The New Accounts Payable Toolkit

Christine H. Doxey
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The New Accounts
Payable Toolkit
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The New Accounts
Payable Toolkit

Christine H. Doxey
Copyright © 2021 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

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Library of Congress Cataloging-in-Publication Data

Names: Doxey, Christine H., 1955- author. | John Wiley & Sons, Inc.,
publisher.
Title: The new accounts payable toolkit / Christine H. Doxey.
Description: Hoboken, New Jersey : Wiley, [2021]
Identifiers: LCCN 2020055859 (print) | LCCN 2020055860 (ebook) | ISBN
9781119700500 (hardback) | ISBN 9781119700531 (adobe pdf) | ISBN
9781119700524 (epub)
Subjects: LCSH: Accounts payable. | Invoices.
Classification: LCC HF5681.A27 D69 2021 (print) | LCC HF5681.A27 (ebook)
| DDC 658.15/26—dc23
LC record available at https://lccn.loc.gov/2020055859
LC ebook record available at https://lccn.loc.gov/2020055860

Cover Design: Wiley

Cover Image: yewkeo/Getty Images

Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1
 Contents

SECTION 1 – INTRODUCTION 1

Chapter 1: About This Toolkit 3

Index of AP Tools 5

SECTION 2 – THE NEW AP DEPARTMENT 9

Chapter 2: The New AP Department 11

Introduction 11
Case Study: Journey to Excellence 11
Focus on Corporate Productivity 12
Accounts Payable and Procure-to-Pay (P2P) Process Improvements 13
AP Tool 1: AP Process Improvement and Automation Checklist 14
P2P Reporting, Understanding, and Perspective 15
AP Tool 2: Procurement Spend Analysis 16
Strategic Sourcing 17
Other Procure-to-Pay Best Practices 17
AP Process Improvement Impacts on Working Capital 18
Average Payable Period 18
Measuring Average Payable Period 18
When to Take a Trade Discount 19
Negotiating Payment Terms 20
Overview of the Requirements of the Sarbanes-Oxley Act of 2002 23
Accounts Payable, Risk, and Fraud 25
Fraud Statistics 26
Introduction to Internal Controls 28
Standards of Internal Control 28
AP Tool 3: Types of Internal Controls 29
Defining Control Activities 31
The Three Critical Corporate Controls 32
AP Tool 4: The Benefits of Segregation of Duties (SoD) Controls 34

v
vi ■ Contents

AP Tool 5: Mitigating Risk with Internal Controls 35

AP Tool 6: Compensating Controls to Mitigate Risk 38
AP Tool 7: Your Roadmap for Implementing an Internal Controls
Program 40
AP Tool 8: The Top Twenty Controls for the AP Process 43
Benefits of a Payment Audit Process 45
AP Tool 9: Internal Controls Checklist 47
AP Tool 10: Sample Internal Controls Program for Accounts Payable
for Companies Using the SAP ERP 47
AP Tool 11: Metrics to Drive Process Improvements 52

Chapter 3: Automating the AP Process 55

Introduction 55
Benefits of AP Automation 57
A Summary of AP Automation Functionality Considerations 57
Examples of AP Automation Solutions 59
Other Types of AP Automation 61
Imaging and Workflow Automation (IWA) 64
Different Flavors of Imaging and Workflow Automation 67
Electronic Invoicing 69
Different Flavors of Electronic Invoicing 72
Convergence of Electronic Invoicing and IWA 73
Implementation of Your P2P Automation Solution 74
Developing the Business Case 75
Software Solutions, Software-as-a-Service, or Outsourcing? 75

SECTION 3 – DISSECTING THE P2P PROCESS 79

Chapter 4: What Is the P2P Process? 81

Introduction 81
P2P Business Partnerships, Dependencies, and Interdependencies
for Success 83
AP Tool 12: Dependencies and Interdependencies
Within the P2P Process 83

Chapter 5: Transforming the P2P Process 85

Introduction 85
AP Tool 13: Current State Analysis 86
Visioning and Transformation Roadmap 87
AP Tool 14: P2P Transformation Roadmap 88
AP Tool 15: Other Recommendations for P2P Transformation 88
AP Tool 16: Managing Change 89
 Contents ■ vii

AP Tool 17: P2P Transformation Metrics 90

AP Tool 18: Streamlining Your P2P Process Without Automation 92
AP Tool 19: How to Begin Your P2P Automation Journey 96

Chapter 6: Structuring the AP Organization 99

Introduction 99
The Finance and Accounting Organization 100
The Finance and Accounting Organizational Chart (Example) 100
Organizational Chart for an AP Department (Example) 101
History of the Transition 101
About Shared Services 102
Organizational Chart for a Shared Services Structure (Example) 103
Shared Services and Service-Level Agreements (SLAs) 103

