Staff members are a wildcard.

August 1, 2016 Lynn Larson

When we talk about expanding electronic payments, things like technology and work flow often surface, but are we forgetting the people aspect? The employees who manage or support purchase-to-pay processes—namely, procurement and AP—often wield just as much power as senior management in the success or failure of a new payment strategy. Organization leaders who are ready to modernize payment operations need to address two aspects of the staff members responsible for executing their plan: attitude and skills.

In case you missed it... Staff members are not the only culprit in a laggard payments environment. The previous blog post shares an example highlighting how internal culture driven by management can plague B2B payments.

Attitude

People are unpredictable. Even employees who are generally flexible might resist a change in payment methods, processes, and/or technology. I have heard of organizations who avoid such conflict by holding off on implementing something new until “so-and-so” retires. It does not make business sense to sacrifice quantifiable benefits of a modern payments strategy to appease one or more employees.

Resistance often stems from fear. Senior management should be planning appropriate communications to ease employees’ fears about the unknown. This includes explaining:

the reasons for making a change and
the anticipated impact on jobs

Some organizations go a step further by offering incentives if/when staff achieves certain goals related to adopting a new initiative. This could range from monetary rewards to something basic like a celebratory lunch. Those who do not display the right attitude could be subject to a change in job position or status.

The other dilemma management could encounter is employees who have the right attitude but lack the necessary skills to accommodate a change.

Skills

Key questions for management to explore include:

What skills do employees need to help the organization succeed with the new plan?
Are the right skills attainable? Conversely, are employees simply not suited for what lies ahead, regardless of possible training?

An organization should decide how much it is willing to invest in employee development in order to fulfill a vision.

Which employees are ready to support improvements to the organization’s payments plan? Ensure they possess the skills to meet new job demands.

Conclusion

If management is committed to payment improvements, they should do the following as early as possible in the process:

Assess the impacted staff members to identify potential roadblocks related to attitude and/or a shortage of skills
Determine how they will address the identified potential issues (e.g., training, employee restructuring, incentives, etc.)

Finally, once the dust settles, policies and procedures, as well as job descriptions for procurement and AP personnel, likely need to be refreshed to reflect the organization’s new path.

See more on payment strategy from Recharged Education.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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Two issues plaguing B2B payments.

July 20, 2016 Lynn Larson

Internal culture and tools drive the operations of AP and procurement, but these things can also be roadblocks. A culture that is forward thinking and innovative will lead an organization to adopt the right technology to streamline purchase-to-pay processes. One that resists change and remains stuck on old ways risks a downward spiral. This can even occur with billion dollar companies; following is a real-life example. Call it a case of duct tape, wire, and chewing gum. What can happen if your organization resembles this one?

Duct Tape, Wire, and Chewing Gum

The MacGyver way is how “Paul” describes operations at his $2B employer, a large North American manufacturer. He wryly remarks that employees use duct tape, wire, and chewing gum to fix a problem because no one wants to fix the process at the root of the problem. Management is satisfied with ignoring an issue because, as Paul sums up, “Bill and John know how to work around it, and, as long as Bill and John are here, they think we are fine.”

Inefficiencies

The company uses a huge spreadsheet file (originating at least a decade ago) to manage certain purchasing activity. Because it repeatedly caused Paul’s computer to crash, the company actually purchased a second computer for Paul, so he could keep using the file. Making matters even worse are company acquisitions for which executive management has allowed the acquirees to retain their legacy systems indefinitely.

Excess Costs

Like many other organizations, AP is paper based at Paul’s company. He shares that a recent audit required them to make more than 2500 invoice copies for auditor review. In addition to printing costs, they incurred the cost of retrieving the original invoices from storage (with a records management company) and putting them back.

Paul proposed new AP technology, not realizing that the decision makers lacked basic information about payment strategies. He had to go back to square one.

Personnel Hurdles

Most employees have been at this company for decades. Paul says the cafeteria dining room is a “sea of gray” (as in hair color). Millennials do not stay around long. They quit because of antiquated processes and the lack of a similar-age peer group with whom to connect.

Further, Paul explains the impact of his retired employee, Judy, who basically took all operational and company knowledge with her. His new hire, Kathy, struggles to grasp the labor-intensive processes and systems. Given their limited resources, no one has time to train her. Everything has taken longer to get done. Poor processes + new employee = reduced productivity.

Does this look familiar? Organizations that do not equip employees with the right tools risk losing staff and, ultimately, revenue.

What to Do

“Traditional” culture and outdated tools are tough to battle. Nevertheless, I believe in making an effort. Tips include:

Ensure procedures are documented, so knowledge is not lost when someone retires. This is the easy part; the real problem is outdated processes.
Calculate the process costs of your most tedious processes and share with management along with potential solutions. Educate them on what is possible.
Encourage management to explore why you do “X” and whether it is still justifiable beyond “Because we’ve always done it this way.”
Talk with your bank, other providers of payment-related products and services, and your industry peers to learn more about the options.

Access more information and tips on payment strategy.

Up Next

What happens when management is ready to expand electronic payments, but employees stand in the way? Take a look at the next blog post.

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Who pays for payments fraud?

July 13, 2016 Lynn Larson

We all pay for fraud in some way, but who bears the direct cost? It can depend on the fraud and payment type, but some organizations think insurance will cover everything. This is typically not the case. Following are two examples of what insurance generally does not cover, one of which ties in with the executive card fraud I wrote about in June. Because it is such an important topic, AP Now is exploring the insurance angle within their payment fraud survey going on this month; learn more below.

Internal Failure

Insurance carriers may back away from organizations who blatantly drop the ball in preventing a fraud. Last month, I shared the fraud case involving Bill Davis, ex-CEO of Community Action of Minneapolis. The board did nothing to prevent or detect the fraud; worse, some board members apparently benefited from it. As Star Tribune columnist Jon Tevlin wrote last week, insurance companies can and do refuse to cover board members when they are grossly negligent in their duties (according to Kate Barr, executive director of the Nonprofits Assistance Fund). Read the complete article to see how this fraud case is evolving.

Does your organization have solid controls pertaining to card use by executives and the people responsible for monitoring them?

Business Email Compromise (BEC)

Organizations may or may not have insurance coverage for losses due to BEC scams. As a refresher, in a BEC scam, an email appearing to be from an internal executive is actually sent by a fraudster who requests that AP wire a certain sum of money to a specified account. Some insurance carriers are reclassifying BEC losses from E&O and/or fidelity bonds, which have low to modest deductibles, to cyber crime, which often requires organizations to purchase a separate, specific insurance policy with high deductibles. Has your organization checked into its insurance coverage lately?

Who is Liable?

If an insurance carrier is off the hook, we are left with the question, “Who bears the direct cost of fraud?” It could be your organization. Fortunately, card payments generally include some external protections that other payment methods do not. Ensure you are familiar with the related contract terms between your organization and its card issuer.

From whose pockets does fraud extract money?

Payments Fraud Survey

Fraud has evolved, taking on new forms, but the old fraud tactics remain as well. To determine what organizations have experienced, AP Now is currently conducting a survey, which addresses all payment types. Even if you have not been a fraud target, please take the survey to share the strategies that have helped protect your organization. Each participant will receive an executive summary of the results and an invitation to attend the related live webinar.

Take the Survey

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