable process has become mainstream over the last few years. Scanning invoices and extracting data with OCR (Optical character Recognition) is one of the most obvious components of this solution. Together, with the resulting business process management and workflow improvements it helps to drive the payment process much more efficiently. For companies that have to manage thousands of invoices per week, the ROI timeframe can be very short − typically less than twelve (12) months.

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ELECTRONIC STEPS OF ACCOUNTS PAYABLE PROCESSING

Figure 2: Electronic Steps of AP Processing

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BENEFITS STATEMENTS FOR AUTOMATED ACCOUNTS PAYABLE PROCESSING • Enable the AP team to effectively handle invoice approvals and resolve invoice exceptions before the ERP

system creates the voucher

• Streamline the AP processes to handle even the most complex business rules, decrease invoice processing time and provide audit ability

• Minimize the deployment and maintenance costs of AP exception handling system

• Streamline document transport and retrieval procedures

• Process invoices more quickly and accurately

• Ensure timely payments are made to obtain cash discounts

• Reduce liability to vendors with enhanced invoice monitoring

• Eliminate manual data entry and reduce human errors

The key drivers in accounts payable are reduction of core costs, decreasing the process cycle time, improved visibility of the process itself, and better cash management.

0% 10% 20% 30% 40% 50% 60%

Reduce core invoice processing costs

Decrease invoice cycle time

Improve visibility of invoice status (increase transparency)

Improve cash management

Centralize operations

Integrate e-payables solutions with other systems

Improve collection rates/disputes/write-offs

Minimize litigation impact

Figure 3: What are the biggest drivers related to AP and AR processing in an organization?

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VOLUMES AND PROCESSING COSTS

Traditionally, automated capture systems for accounts payable required high volumes of daily invoices to be financially viable. However, this is an over-simplification because invoice costs can vary considerably.

In addition, current capture, BPM (Business Process Management) and ECM systems are much more flexible. They enable the technology investment to be extended to more processes than just simply AP. The estimated cost of processing per invoice has a very broad range. The Aberdeen Group shows us what the top best-in-class performers can earn.

Definition of Maturity Class Mean Class Performance

Best-in-Class Top 20%

Of aggregate performance scorers

• 3.8 days to process a single invoice • $3.09 average cost to process a single invoice • 4.1% year-over-year increase in early payment discount capture

Industry Average: Middle 50%

Of aggregate performance scorers


Laggard: Bottom 30% Of aggregate

Performance scorers


Source: Aberdeen Group, April 2011

Figure 4: Top Performers Earn Best-in-Class Status

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CONCLUSION

Best practices in AP include centralized receipt of invoices, scanning invoices as soon as possible, and using workflow for invoice review, discrepancy resolution, coding and approval. By combining document capture and financial process automation, products such as Therefore and IRISXtract enable these best practices and significantly reduce the burden of manually entering invoice data into an ERP system.

The value proposition is elementary, yet extremely powerful. An automated AP process solution is not limited to the large enterprise. Even a small business can very quickly realize impressive results.

Figure5: A Simple yet Powerful Combination

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APPENDIX – GLOSSARY OF TERMS

-A-

Account Classification Business transactions that are summarized by groups/categories, i.e., assets, liabilities, revenues and expenses.

Accounting Period A period of time covered by an Income Statement or Statement of Changes in Financial Position. It can be any length of time that is measured, but usually accounting periods are months, quarters and years. A fiscal year is any consecutive 12-month period that a business chooses to adopt as its calendar year.

Accounts Payable Accounts payable is a strategic, value-added accounting function that performs the primary non-payroll disbursement functions in an organization. As such, the AP operation plays a critical role in the financial cycle of the organization. AP enables an organization to accomplish its objectives by bringing asystematic, disciplined approach to evaluate and improve the effectiveness of the entire payables process. In addition to the traditional AP activities whereby liabilities to third-party entities (suppliers, vendors, taxing authorities, etc.) are recognized and paid based on the credit policies agreed to between the company and its suppliers, today's AP departments have taken on much wider roles including fraud prevention, cost reduction, workflow system solutions, cash-flow management, internal controls and vendor (supply chain) financing.

Accounts Receivable Amounts due to the reporting company from customers. Accounts receivable is considered a current asset.

Accrual Accounting Accrual accounting attempts to match expenses with revenues for a particular reporting period.