SECTION 4 – HOW PROCUREMENT

AND RECEIVING IMPACT AP 105

Chapter 7: Supplier Selection and Management 107

Introduction 107
Supplier Selection and Management Process Insights 109
AP Tool 20: The Top Ten Best Practices in the Supplier
Management Lifecycle 109
AP Tool 21: Five Steps to Use When
“Fine-Tuning” Your Supplier Master File 115
Another Look at Supplier Master File Management Best Practices 120
AP Tool 22: Supplier Diversity 124
AP Tool 23: Eight Critical Supplier Master Practices 128
AP Tool 24: Managing the Supplier Master File 130
Standards of Internal Control: Supplier Selection and Management 131

Chapter 8: Contract Management 135

Introduction 135
Contract Management Process Insights 138
AP Tool 25: Defining the Types of Contracts 138
AP Tool 26: Ten Recommendations for Establishing Contracts 142
Standards of Internal Control: Contract Management 147

Chapter 9: Purchasing and Ordering 151

Introduction 151
AP Tool 27: Five Steps in an Electronic Procurement Process 152
Purchasing and Ordering Process Insights 155
AP Tool 28: Four Best Practices to Consider for the Purchase
Requisition Process 157
viii ■ Contents

The Catalog Procurement Model 158

Standards of Internal Control: Purchasing and Ordering Process 163

Chapter 10: Receiving 179

Introduction 179
Receiving Process Insights 181
Standards of Internal Controls: Receiving Process 184

SECTION 5 – A LASER FOCUS ON AP 193

Chapter 11: The Supplier Master File 195

Introduction 195
AP Tool 29: Supplier Master File Process Best Practices 196
AP Tool 30: Supplier Master File Coding Standards 214
Standards of Internal Control: Supplier Master 218

Chapter 12: Invoice Processing 231

Introduction 231
Invoice Processing Insights 233
Types of Matching Processes 235
Automating the Matching Process 236
AP Tool 31: Establishing Tolerances 237
AP Tool 32: Five Factors Driving the Automation of Invoice
Processing 239
The Benefits of Sending and Receiving Electronic Invoices 240
AP Tool 33: The Most Common Forms of Invoice Automation 241
AP Tool 34: Six Best Practices for Invoice Processing 244
AP Tool 35: Three Components of Imaging and Workflow 248
AP Tool 36: Nine Performance Indicators for
Invoice Processing 249
AP Tool 37: The Twenty-Five Top Reasons for Problem Invoices 251
Standards of Internal Controls: Invoice Processing 254

Chapter 13: P-Cards 261

Introduction 261
Types of Payment Cards 262
P-Card Definitions 266
AP Tool 38: P-Card Program Best Practices 269
AP Tool 39: P-Card Program Implementation Best Practices 275
AP Tool 40: The P-Card Holder Agreement 276
 Contents ■ ix

AP Tool 41: The P-Card Scorecard 278

Standards of Internal Controls: P-Card Process 284

Chapter 14: Travel and Entertainment 289

Introduction 289
AP Tool 42: Red Flags for the T&E Process 293
Standards of Internal Control: T&E Process 297

Chapter 15: The Payment Process 303

Introduction 303
AP Tool 43: Effectively Managing Your Payment Process 306
AP Tool 44: Five ACH Controls 307
AP Tool 45: Preventing Duplicate Payments 308
AP Tool 46: Eight Best Payment Practices 313
AP Tool 47: Tackling Payments Fraud 317
Standards of Internal Control: Payment Process 319

Chapter 16: Accounting, Reconciliation Processes,

Self-Audit Tools, and Internal Controls 325
Introduction 325
AP Tool 48: The Financial Close Checklist for Accounts Payable 331
Standards of Internal Controls: Accounting,
Reconciliation Processes, Self-Audits, and Internal Controls 334

Chapter 17: Customer Service 343

Introduction 343
Standards of Internal Controls: Customer Service Process 347

Chapter 18: Reporting, Analytics, and Benchmarking 351

Introduction 351
AP Tool 49: How to Implement a Successful Metrics Process 353
Standards of Internal Control: Reporting, Analytics,
and Benchmarking Process 361

SECTION 6 – OTHER AP BUSINESS PROCESSES 365

Chapter 19: Supply Chain Financing (SCF) 367

Introduction 367
Unlocking Supply Chain Value 368
AP Tool 50: Defining Who Benefits from an SCF Solution 369
x ■ Contents

Chapter 20: Escheatment 371

Introduction 371
Uniform Unclaimed Property Act (the 2016 Act) 372
Trends in Unclaimed Property Audit and Compliance Issues 372
The Three Objectives of Unclaimed Property Laws 374
AP Tool 51: Action Plan for the Holder of Unclaimed Property 376
AP Tool 52: Basic Procedures for Managing Your Company's
Escheatment Obligations 377
AP Tool 53: Unclaimed Property Checklist 379

