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Payments compliance
Inside WEX

Make Payments Automation the Center of Your Compliance Efforts

September 19, 2016

Payments departments focus on moving money out of the company. There’s less attention paid to the information that moves in to the payments department. With the information payments gathers about vendors and spending, it’s an obvious target of compliance concerns.

Certainly compliance with corporate spending policies is relevant, but so are larger corporate compliance concerns, such as adhering to IRS policies regarding vendor payments and generally accepted accounting principles for recording payments on the company’s ledger.

When payments remain manual, enforcing compliance is difficult. When payments are automated, compliance with policies can be built into the system. Connected systems allow data to flow automatically, eliminating silos that enable information to be concealed or misreported.

With the increased scrutiny on corporate accounting imposed by the Sarbanes-Oxley Act, corporations need to take comprehensive measures to ensure the validity of the accounting data they report. Automate your payments process and you’ll gain compliance benefits in these areas:

  • Data protection. Companies have obligations to protect their customers’ personal information. This obligation extends to any customer account information held by the payments department to generate refund payments. Payments software can ensure that only authorized users are able to access this information as well as store it securely through encryption.
  • Reduced risk of fraud. Using payments software adds features that increase security and reduce the risk of fraud. Access controls can enforce segregation of duties and limit users’ access to the functions needed to perform their specific responsibilities. Audit trails document and record all actions taken. Through a defined payments workflow, using payments software guarantees no shortcuts are taken and all mandated approvals obtained. The software also helps ensure that the amount paid matches the amount approved.
  • Vendor selection. Because vendors need to be added to the payments software in order to be paid, you can enforce compliance with vendor selection/due diligence policies and prevent payments to unapproved vendors and reduce the risk of involvement with money laundering. Through integration with procurement systems, the vendor’s quality can be evaluated, enabling buyers who choose a vendor from a company catalog to make informed choices.
  • Payments. Using payments software enables you to enforce compliance with corporate spending policies. Automated workflows let you enforce the approvals process and authorizations limits. Payments can be restricted to approved vendors only. Invoices can be automatically reconciled against purchase orders to verify the amounts; tracking invoice numbers and purchase orders also prevents duplicate invoices from being paid. In addition to making sure payments match invoices and purchase orders, payments software can help validate that the amounts billed and paid correctly reflect negotiated prices, automatically apply early payment discounts, and apply any credits due against the invoiced amounts. Through systems integration, invoices can also be reconciled with receipts confirming that the goods and services paid for were in fact obtained.
  • Accounting. Perhaps most important from a compliance perspective, integrating payments software with a company’s accounting software ensures that payments are made and reflected in a company’s books and records in a timely, accurate manner. The flow of data ensures that payment dates and amounts are correctly recorded. Additionally, vendors can be assigned default categories so that payments are correctly categorized as well. In addition, data can flow in the other direction, informing a user who is about to make a purchase or payment that budgets will be exceeded if the transaction occurs.

In addition to these specific benefits, payments automation software means that the payments process becomes searchable. Compliance audits no longer require sifting through paper records, which can take time to gather as well as review. Instead, compliance personnel can simply generate reports and review electronic audit trails. Compliance becomes less intrusive and less time consuming. Because the software enforces compliance with policies, there are fewer exceptions that need to be explained. Compliance simply happens, with less effort required to train employees on policies, employees to adhere to policies, and audits to verify adherence.

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