Accrual Income The difference between revenues and expenses identified during specific periods of time. Revenue is recognized during the period it is earned. Correspondingly, expenses are matched to the revenue they help produce.

ACH Transaction A method for paying a vendor whereby a firm deposits funds into the vendor’s bank account.

Activity Based Costing (ABC) A method to direct organization’s costs to the products and services that caused the costs to be incurred.

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Alternate Site An alternate operating location to be used by business functions when the primary facilities are inaccessible. 1) Another location, computer center or work area designated for recovery. 2) Location, other than the main facility, that can be used to conduct business functions. 3) A location, other than the normal facility, used to process data and/or conduct critical business functions in the event of a disaster.

Assets Resources owned by a company usually recorded in the ledger at historical cost.

Assumed Receipt An alternative to the three-way matching method of matching payment documents where goods are assumed to have been delivered when the invoice arrives with the firm; accounts payable pays the amount on the invoice unless instructed otherwise after the department making the purchase reviews the invoice.

-B-

Backup Withholding Under certain conditions, the business entity is required to withhold part of a payment to a vendor subject to backup withholding. The amount withheld is remitted to the internal revenue service. Backup withholding is usually required when a payee has failed to give the proper taxpayer identification number to the business entity.

Balance Sheet A financial statement that lists the assets of the reporting entity and claims against those assets. The difference between categories is known as Owners’ Equity.

Benchmarking The process of establishing a standard of performance.

Bills of Lading Documents that typically accompany a shipment transferring custody of the goods from the supplier to the transportation company.

Blanket Purchase Order A large purchase order covering multiple purchases over a stated period of time.

B-Notice A notification sent by a business entity to a vendor/payee that the taxpayer identification number provided by them is incorrect, thus subjecting the vendor/payee to possible backup withholding requirements.

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Business Continuity The ability of an organization to provide service and support for its customers and to maintain its viability before, during, and after a business continuity event.

Business-To-Business Network (B2B) A connection between the Internet and a company’s private internal network.

-C-

Cash Flow The process of using cash to generate goods or services for sale, selling the goods or services, collecting the cash and then repeating this cycle.

Certified Independent Audits Performed by CPAs who attest to the fairness of the financial statement presentation.

Check Traditional payment system; specially constructed piece of paper instructing the issuer's financial institution to pay the individual, or organization, indicated on the paper a specified sum of money.

Check Disbursement The act of sending checks to the payees, usually by mail.

Check Float The time between when a check is prepared and the funds are withdrawn from the issuer’s bank account.

Check Run The act of printing a series of checks to be disbursed by the firm.

Check Stock The special paper on which a firm prints checks.

Collection Float The length of time between a check’s presentation for deposit and the actual debit from the account.

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Consigned Inventories Goods owned by a supplier, but stored at the buyer’s facility and billed only after they have been sold or consumed.

Consumption Tax A tax levied on the consumer. Sales/use taxes and value added taxes are considered consumption taxes.

Control An activity that mitigates or prevents a risk from being realized.

Cross Docking A process whereby incoming shipments are placed onto an outgoing vehicle.

Current Assets Assets that are expected to be consumed within one year or one operating cycle of the business.

Current Liabilities Obligations due within the next 12 months.

Custodial Agreements A covenant signed by the employee outlining responsibilities as a safeguard against misuse and abuse.

-D-

Deferrable Applications that contain data that is used periodically, such as market analyses. These applications are looking at a recovery time of 24 hours or longer.

Dormancy Period The dormancy period is prescribed by state law and is the amount of time that lapses before an unclaimed property becomes escheatable.

-E-

E Card Similar to a P-card but used by purchasing to facilitate buying via e-commerce/internet.

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EFT The electronic direct deposit system for organizations.

Electronic Data Interchange (EDI) The electronic exchange of business transactions in a standard format.

Electronic Invoice Presentment (Payment) EIP is a process by which a service provider collects invoices from a customer’s suppliers and electronically transforms them into a standard format that can be integrated into the customer’s Enterprise Resource Planning (ERP) system. In some cases, the service provider also pays the invoices on behalf of the customer (EIPP).

Electronic Matching Electronically reconciling documents, such as the purchase order, invoice and receipt.

Enterprise Resource Planning (ERP) A business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing.

Entity Level Control A control that is pervasive across the entity, sometimes referred to as a soft control or an element of the control environment.