Chapter 21: Sales and Use Tax 381

Introduction 381
What the Wayfair Decision Means for Out-of-State Sellers 382

Chapter 22: Independent Contractors and the

1099 Process 393
TIN Matching and 1099 Filers 393
AP Tool 54: Identifying Your Payee 403
AP Tool 55: Compliance Checklist and Year-End Review 409

Chapter 23: Business Continuity Planning 411

Introduction 411
How COVID-19 Is Impacting Today’s Business Environment 412
Business Continuity Basics 412
The Difference Between Disaster Recovery and
Business Continuity 413
Other Definitions and Terms 413
Managing a Crisis 414
Assessing the Risk and Developing a Strategy 415
Taking Business Continuity to the Cloud 415
How to Ensure Continuous Business Continuity 416
AP Tool 56: Six BCP Best Practices 417
AP Tool 57: A Roadmap for Developing Your BCP 418
AP Tool 58: Five Recommended BCP Internal Controls 419

SECTION 7 – ADDENDUM 421

Accounts Payable: Quarterly Controls Self-Assessment

Questionnaire 423
Glossary 427
Index 451
 1
S EC TIO N O N E

Introduction

Welcome to The New Accounts Payable Toolkit! This toolkit is a guide for
“­everything AP.” As we look at all the processes that impact AP and procure to
pay (P2P), the author will present best practices and current trends. As we drill
down into the pertinent process details, an overview will be provided, followed
by a process flow diagram with additional insights. Standards of internal con-
trols are also presented for the AP and P2P processes explored in this toolkit.

1
The New Accounts Payable Toolkit, First Edition. Christine H. Doxey.
© 2021 John Wiley & Sons, Inc. Published 2021 by John Wiley & Sons, Inc.
 About This Toolkit
1
C HAPTER O N E

The New AP Toolkit is an excellent reference book for anyone new to the AP or
P2P space. It can be used to evaluate current processes and identify improve-
ments. This book also serves as a reference for AP managers and directors, P2P
managers and directors, shared services managers and directors, external and
internal auditors, internal control professionals, CPOs, controllers, and CFOs.
Here’s how the book is organized.
How This Toolkit Is Organized

Section Number Title Chapter Number Chapters

1 Introduction 1 About This Toolkit
2 The New AP 2 The New AP
Department Department
3 Automating the AP
Process
3 Dissecting the P2P 4 What is the P2P
Process Process?

5 Transforming the
P2P Process

6 Structuring the AP
Process

(Continued)

3
The New Accounts Payable Toolkit, First Edition. Christine H. Doxey.
© 2021 John Wiley & Sons, Inc. Published 2021 by John Wiley & Sons, Inc.
4 ■ About This Toolkit

How This Toolkit Is Organized

Section Number Title Chapter Number Chapters

4 How Procurement 7 Supplier Selection
and Receiving and Management
Impact AP 8 Contract
Management
9 Purchasing and
Ordering
10 Receiving
5 A Laser Focus 11 The Supplier Master
on AP File
12 Invoice Processing
13 P-Cards
14 Travel and
Entertainment
15 The Payment
Process
16 Accounting,
Reconciliation
Processes, Self-Audit
Tools, and Internal
Controls
17 Customer Service
18 Reporting, Analytics,
and Benchmarking
6 Other AP Business 19 Supply Chain
Processes Financing (SCF)
20 Escheatment
21 Sales and Use Tax
22 Independent
Contracts and the
1099 Process
23 Business Continuity
Planning

7 Addendum Accounts Payable: Quarterly Controls Self-

Assessment Questionnaire
Glossary
 Index of AP Tools ■ 5

INDEX OF AP TOOLS

As an additional bonus, AP Tools are provided within each applicable section.

Each AP Tool is numbered for your reference and cross-referenced to a chapter.
Every AP Tool includes an introduction titled “About This Tool” which serves
as an overview of the tool. Each type of tool is classified as a checklist, template,
or best practice.
This index provides the listing of all the tools for controllers that are
included in this book and provides a quick glance of an inventory of all the help-
ful tools provided. The index is organized by: (1) Section Number, (2) Section
Title, (3) Chapter Number, (4) Chapter Title, and (5) AP Tool Title and Number.
Index of AP Tools

(1) (3)
Section (2) Section Chapter (4) Chapter
Number Title Number Title (5) AP Tool Title and Number
1 Introduction 1 About This
Toolkit
2 The New AP 2 The New AP 1. AP Process Improvement
Department Department and Automation Checklist
2. Procurement Spend
Analysis
3. Types of Internal Controls
4. The Benefits of Segre-
gation of Duties (SoD)
Controls
5. Mitigating Risk with
Internal Controls
6. Compensating Controls
to Mitigate Risk
7. Your Roadmap for
Implementing an Internal
Controls Program
8. The Top Twenty Controls
for the AP Process
9. Internal Controls
­Checklist
10. Sample Internal Controls
Program for Accounts
Payable for Companies
Using the SAP ERP
11. Metrics to Drive Process
Improvements
3 Automating
the AP Process

