The announcement was made concurrently at the Institute of Financial Operations’ “Fusion 2012” conference in Nashville and at the Shared Services Outsourcing Network’s “European Shared Services & Outsourcing Week 2012” in Amsterdam.

To date FirstStrike has saved companies more than $2 billion in overpayments by detecting and preventing costly errors.  APEX Analytix now will provide the software as a cloud-based service, supported by a highly secure infrastructure and managed services.

Companies will have an end-to-end, scalable environment that acts as an extension of their internal information technology resources, without any infrastructure investment.  They also will have ready access to the latest software releases and upgrades and to comprehensive support delivered by the APEX Analytix team.

“Cloud-based FirstStrike solutions make it easier than ever for companies to monitor for overpayments and fraud, analyze shared services center metrics and improve their efficiency and cash flow,” says Steve Yurko, CEO of APEX Analytix.  “With APEX Analytix managing and maintaining FirstStrike and the underlying infrastructure, companies can focus instead on continuously protecting and improving their operations.”

The FirstStrike modules now available over the cloud include:

• FirstStrike Accounts Payable, which prevents overpayments, improves cash flow and tracks accounts payable metrics.
• FirstStrike Purchasing, which detects pricing errors, analyzes spending and produces reports to support continuous procure-to-pay improvements. 
• FirstStrike Retail, which serves the unique and highly sophisticated purchasing and recovery audit needs of the retail industry. 
• FirstStrike Fraud Detect, which analyzes vendor, invoice and employee data and ranks potential fraudsters by risk score. 
• FirstStrike Vendor Portal, which enables vendors to check the status of their invoices and payments online in real-time, without having to contact a company’s accounts payable department. 

FirstStrike uses secure, encrypted protocols to pull relevant procure-to-pay data daily from ERP platforms and legacy systems – creating a single, consolidated database for analysis and reporting.   APEX Analytix stores the information in a SAS 70/SSAE 16-compliant data center with high availability, redundancy and fail-over capabilities.  The data compiled can be segregated by business unit, geography or other parameters as required–from initial data capture to reporting and analytics.

Scot Spear has joined APEX Analytix as Senior Vice President of Global Sales and Marketing, while Walt Kristick has joined as Chief Information Officer.  The new hires were selected to expand APEX Analytix’s market leadership in North America, broaden the company’s footprint internationally and extend its technology leadership in recovery auditing, overpayment prevention and fraud detection.

World-Class Sales Leadership

Spear comes to APEX Analytix from ABB/Ventyx, a global supplier of industrial enterprise software, where he served as senior vice president for International Sales and Operations.  He is a former sales vice president for IBM and for ERP software provider JD Edwards.  He joins APEX Analytix with a very successful track record of building and maintaining world-class sales and marketing organizations globally.

Proven Technology Innovator

Kristick comes to APEX Analytix with more than two decades of experience in the software and financial services industries, both as a technology leader and applications innovator.  His technology leadership is expected to expand the measureable value delivered to APEX Analytix clients through the company’s industry-leading FirstStrike® suite of applications and by taking advantage of evolving technologies.   Kristick is a former senior vice president at iQor, one of the largest and fastest-growing technology and services companies in the world.  He previously served as CIO at Receivables Management Services and as former managing director of global commercial technology for Marsh, one of the world’s largest insurance brokers.

“Both Scot and Walt bring key skills that are vital to our clients and to bolstering our organization’s mission as a pioneer of software, audit and consulting solutions that drive measurable value safeguarding disbursements globally,” says Steve Yurko, CEO of APEX Analytix.  “We expect that their experience will contribute significantly to increasing our market share in North America, building a much stronger presence internationally and helping our clients take advantage of new and evolving technologies vital to improving their accounts payable and shared services operations.”

Both Spear and Kristick will be based at APEX Analytix headquarters in Greensboro, N.C.

Arnold will be diving into topics that cover (just to list a few):

• Supplier Relationship Management
• Vendor Portal Statistics and Usage
• FirstStrike eCapture
• Vendor Risk Analysis
• Cash Discounts

His presentation will be great for every firm seeking best practices for:

• Visibility and transparency
• Payment accuracy and efficiency
• Case in the procure-to-pay value stream

Arnold founded APEX in 1988, and it has become a world class provider for audit technology and services.