Evaluated Receipt Settlement An alternative to the three-way matching method of matching payment documents where accounts payable submits payment to the vendor based on the figures stated in the purchase order upon receipt of ordered goods, no invoice is used in the payment process.

Evaluated Receipts Settlement (ERS) A procedure that allows one to settle goods received without receiving an invoice. Also known as a two-way match.

Expenditure Authority Name for the level of authority granted to an individual within a firm allowing them to authorize purchases up to stated dollar amount.

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-F-

Fixed Assets Tangible resources expected to last in excess of one year. The business ordinarily acquires these assets to use in the production of other goods and services. Since these assets are used over more than one accounting period, the cost is allocated over the expected useful lives through a process called depreciation. The full cost is not expensed in the period of acquisition.

Fleet Card A credit card restricted to expenses, such as gas, vehicle maintenance, and parking.

Freight Bill A document that transfers custody from the carrier to the purchaser.

-G-

General Ledger The detail of the financial effects of a company’s monetary transactions summarized by account.

Generally Accepted Accounting Principles (GAAP) The guiding principles for recording transactions and producing financial statements for use by managers, investors and other interested parties.

Ghost Card An organization credit account with a number unknown to the user. This can help centralize purchases, making payment processing earlier.

-I-

Income Statement A financial statement that over a specific period of time summarizes the change in owners’ equity resulting from transactions other than contributions and withdrawals by owners.

Independent Contractor An independent contractor is a self employed person who provides services to a business or businesses. Business entities are required to report payments to independent contractors on Form 1099 each year.

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Independent Contractor An individual who performs services normally covered by contract, subject to Profit & Loss (P&L) risk, without employee benefits and not closely supervised or controlled.

Information Return A return filed with the Internal Revenue Service which provides information; however, a tax payment is generally not remitted.

Input Tax Associated with value added tax, the input tax is the tax paid on raw material or inputs into the product being produced.

Internal Audit Assesses the control environment and provides operational solutions and control improvement recommendations to management.

Internal Control Assessment A process performed by management or auditors to determine if controls are well designed and effective at mitigating risk.

Internal Metrics Measurements used to evaluate the performance of a function or process. They can be used for both cost and quality purposes and serve as a “report card” for evaluating performance.

Invoice A bill from a vendor indicating the items purchased, price of each item, total value of the purchase and payment terms for remittance.

-J-

Journal A chronological record of daily transactions of a business. Journals are the books of original entry, i.e.; the book where a transaction is initially recorded before being posted into a ledger. For each transaction, the journal shows the debits and credits to be entered in specific ledger accounts, as well as a description of the transaction.

Just-in-time- Inventory A process whereby materials needed for a particular day in the manufacturing cycle are expected to arrive at the factory exactly when needed.

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-L-

Letter of Credit A non-negotiable instrument authorizing an agent to pay a bank or other firm when specific conditions are met.

Liabilities Claims of outsiders against the business.

Long Term Liabilities Obligations that do not need to be satisfied during the next 12 months or operating cycle.

-M-

Mail Float The time between a check being mailed and its presentation for payment.

Master Credit Limit Total credit limit available to a firm's entire purchasing card program.

MICR Special ink used in printing checks.

-N-

NEXUS A seller’s minimum level of physical presence within a state that permits the taxing authority to require the seller to register in order to levy the tax, and to collect and remit sales/use tax to comply with the state’s taxing statutes and regulations.

Notice CP2100 or CP2100A Notification from the Internal Revenue Service that one or more taxpayer identification numbers do not match the taxpayer reported on Form 1099. Specific actions are required by the business entity when these notices are received.

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-O-

Output Tax Associated with value added tax, the output tax is the tax collected on the sale of a good or service. It is collected by the seller.

Outsourcing Strategically using outside resources to perform activities traditionally handled by internal staff and resources.

Owners’ Equity The residual after all liabilities (that which the firm owes) are deducted from total assets (that which the firm owns). Owners’ Equity is frequently referred to as “Net Worth.”

-P-

Pareto Chart A graphical presentation employing bars to highlight cumulative effects.

Payment Discount Reduction in invoice amount offered to a customer for prompt payment, commonly a 2% reduction for payment within 10 days.

Payment File An accumulation of payments made to a vendor/payee usually in connection with reporting amounts on Form 1099.

Payment Terms The parameters by which a vendor requires a firm to pay an invoice.