(Continued)
6 ■ About This Toolkit

Index of AP Tools

(1) (3)
Section (2) Section Chapter (4) Chapter
Number Title Number Title (5) AP Tool Title and Number
3 Dissecting 4 What Is the 12. Dependencies and
the P2P P2P Process? Interdependencies
Process within the P2P Process
5 Transforming 13. Current State Analysis
the P2P 14. P2P Transformation
Process Roadmap
15. O
 ther Recommendations
for P2P Transformation
16. Managing Change
17. P2P Transformation
Metrics
18. Streamlining Your P2P
Process Without Auto-
mation
19. How to Begin Your P2P
Automation Journey
6 Structuring the
AP Process

4 How 7 Supplier 20. The Top Ten Best

Procure- Selection and Practices in the Supplier
ment Management Management Lifecycle
and 21. Five Steps to Use When
Receiving “Fine Tuning” Your
Impact AP Supplier Master File
22. Supplier Diversity
23. Eight Critical Supplier
Master Practices
24. Managing the Supplier
Master File

8 Contract 25. Defining the Types of

Management Contracts
26. Ten Recommendations
for Establishing Contracts

9 Purchasing and 27. Five Steps in an

Ordering Electronic Procurement
Process
28. Four Best Practices to
Consider for the Purchase
Requisition Process

10 Receiving
 Index of AP Tools ■ 7

Index of AP Tools

(1) (3)
Section (2) Section Chapter (4) Chapter
Number Title Number Title (5) AP Tool Title and Number
5 A Laser 11 The Supplier 29. Supplier Master File
Focus on AP Master File Process Best Practices
30. Supplier Master File
Coding Standards
12 Invoice 31. Establishing Tolerances
Processing 32. Five Factors Driving the
Automation of Invoice
Processing
33. The Most Common
Forms of Invoice
Automation
34. Six Best Practices for
Invoice Processing
35. Three Components of
Imaging and Workflow
36. Nine Performance
Indicators for Invoice
Processing
37. The Twenty-Five Top
Reasons for Problem
Invoices
13 P-Cards 38. P-Card Program Best
Practices
39. P-Card Program Imple-
mentation Best Practices
40. The P-Card Holder
Agreement
41. The P-Card Scorecard
14 Travel and 42. Red Flags for the
Entertainment T&E Process
15 The Payment 43. Effectively Managing
Process Your Payment Process
44. Five ACH Controls
45. Preventing Duplicate
Payments
46. Eight Best Payment
Practices
47. Tackling Payments Fraud

(Continued)
8 ■ About This Toolkit

Index of AP Tools

(1) (3)
Section (2) Section Chapter (4) Chapter
Number Title Number Title (5) AP Tool Title and Number
16 Accounting, 48. The Financial Close
Reconciliation Checklist for Accounts
Processes, Self- Payable
Audit Tools,
and Internal
Controls

17 Customer Service
18 Reporting, 49. How to Implement a
Analytics, and Successful Metrics
Benchmarking Process
6 Other AP 19 Supply Chain 50. Defining Who Benefits
Business Financing (SCF) from an SCF Solution
Processes 20 Escheatment 51. Action Plan for the
Holder of Unclaimed
Property
52. Basic Procedures for
Managing your
Company’s Escheatment
Obligations
53. Unclaimed Property
Checklist
21 Sales and
Use Tax
22 Independent 54. Identifying Your Payee
Contractors 55. Compliance Checklist
and the 1099 and Year-End Review
Process
23 Business 56. Six BCP Best Practices
Continuity 57. A Roadmap for
Planning Developing Your BCP
58. Five Recommended
BCP Internal Controls

7 Addendum Accounts Payable: Quarterly Controls Self-Assessment

Questionnaire
Glossary
 The New AP Department
2
S EC TIO N TWO

The accounts payable (AP) department plays a critical role within an organi-
zation as it is a last point of control before a payment is made and sent to a sup-
plier. The function of accounts payable provides several benefits: performing
due diligence related to supplier setup and timely invoice processing; assuring
that payments are processed based on terms; and providing a high level of cus-
tomer service.
AP are “an entity’s short-term obligation to pay suppliers for products
and services, which the entity purchased on credit.” If accounts payable are
not paid within the payment terms agreed to with the supplier, the payables
are considered to be in default, which may trigger a penalty or interest.
The integrity of AP results is directly influenced by the functions of
securing and qualifying sources of supply; initiating requests for materials,
equipment, merchandise, supplies, or services; obtaining information as to
availability and pricing from approved suppliers; placing orders for goods or
services; receiving and inspecting or otherwise accepting the material or mer-
chandise; accounting for the proper amounts due to suppliers; and processing
payments in a controlled and efficient manner.
AP departments are responsible for the traditional tasks of setting up
suppliers, invoice processing, creating manual checks, and expense report-
ing. In about half of the larger organizations, they are also involved in sales