Be sure to join Jim Arnold at the IAPP Fusion Conference on the 16th. Other speakers representing APEX Analytix will be Joseph Collins and Jeremy Dotson.

As Accounts Payable evolves how do we know that measurement techniques are evolving as well? For years benchmarking has traditionally fallen into five major categories:

1. A/P Infrastructure
2. Processing/Automation
3. Payables Controls
4. Risk Management
5. Cash Management

But the question is; are these still the right categories for today’s payables shops? In this session there will be no formal presentation and no lecture – this is a creative session to explore and redesign from the ground up. Grouped together we will collaborate in groups to pick apart benchmarking and see what, if anything can be done better or differently.

Don’t miss this opportunity to work side by side with the best thought leaders in the industry. This will be a fun and enlightening session that will generate some valuable insight for all!

This session will be facilitated by Joseph Collins on May 16th from 11:15am-12:15pm. Collins is a seasoned presenter who creates a unique environment of entertainment, engagement and learning by incorporating multiple elements from his background in AP, global training, internal audit, payroll, IT, sales, marketing, customer service, team building, employee relations and psychology.

Other speakers representing APEX Analytix will be Jim Arnold and Jeremy Dotson.

Re-evaluate your current strategies to enhance your recovery efforts and improve the accuracy of your long-term global retail transactional process. Find out how you can improve your cash management strategy by taking advantage of promotional allowances, rebates, and cash discounts.

Other speakers representing APEX Analytix will be Joseph Collins and Founder Jim Arnold.

– Accounting Manager, Raleigh, N.C.

The safe bet: Know whom you are dealing with

Bankers handle money day in and day out. They have a saying they drill into everyone on staff, and it applies just as well to commercial vendors: Know your customer. Many readers share that thought, along with other best practices to prevent bank account fraud:

• Communicate regularly with suppliers.
• Control master file access.
• Make technology work harder.

Communicate regularly with suppliers

A retail accounts payable director who chose to remain anonymous says, “If you communicate regularly with a supplier and receive a fax, e-mail or letter requesting a change in remittance address, call to confirm the request is valid. If you do not have a personal contact, find someone in your organization who does, and have that person make the call. To add another layer of control, place a second call to the vendor’s credit manager, controller or CFO.”

An anonymous A/P business process analyst agrees. “We require validations with both the bank and the vendor for any new account set-ups or changes to the banking data in our vendor master file. We also use validation tools to ensure the vendor is legitimate.”

Control master file access

An anonymous controller advises that you limit vendor master file access to as few members of your staff as possible. Also, periodically audit the master file, and specifically examine banking data for anomalies. This may help problems surface before they get out of hand.

“When ACH/wire payments are involved, and bank account information is changing, I have the requestor complete an authorization to confirm who owns the new bank account. The requestor sends it to the bank and receives bank confirmation of account ownership before my staff makes the requested change. It extends the timeline on this type of change but prevents payments to criminals.”

Make technology work harder

Pilar Tirado, accounts payable manager at Baker Hughes, Inc., recommends moving as many vendors as possible to electronic ACH payments. “It is not that difficult,” she says. “Then implement Positive Pay for checks that you still have to issue and re-visit the security features used in and on your paper checks. Consider using a Secure Seal as well to provide a means to verify all info on a check.”

But don’t trust technology too much. “Look carefully at e-mail addresses and document letterheads,” says the anonymous retail A/P director. “Some are set up to be easily misinterpreted as valid business e-mail addresses, while letterheads can be copied quite accurately. Look for sloppy, misaligned ones that lack color in the company logo. These should raise red flags to your vendor maintenance processors.”

by Jim Arnold, President of APEX Analytix

Contract overpayments are a little like a slow leak in your right rear tire. You don’t usually notice until it’s too late, and you find yourself fixing a flat by the side of the road. The good news: You can solve the problem and get back on the road to business as usual

No one sets out to routinely overpay on supplier contracts. But despite everyone’s best efforts, money gets wasted — a lot of money. Ironically, part of the blame rests on efforts to streamline paper-driven accounts payable processes and drive down manual error rates.