Payment Timing Optimization (PTO) A vendor payment system based on the assumption that real terms may deviate from those on the invoice.

Per Diem Absolute ceiling or guideline for certain types of travel expenses.

Positive Pay A way of preventing check fraud by transmitting the daily AP and Payroll check information to a corporation’s bank to help detect bogus or altered checks.

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Prime Contractor A contractor providing service to a government agency that is eligible to do so because it subcontracts or purchases supplies from a certified women- or minority-owned businesses.

Process Level Control A control implicit in a process. An example would be a requirement that two Individuals approve a payment transaction.

Procurement Card (Pcard) A credit card issued to an employee, generally for specified low-dollar transactions, as a time/cost saver for accounting, management, purchasers and vendors.

Purchase Order Document authorizing an employee to make a purchase for an organization contains a description of the good, or service, to be purchased, the total amount of the purchase and authorizing signatures from appropriate approvers.

-R-

Receiving Document Document prepared by a firm's receiving department indicating goods the firm has received from a vendor.

Reengineering The radical, rapid, redesign of a business process for breakthrough changes.

Remittance/Check Request A form used to pay an invoice that usually lacks any formal document matching such as a Purchase Order.

Risk An event or consequence that prohibits or delays the achievement of a business objective.

Risk Assessment A process performed by management to identify and analyze risks that might inhibit or prevent the achievement of a business objective.

Rush Processing Rushing a payment as an exception through the process.

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-S-

Sales Tax A consumption tax levied on the consumer of the good or service. Sales tax is collected and remitted by the seller of the good or service.

Sarbanes-Oxley Act Legislation that requires the management of public companies to assess and certify as to the quality of their internal control structure as it relates to preparing accurate and relevant financial statements in accordance with professional standards.

Single Transaction Limit The most a cardholder within a purchasing card program can spend on any one transaction.

Statement of Cash Flows A financial statement that summarizes a reporting entity’s sources and uses of cash over the accounting period.

Statement of Changes in Financial Position A financial statement that summarizes a reporting entity’s sources and uses of cash over the accounting period.

Summary Invoices Vendor invoicing that summarizes many small charges on one document.

Supply Chain Management Focuses on the design, development, optimization and management of all internal and external components of the organization’s supply system.

Sweep Account Type of checking account utilized by firms where the financial institution totals all checks presented against the account and then informs the firm of the total funds necessary to clear the checks, allowing the firm to keep funds in an interest bearing account for the maximum possible length of time.

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-T-

Tax Exemption Certificate Certificate issued by the taxing jurisdiction that exempts a purchaser from paying sales tax on items held for resale or included in a manufacturing process. Tax exemption certificates are issued to wholesalers, manufacturers, and other organizations exempted by taxing jurisdiction.

Taxpayer Identification Number (TIN) A number used by the Internal revenue Service to track individuals and organizations and their income tax reporting responsibilities. For individuals, the social security number is considered the taxpayer identification number. For business entities, the employer identification number is considered a taxpayer identification number.

Third Party Recovery Auditors Outside vendors who audit AP invoices to determine if overpayments have been made and recommend process improvements to avoid overpayments in the future.

Three-way Match Traditional invoice confirmation method where the figures on the invoice must match those on the purchase order and receiving documents before accounts payable will issue a check to a vendor.

Total Quality Management (TQM) A management process and set of disciplines that is coordinated to ensure that the organization consistently meets and exceeds customer requirements on a journey toward excellence.

-U-

UN/EDIFACT An international set of EDI standards adopted in Europe.

Uniform Commercial Code (UCC) Laws governing commercial practices.

Use Tax A consumption tax self assessed, reported, and remitted to the state of jurisdiction by the consumer of the good or service. This tax is applicable when the consumer has not paid a sales tax on a taxable transaction.

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-V-

Value Added Tax (VAT) A consumption tax typically found in countries other than the United States. Taxes are collected as value is added to the good or service.

Value-Added Network (VAN) A service provider that typically furnishes communication, mailboxes, and an EDI interface.

Vendor Entity from which a firm purchases goods, or services

Vendor Master File A database that stores information about each vendor, including names, addresses and contacts.

Vulnerability A flaw or weakness in organizational security procedures, system design and implementation, or overall internal controls that could be exercised (accidentally triggered or intentionally exploited) and result in a disaster or incident event that could lead to a disruption of service or an in ability to recover operations