9
The New Accounts Payable Toolkit, First Edition. Christine H. Doxey.
© 2021 John Wiley & Sons, Inc. Published 2021 by John Wiley & Sons, Inc.
10 ■ The New AP Department

and use tax, electronic funds transfers (EFT), foreign currency payments,
and petty cash management. They also occasionally perform bank recon-
ciliation and P-Card issuance and management. However, in larger orga-
nizations, they are less likely to print checks, make tax payments, or issue
travel advances.
 The New AP Department
2
CHAPTER TWO

INTRODUCTION

Improving the financial transaction processes has been the focus of most orga-
nizations since the 1980s. Financial transaction processing includes those tra-
ditional “back office” processes such as procure to pay (P2P), payroll, travel
and entertainment (T&E), fixed asset accounting, and accounts receivable.
There has been an evolution of transitioning financial transaction processes to
financial management centers, then to shared service centers, and finally to an
outsourced model. In today’s economy, organizations are now focused on pro-
cess improvements and automation initiatives to garner additional efficiencies
and cost reduction opportunities. It’s not just about transitioning processes to
shared service centers any more.

CASE STUDY: JOURNEY TO EXCELLENCE

In 1987, Digital Equipment Corporation took a futuristic approach to improving

the productivity of their financial transaction processes. Prior to 1987, Digital
established several manufacturing plants across the United States. Each plant
was supported by a separate general ledger and stand-alone accounts payable,
and T&E processes. Some plants even had their own payroll processes.
The inefficiencies and cost of these disparate ledgers and processes was rec-
ognized. As a result, a project was initiated to consolidate twenty-eight general

11
The New Accounts Payable Toolkit, First Edition. Christine H. Doxey.
© 2021 John Wiley & Sons, Inc. Published 2021 by John Wiley & Sons, Inc.
12 ■ The New AP Department

ledgers and financial transaction processes into four financial management

centers. The financial management centers were eventually transited to a
single US shared service center in the mid 1990s before Digital was acquired
by Compaq Computer Corporation in 1998. Compaq was then acquired by
Hewlett Packard (HP) in 2002.
HP’s journey to excellence can be attributed to the company’s drive for
value and innovation. “HP was an early adopter of the shared services model
when it began this journey over 15 years ago. In the early 1990s, the company
set a strategic goal to reduce operating costs by 30% within three years. At that
time, the outsourcing market had not yet come into being for F&A. The only
viable means of achieving the type of savings HP had targeted was to build cap-
tive shared services operations. As part of that effort HP wanted to integrate the
back-end work of individual business units and countries, and reap the benefits
of consistency in process, operating efficiency, and first time quality.”1

FOCUS ON CORPORATE PRODUCTIVITY

Many organizations have not had the opportunity to realize the tremendous cost
savings that HP did with the acquisition of Compaq and the transition to a shared
service center organization. So they continue to focus on productivity improve-
ments in financial transaction processing and are spotlighting the P2P cycle.
Additionally, many organizations have found the hidden value that the
accounts payable process, as a key component of the P2P cycle, can bring
to an organization in cost saving opportunities and process improvements.
These cost saving opportunities and improvements can be recognized by
process efficiencies and automation. This continues to be a critical focus in
today’s difficult economy. Recommendations and best practices for improving
the P2P process are included in the following section.

The New AP Professional

The new AP professional understands the importance of eliminating the silos
within the process and has a good understanding of all the components that
impact the cost, accuracy, and controls of the accounts payable process. The AP
process flow provides an overview of the end-to-end accounts payable process.

1
Dian Schaffhauser, “HP’s Journey to Shared Services Finance & Accounting Success,” Sourcing-
Mag, September 24, 2007, accessed on September 9, 2020, https://sourcingmag.com/2007/09/
hps-journey-to-shared-services-finance-accounting-success/.
 Accounts Payable and Procure-to-Pay (P2P) Process Improvements ■ 13

The new AP professional is not just focused on transaction process, but

on automation and process improvements that can reduce cost and improve
internal controls. The new AP professional has moved from a clerical role to
financial and business analyst role that looks into new metrics, analysts, and
automation solutions. With a continued focus on internal controls and risk
management, the new AP professional will look into self-audit tools, payment
audit processes, and implementing automated controls solutions. Today’s
savvy AP professional is able to link all AP processes together and under-
stands the linkage with their company’s P2P process. The new professional
is able to break down the silos and make recommendations that will benefit
the entire organization.