Using enterprise resource planning (ERP) systems or best-of-breed approaches, many companies have done well at automating the purchase-to-pay process. And some have gone a step further, to implement Evaluated Receipt Settlement (ERS), which automates invoice payment, eliminates traditional three-way matching and saves a lot of paper-shuffling.

But contract compliance has lagged behind. Few companies have a global contract repository or any easy way to match contract terms to purchase orders or invoices. Even companies that image documents may be exposed to above-average error rates. That’s because contract terms aren’t culled out and stored so they can easily be matched with transactions.

The bottom-line questions to ask: How can we make sure every invoice we pay is in compliance with the contract terms? If we pay $15.52 per unit for Part No. 1234 on the face of the invoice, was that the price negotiated on the contract?

Big discrepancies

Lack of contract compliance leads to some of the highest error rates, biggest disconnects and largest dollar amounts slipping through the cracks. Here are a few recent examples:

• A global entertainment company contracted with a temporary staffing service to fill 1,100 different positions in different countries. But the contract only established rates for 350 of those positions. At stake: Total contract payments of $40 million annually. Since most temporary service contracts are billed cost-plus, inability to know the true base rate drained away even more cash.
• An automotive manufacturer wound up paying $421,000 too much to a vendor because someone “fat-fingered” the price with a misplaced decimal point. The manufacturer’s ERS assumed both the purchase order and receipt were correct and automatically cut the checks.
• A large manufacturer that used industrial gases arranged for a contract price of 75 cents per cubic foot, but a data entry error turned that price into $75, and an invoice that should have been $1,150 added up to $115,000. Again, their ERS just paid the calculated amount on the check.

Other examples range from mistakes that hinge on incorrect units of measure (pounds to kilos is commonplace) to companies that buy at the correct contract price but get refunds for returned items at a lower price. The latter cost one plastics manufacturer $27,000.

What you can do to prevent errors

Most CFOs and other financial executives understand these things happen. They may not realize the scope of the problem, which tends to increase as companies grow, merge and build a global presence. Clearly, the larger the enterprise, the more likely you’ll find information silos, fiefdoms, little or no interface between Accounts Payable and Purchasing and other signals that overpayments need attention. To prevent these errors, companies can take two main approaches:

• Marry the contract master file and the transaction file, so you can more readily compare the two. For example, say the contract calls for Company A to pay Company B $16 per widget from January 1st to July 31st. When you run a transaction report, you see that you’ve been paying $18, or $2 more than you should. That gives you the data you need to take action and recover those overpayments.
• Look for anomalies in the data, and then chase down the contract to determine why the anomalies occurred. Let’s say you review the transactions over time and see that for Part X you’ve been paying $12 per invoice except for twice when you paid $18.50. In context, that $18.50 anomaly sticks out like a sore thumb. And if you’re talking about thousands of parts and invoices, some number of anomalies will surely turn into overpayments.

Flag exceptions early and often

Certainly, keeping exceptions to a minimum and flagging them as early as possible is a “best practice” well worth pursuing. You will not only put a stop to overpayments, but cut your overall processing costs as well. Fixing problems during invoice processing carries one cost; finding the problem later, when you have to reverse it out in accounting, carries an even higher price.

And of course, if your overpayment is out the door, you have to get it back from your supplier, and that creates another set of problems. What if you discover the overpayment is a year old or more? Is that supplier still in business? Are your contact people still in place? Can you get to the right people?

Relationship issues add yet another dimension. Hunting down $5,000 from a distant third-tier vendor is one thing, but asking a downstream supply chain partner to take a $250,000 hit is quite another. Yes, they’ve been billing you the wrong amount, and yes, you deserve to get your money back. But that’s still going to be a difficult conversation — and an adversarial situation.

Consider sending statements

Another recovery option that can pay handsome dividends is to send statement requests to vendors, in an effort to resolve open invoices or credits on their books. Often vendors have credits on their books that aren’t reflected in clients’ internal records. For example, say a plant across the country returned $50,000 worth of parts, but that credit never made it into the company’s ERP system.

