Last week's column "Making AP Pros Feel Appreciated" really struck a nerve with our friend Mary Schaeffer, the editor and publisher of AP Now and Tomorrow, the premier newsletter for accounts payable professionals. We won't hold that against her, and for what it's worth, Mary also edited a credit and collection newsletter for over a dozen years, so she knows finance inside and out, and we're always interested in her perspective.

Following the weekly tip, Mary wrote that she hoped our readers heeded the excellent advice.

But then she asked us something else: would we be willing to ask our readers how many hide open vendor credits from their customers by either suppressing them when statements are printed or by retyping statements without any open credits?

We responded that every once in a while, we hear from credit execs on our "listserv who (through ignorance, we presume) write off old credit balances. But if that issue is ever brought up in that context, other, saner, list members are always quick to point out that it is not legal to write-off old credit balances. Those are the property of the customer in question, and if the customer can no longer be located to claim any credits, they must be turned over to the state. And cash-strapped states are increasingly auditing firms' A/R to look for this type of credit to raise badly needed money.

So we couldn't imagine, we told her, that there would be anyone foolish enough to engage in such a practice.

She proceeded to share two very interesting emails she'd received. One, from a recovery auditor read:

"Just a word of caution....A/R people can easily manipulate an excel spread sheet by deleting all or some open credits. I've seen it happen. Therefore, I instruct our recovery auditors to insist on receiving an official A/R system statement or aging printout. Just this week, we recovered a $56K credit dated from 2008 from a vendor that sent us two hand typed (Microsoft word) statements with both the client's logo and its own logo on the statement memo just to make it look official before we received the A/R system printout after 4 phone calls requesting an 'A/R system statement'....it was our client's largest vendor with well over a hundred mil in spend. No way should they be typing up a statement of account.

"Lately, maybe because of the economy/dubious motivation(?), I've found that it's like pulling teeth and it's becoming more time consuming to get vendors to disclose open credits."

In addition, she shared a comment from a payables person who wrote that their accounting software (MAS 200) "has an option to run an A/R system statement that excludes credits. Every month when I run statements I have to check a box that says 'include credits.' No hand typing necessary in a word document to exclude certain items."

Her comment: "now - why do you think the software would have this feature?"

Our comment: We can't think of any good reason for the feature. But if yours has it, don't use it!

For more on this issue, we urge you to consult Credit Today's Unclaimed Property Resource Center, which, among many other resources on this issue, includes policy templates. These are very important to implement and can single-handedly forestall an audit if you can show that you have a sound policy in place.

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