ACCOUNTS PAYABLE AND PROCURE-TO-PAY (P2P)

PROCESS IMPROVEMENTS

AP represents an organization’s obligation to pay off a short-term debt

to its creditors. AP also refers to short-term debt payments to suppliers
and banks.
Many organizations no longer look at accounts payable as a stand-alone
entity. The integrity of AP results are directly influenced by the functions of
securing and qualifying sources of supply; initiating requests for materials,
equipment, merchandise, supplies, or services; obtaining information as to
availability and pricing from approved suppliers; placing orders for goods
or services; receiving and inspecting or otherwise accepting the material
or merchandise; accounting for the proper amounts due to suppliers; and
processing payments in a controlled and efficient manner.
“Shared services” is a term defining an operational philosophy that
involves centralizing those administrative functions of a company that were
once performed in separate divisions or locations as noted in the Case Study:
Journey to Excellence section. The focus of shared service organizations is
not only on financial transaction processing, but on procurement, inventory
accounting, payroll, human resources, and information technology.
Moving the AP process to a shared service center can generate significant
cost savings, but all its processes should be understood. Any process weak-
nesses, control issues, and risk should be defined and mitigated. To ensure
the success of any AP transition, all process improvements should be real-
ized before centralizing or moving accounts payable to a shared service
organization.
14 ■ The New AP Department

AP TOOL 1: AP PROCESS IMPROVEMENT

AND AUTOMATION CHECKLIST

About This Tool: The “touchless” AP process isn’t too difficult to achieve. A
savvy AP leader should have the strategy in place to move to a paperless envi-
ronment. It all starts with implementing some best practices including electronic
payments, the automated clearing house (ACH) remittance, and the automated
workflow process. Best practices establish the foundation for accounts automa-
tion and the achievement of your “touchless” process. The success of your new
“touchless” process can be measured not only by improvements in metrics, but by
the results of your automated self-assessment process. Lastly, dynamic discount-
ing is a “win-win” option for both buyers and suppliers in the “touchless” accounts
payable process.
Examples of AP best practices include delegation of authority via workflow.
Many leading practice companies are already paying their suppliers electron-
ically, but are now utilizing the ACH remittance process to reduce paper. And
to ensure that your “touchless” environment is working properly, I suggest
using an automated self-assessment process that validates the accuracy of your
payment process. Lastly, leading practice accounts payable companies also con-
sider dynamic discounting solutions. We’ll now explore the components of the
“touchless” accounts payable process in detail as listed in the following table.
1. Automated PO Requisition Process: Upon approval, POs can be electronically
invoiced from suppliers directly for a paperless process in which automated matching
occurs between the PO and the invoice when it arrives to validate price, quantity, line
amount, and items ordered. All invoices matched can be tracked against the PO until
the PO is closed to account for blanket POs or partial payment against an open PO.
2. eInvoicing: eInvoicing is the exchange of the invoice document between a supplier
and a buyer in an integrated and agreed-upon electronic format with the goal of
reducing paper and cost. Imagine no more paper invoices!
3. Automated Approval Process: In an automated approval process, the invoice
approval process is linked to your company’s delegation of authority (DoA) policy.
The invoice approval process is completely automated based on defined rules via
workflow. The workflow determines if an invoice needs approval; who the appropriate
approvers are; and in what order approvers should approve payment of the invoice.
The workflow then sequentially asks each approver in the approval list to approve
invoices online. For example, you can define a rule so invoices over $100,000 (or a
specific amount designated in your DoA policy) require CFO approval and then CEO
approval.
4. Link Approvals to Job Levels: Most leading practice companies link the DoA policy
to the job levels within the employee master file. A DoA table is then established as
the driver of the approval workflow. If an approver moves to a different position or
department, or leaves the company, the approval tables are automatically updated.
 P2P Reporting, Understanding, and Perspective ■ 15