At some point, the vendor will take that $50,000 into income, even though it’s money owed to you. And let’s be candid: Vendors have little or no incentive to tell you about credits on their books — in some cases Accounts Receivable departments are instructed to hide credits, to respond only if specifically asked about them, or not to respond at all.

For example, APEX Analytix has found that a series of two or three letters generates about a 40 percent response rate from the vendor master list. Calling the major vendors often brings the total to 50 percent. If that effort generates $2 million, you can bet there’s another $2 million held by vendors who didn’t respond.

It’s a safe bet that, if you have 50,000 vendors globally, some will be forthright about credits, and some won’t. Others will rationalize that those credits amount to a compensating balance or represent just payment because you made them wait 90 days to get paid.

A final word

The longer you wait to recover overpayments, the more effort and expense involved, and the more time needed to resolve the issues. Across thousands of payments and vendors, these dollars can be significant. As the late Sen. Everett Dirksen once said, “A million here, a million there, and pretty soon you are talking about real money.”

That’s why smart companies use technology solutions that will find overpayments or other errors as early in the procure-to-pay process as possible, when least costly to fix — and less likely to leave you stranded by the side of the financial road, wondering why the spare tire isn’t in the trunk.

____________________________________________________________________________________________

Jim Arnold is the president, founder and chief technology officer of APEX Analytix. A CPA, CMA, CFE, CISA and CAPP, Arnold previously worked in application development at Texaco Inc. and internal auditing at General Foods/Philip Morris, and for two years was manager of financial planning for the Maxwell House coffee division. He received a bachelor’s degree in accounting information systems from Pace University.

At CBS Moneywatch, Susan Lucas used our post as an example of an office party embarrassment that needs dealing with: “Don’t just forget about it and hope it goes away, because it won’t. Be upfront and say to your boss, ‘I’m realy sorry.’”

John Sylo at Workbloom discusses the proposed incident and offers good advice to head this off before the fact:  ”First of all, when you invite your spouse to your company’s Christmas party, you have to discuss with him or her about what you hope will happen, so that you can avoid these types of surprises.”  Read his entire post and other career related issues at Workbloom.

We also encourage you to read more holiday related industry topics from our friends at RetailFraud.com and TodaysWorkplace.org.

Do I hope he had “one too many,” and won’t remember what happened? Or do I make a point of speaking to him about this conversation? If so, what do I say?

– Embarrassed (company withheld)

Time for an open dialogue

Nearly everyone has a story to tell about a holiday party — and many involve some sort of inappropriate behavior fueled by alcohol. As embarrassing as this incident was, one anonymous reader says “count your blessings,” because in a similar situation, her significant other engaged in sexual harassment! Advice from readers on “damage control” with your boss in this specific situation centers on three strategies:

• Be up-front and apologize.
• Turn it to your advantage.
• Ask for a performance review.

Be up-front and apologize

Several readers say that the best approach is to bring the matter up with your boss and apologize for your out-of-line spouse. In the opinion of one anonymous A/P manager, “If you don’t mention it, the boss may think you planned it. Apologize, say your husband had a few too many drinks, and leave it at that. If the boss says he doesn’t remember, all the better.”

An anonymous payroll manager shares the same view, but offers a different strategy. “Better to address things up-front with your boss — not knowing where the rocks are can be more dangerous than any embarrassment. Ask your boss for a moment to talk about what happened, but rather than blurt everything out, try to open the conversation with a few questions and let HIM do the talking.”

Turn it to your advantage

Reader Dave Pouliot sees this as the opportunity for a win/win outcome. “Your boss may chalk it up to a disgruntled spouse, and most likely will address you,” he says. “This may be your opening for discussions relevant to a balanced work/life schedule. Treat it as a ‘lesson learned’ about discussing your work situations at home and not addressing them in the office, too.”

An anonymous manager also sees an opportunity. “You can demonstrate that you are a problem solver who can face an uncomfortable issue head on and deal with it swiftly and maturely — all excellent qualities for anyone who wants to move ahead in an organization.”

The first step, she says, is to go to your boss and tell him that you are aware your spouse spoke out of concern — but also out of turn. Be honest and let him know that if your work situation is an issue, you will bring up the subject, not your spouse. Apologize for your spouse taking personal liberties and for any resultant confusion.