5. Automated ACH Remittance: As companies increase their electronic payments to

suppliers, many are moving toward sending the automated remittance advice as con-
firmation indicating that the invoice has been paid. This best practice helps reduce
paper and moves closer to a “touchless” process.
6. Supplier Portal: As supplier portals move beyond invoice status tools, many solutions are
now delivered as a shared buyer service which accommodate eInvoicing and provide many
additional benefits. Supplier portals provide:
■■ Reduction in paper invoices as suppliers send their invoices electronically;
■■ Faster transactions with integration to ERP software;
■■ Stronger supplier relationships with a well-defined onboarding process and
real-time invoice status;
■■ Digital signatures to guarantee authenticity and security;
■■ Flip purchase orders for easy invoicing;
■■ The ability to correct errors on the spot to prevent payment delays further down
the line;
■■ The ability to begin using sales catalogs for greater accuracy.
7. Accounts Payable Self-Assessment Process: The goal of any accounts payable
department is to pay a supplier “once and only once.” Rather than have a third party
or external audit firm identify a control weakness, many companies have worked with
a solution provider to implement a self-assessment process that identifies a possible
duplicate payment before the payment is initiated. This software considers “fuzzy”
logic algorithms that flag a potential duplicate or erroneous payment. This self-as-
sessment process can often be included in a company’s internal control program.
8. Dynamic Payables Discounting: Dynamic discounting is a solution that gives buyers
more flexibility to choose how and when to pay their suppliers in exchange for a
lower price or discount for the goods and services purchased. The “dynamic” com-
ponent refers to the option to provide discounts based on the dates of payment to
suppliers. Solution providers help both buyers and suppliers optimize their working
capital positions by: providing a collaborative platform where buyers, suppliers, and
third-party financing providers can negotiate and execute early payment offers.

P2P REPORTING, UNDERSTANDING,

AND PERSPECTIVE

Purchasing Insight notes that, “P2P is all about helping to optimize the
processes associated with purchasing and recognizing that the process does
not end at the purchase order but extends to include accounts payable and
payment processes.”2
2
Pete Loughlin, “Definition of Procure to Pay,” Purchasing Insight, accessed on September 8,
2020, http://purchasinginsight.com/definition-of-purchase-to-pay/.
16 ■ The New AP Department

Purchasing Insight noted that the P2P process extends even into the
future. The process includes the strategies and technologies that are drivers
of the procurement process. These strategies and technologies apply to the
procurement spend analysis process as defined in the next section.

AP TOOL 2: PROCUREMENT SPEND ANALYSIS

About This Tool: This tool provides insight on how to achieve accurate and
timely spend analysis that is often driven by the procurement process.

1. Identify Leverage with Existing Suppliers: Determine the “parent-child relation-

ships” within the supplier master file and determine if multiple contracts can be
consolidated or leveraged.
2. Supplier Rationalization: This is a straightforward analysis commonly using the
Pareto principle (80/20) that highlights how many suppliers comprise 80% of the
spend for each category. Using this type of analysis we can quickly identify the cate-
gories where there are too many suppliers comprising the bulk of the spending.
3. Perform a Spending Stratification Analysis: This analysis will highlight the volume
of low dollar invoices processed by accounts payable. The results will indicate if these
transactions can be moved to a P-Card or to an automated process.
4. Preferred Supplier Spend: Many organizations have a preferred supplier list.
Including this information in the spend analysis application will provide visibility into
two areas: (1) categories where preferred suppliers are in place but not used, and (2)
categories where no preferred supplier exists.
5. Spend by Buying Channel: One of the benefits of spend analysis is that it helps
to identify process inefficiencies. Companies with procurement systems in place
can quickly identify business units and individuals that are circumventing existing
processes. Driving spends toward approved buying channels will improve overall
controls, yield better compliance, improve data quality, lead to faster sourcing cycles,
and provide term discount opportunities. This will also reduce accounts payable costs
associated with check requests.
6. Purchase Price Variance: This step in the process highlights that different prices may
be paid for the same good or service.
7. Sourcing Compliance: The final step includes a review of key contracts to determine
if there are significant variances from the contract’s terms and conditions.
8. Quarterly Spend Analysis: Implement a process to track supplier spending on a
quarterly basis. This process can be used to track the results of the implementation of
a strategic sourcing initiative.
 Other Procure-to-Pay Best Practices ■ 17

STRATEGIC SOURCING

Strategic sourcing was first established by General Motors in the 1980s

and is now a common tool in the procurement toolkit. Strategic sourcing
is dependent upon the results of the spend analysis process described in the
previous section.
Strategic sourcing is often used as a procurement best practice to source
high-value goods and services used in the production process along with
large volume, and low-value non-production goods and service. The steps in
the strategic sourcing process include:

■■ Review the results of the spend analysis and determine the suppliers
to focus on.
■■ Review the pricing differences offered for the same goods and services.
Also, review the terms and conditions of the contracts currently in place.
■■ Determine the cost benefit analysis of moving to a single supplier.
■■ Schedule discussions with targeted suppliers.
■■ As noted in the previous section, review the results on a quarterly basis
and update the strategic sourcing plans.