Another opportunity for a positive outcome comes from a reader who chose to remain anonymous. “If long hours and low pay are indeed an issue, do meet with your boss. However, come prepared to discuss possible solutions. Dig for data: Has volume increased with the same resources; has the deployment of new systems caused some implementation overload? Are other people underperforming? Are systems not working? Could the company handle manual work differently? Are there processes that staff can change or re-engineer?”

Ask for a performance review

An anonymous reader from San Diego says to assure him that you feel comfortable speaking directly about any issues you have. “Don’t let long hours and low pay turn into ‘the elephant in the living room.’ Tell the boss you don’t mind ‘paying your dues’ to advance in the organization, but you would like to have a definite career path. Schedule a time when you can discuss it, without waiting for the traditional annual performance review — especially, if that review will be months and months down the road.”

Alternatively, an anonymous CFO recommends working within the normal performance review timeframe. “If you do have issues to bring up during your review, be sure to have backup documentation handy that shows your accomplishments, how you add value to the organization and how much time you average on the job.”

A final note

As readers have pointed out, a heartfelt apology goes a long way in restoring a relationship in trouble, whether it involves the boss, a co-worker or your spouse. In most cases, the courage to say “I’m sorry” will lead to open communication and a more positive outcome than you might expect.

by Chris Siemasko, Vice President of Product Management

These days, faced with a fragile economy, shrinking spend and relentless pressure on margins, companies are looking everywhere for opportunities to cut costs. One area many companies have overlooked is advertising and marketing communications. They may be losing millions of dollars through overpayments, missed discounts and lack of performance against contract guarantees.

The dollars involved are eye-popping. In 2008, the top 100 advertisers spent $612 million each on broadcast, print, outdoor and Internet media alone. When you add all other types of marketing communication, such as sales promotions, event marketing and public relations, total spending reaches $777 billion. And that’s just in the U.S. market.

Despite the huge amounts of money in the advertising and media “bucket” at most large companies, the procure-to-pay process in this area gets surprisingly little scrutiny, compared to other vendor supply chains. And error rates are estimated at 1 to 3.5 percent, based on established rules of thumb.

Companies may assume that “our agency takes care of that” — or be reluctant to upset a solid working relationship by questioning what’s going on behind the numbers, but with so much bottom line dollars at risk, is that a prudent approach during these times?

Costly mistakes drain away dollars

The largest category of marketing spending, and thus the most important target for recovery, is typically media advertising. Similar to your other procure-to-pay processes, risks of overpayments exist throughout your media and advertising sourcing:

• Duplicate payments: Agencies typically invoice media costs to advertisers based on an up-front estimate. If media shifts or the media vendor issues an invoice for a different amount than originally planned on the approved buy sheet, the agency may input that invoice into the system again without reconciling or cancelling the original estimate. The advertiser ends up paying twice for the same media.
• Missed discounts: Agencies typically invoice advertisers in different billing formats (i.e., gross, net, net plus commissions, gross less discounts, etc.). An incorrect billing format can cause the advertiser to pay the wrong amount. Print media is typically negotiated off “rate cards,” often with a sliding scale based on spend levels. These discounts are difficult to track and easily overlooked.
• Credits not applied: When ads don’t run as planned, the media issues a credit. But these credits rarely get back to advertisers on a timely basis, due to reconciliation delays. It may not be clear exactly what campaign or month or spot the credit is for, and months can go by, while the credit sits on the agency’s books. If the advertiser is unaware of these credits, it may never receive them.

Underperformance compared to plan

Just as a supply-chain provider might short a delivery of component parts to your loading dock, media can underperform against negotiated contract goals and guarantees. For example, say you want to target 18- to 24-year-old consumers with a campaign around the X Games. The media plan guarantees your campaign will reach 80 percent of the target audience. Did you hit the performance criteria? Did the right commercials run in the right time slots?

Agencies are obligated to track and post these results for review against media guarantees, and then solicit credits for underdelivery. These credits are most commonly in the form of “make-goods” — additional advertising time allotted to the advertiser to make up for the original shortfall. If agencies are not diligent in tracking the media, they may leave value on the table to which advertisers are entitled.

Failure to promptly track and reconcile make-goods against contract guarantees may result from lack of oversight, manual processes, a shortage of agency staff or turnover among media buyers. In any case, the longer it takes to complete the reconciliation, the more likely an advertiser will lose value.

The sooner the agency reconciles make-goods throughout the year, the better. After an annual review, it does little good for a major retailer running a multi-million dollar holiday promotion to get credits applicable to next year’s campaign. That value is still lost when it comes to this year’s bottom line.

This is not to suggest that agencies are asleep at the switch. But they are stretched thin in terms of time and resources just like everyone else. And in many cases, are only spot checking to ensure contract compliance.

Loss as a result of agency float

Agency float is second only to missing credits in terms of total dollars advertisers lose. How it works: An agency might require net-15 payment on an estimated invoice to the advertiser, while at the other end of the transaction, the media may have net-45 or even 60-day terms on its invoice to the agency. Thus, the agency has use of the advertiser’s funds for an unusually long period of time. With tens of millions of dollars involved, that can translate into substantial interest income to the agency and loss of value to the advertiser.

Most contracts are written in a way that minimizes float on media dollars. All parties recognize that there’s a level of reasonable profit-taking surrounding this risk, but there are cases where the agency can and should return that value to the advertiser. Example: In a recent case, a pharmaceutical company found that over a three-year period, its agency had pocketed $3.2 million in interest income, and negotiated a return of $1.7 million.

Questionable practices

When you are dealing with big companies and big agencies, instances of blatant fraud are quite rare. After all, reputations are at stake. However, it’s possible that a thorough media recovery audit will uncover practices that, at minimum, could raise ethical issues. For example:

• Related-party transactions. Agencies may use related parties to provide undisclosed services, resulting in profits that, while not necessarily undue, are unknown. Contracts are usually written so that pass-throughs are at cost, or if cost-plus, at a fair markup. Example: In a recent case, an agency used a sister company to place outdoor advertising in airport terminals, at prices that were unjust.
• Non-disclosed media. Large agencies may use their buying clout to negotiate bulk-rate deals with media, buying time or space on their own account, which they later resell to client advertisers. They’ll usually pass along a discount to the advertiser, but it may not be a full or fair value.

Actually, companies that do not use outside advertising agencies face a higher risk, even with solid internal controls in place. As with any other type of payment fraud, it’s possible for an employee to authorize payments to a “ghost” consultant or graphic artist, who turns out to be a mistress or girlfriend. That’s why a thorough audit needs to look at the controls you have in place and where you remit invoices, and flag potentially fraudulent transactions.

Action steps to take now

Unlike traditional supply chains, controls and oversight over advertising spending haven’t matured the way they have in retailing or manufacturing. Of course, you are right to expect a level of ethics and controls in place, but errors will take place. Here are steps you can take to bring marketing and advertising in line with the rest of your spending:

• Understand your media expenditures, and review existing oversight and controls to test whether you are being fiscally accountable in terms of your total dollar outlay.
• Decide whether or not leakage in the range of 1 to 3.5 percent is acceptable, and if recovering that amount would augment the bottom line.
• Don’t take a fox-in-the-henhouse approach and assume that the agency will make sure you aren’t overbilled or miss discounts.
• Get an independent media recovery audit of this year’s spending, since the earlier you identify variances from plan, the better. An independent review can also lead to new ideas for best practices and process improvements.

Taking these steps will ensure that you are doing all you can to get both maximum value from your dollars and the performance you expect. Handled properly, it can also serve to strengthen the existing client-agency relationship — serving as a “win-win” experience for everyone involved.

Chris Siemasko is vice president of product management for APEX Analytix. He joined Apex Analytix in April 2006 to provide strategic framework for the future direction of the FirstStrike™ product suite. Prior to joining APEX Analytix, Chris worked as vice president of channel solutions for Fidelity Information Services, a leading provider of core financial institution technology services for 35 of the top 50 global banks and nine of the top 10. Chris has spent 16 years in the financial services software marketplace, introducing, developing and delivering strategic and operational technology solutions to Fortune 500 companies. He graduated from the University of Pittsburgh with a bachelor of science degree in electrical engineering with collaborative research in software development and information systems.