OTHER PROCURE-TO-PAY BEST PRACTICES

Here are some additional best practices that should be considered to improve
efficiencies within the P2P process that include:

■■ Perform an annual “clean-up” of the supplier master file which includes either
purging or blocking suppliers that have not had any activity for eighteen months.
■■ Establish a process to designate P-Card suppliers within your organiza-
tion’s supplier master.
■■ Review the supplier master file on a quarterly basis to combine multiple
suppliers and multiple remit to addresses.
■■ Implement a company-wide procurement policy which specifies that pur-
chase orders are required for all purchases over a specified dollar limit which is
depending on the size of the organization. The procurement policy supports the
requirement that a purchase order is needed for every obligation. The procure-
ment policy also stipulates a P-Card will be used for any purchases below the
specified dollar amount. An example of recommended best practices for imple-
menting and expanding a P-Card program are included in the next section.
18 ■ The New AP Department

AP PROCESS IMPROVEMENT IMPACTS

ON WORKING CAPITAL

Working capital is an important measure of an organization’s efficiency, its

short-term financial health and operating liquidity. Positive working capital
means that the organization is able to pay off its short-term liabilities without
increasing debt. Negative working capital means that an organization cur-
rently is unable to meet its short-term liabilities with its current assets (cash,
accounts receivable, and inventory).

AVERAGE PAYABLE PERIOD

Each time a purchase is made from a supplier without paying for it at the time
of the purchase, an account payable is created (a payable) for the business.
Accounts payable are amounts owed to suppliers that are payable sometime
within the near future – “near” meaning 30 to 90 days.

■■ The average payable period is the best indicator of success in managing

cash outflows.
■■ Using the payable period to slow down outflows can significantly improve
cash flow.
■■ The accounts payable aging schedule is an important tool for keeping
track of payables on a monthly or weekly basis.

MEASURING AVERAGE PAYABLE PERIOD

The average payable period measures the average amount of time each dollar
of trade credit is used. That is, it measures how long a company uses their trade
credit before paying the obligations to those businesses or individuals who
extended credit to the company. This measurement gauges the relationship
between trade credit and cash flow. A longer average payable period allows
trade credit to be maximized. Maximizing trade credit means delaying cash out-
flows and taking full advantage of each dollar in the company’s own cash flow.
The average payable period is calculated by dividing accounts payable by
the average daily purchases on account:
 When to Take a Trade Discount ■ 19

Accounts Payable Balance

Average Payable Period =
Average Dailly Purchases on Account

The average daily purchases on account are computed by dividing total

purchases on account by 360:

Annual Purchases on Acco

ount
Average Daily Purchases on Account =
360

The accounts payable balance and the total purchases on account from
the prior year are usually accurate enough for analyzing and managing cash
flow. However, if more recent information is available, such as the previous
month’s accounts payable information, then use that instead. Be sure to
compute the average daily purchases on account correctly using the number
of days actually reflected in the purchases on account figure. For example,
use 30 if one month’s accounts payable information is used.

WHEN TO TAKE A TRADE DISCOUNT

How do you know if it’s worth taking the discount? First the general rule
on trade discounts: a company should always take advantage of trade dis-
counts of 1% or more if the supplier requires full payment within 30 days.
If suppliers offer payment terms beyond 30 days, it may be more advanta-
geous to skip the trade discount and delay paying the supplier until the full
payment is due.
For situations outside the scope of the general rule, or to test the general
rule, a company can determine if taking a trade discount is advantageous.
The following will help the company make that determination:
In order to determine if a trade discount is advantageous, consider the
annualized interest rate you earn by taking the trade discount. If this annu-
alized interest rate is greater than the interest rate charged to borrow the
money from a bank, for example, then the discount is definitely worth taking.
On the other hand, if the interest rate charged to borrow the money from a
bank is greater than the annualized interest rate earned by taking the dis-
count, then you shouldn’t take the trade discount.
20 ■ The New AP Department

Day 10
Day 1 Early payment Day 30

A 20 day loan to your supplier

What are you earning?

vs.
What is your cost?

When taking a trade discount, consider the early payment a loan to

the supplier.
Take, for example, a supplier that offers a discount if their invoice is paid
within 10 days, or accepts full payment within 30 days. When a company pays
this supplier in 10 days, instead of waiting the full 30 days, this supplier is
actually borrowing money from the company for 20 days. The amount of the
discount is the interest the company earns on the loan to the supplier. If the
company views the early payment as a loan to suppliers, a company can then
determine the annualized interest rate they are actually earning. Once the
company knows the annualized interest rate, they can then compare it to the
cost of borrowing money and determine if taking the discount is worthwhile.
The annualized interest rate is calculated as follows:
Annualized Interest from the Trade Discount
Discount Percent
=
100 Percent Discount Percent
360
Credit Days Discount Days Number of Loan Days

NEGOTIATING PAYMENT TERMS

Negotiating payment terms with suppliers and suppliers, or deferring expenses,

are two more methods of delaying cash outflows. Negotiating extended payment
terms with suppliers is a technique that can be used to delay cash outflows and
improve overall cash flow. Most suppliers will require payment within 20 or 30
days after a company receives their bill. Some suppliers may be willing to nego-
tiate longer credit terms. Their willingness to offer better credit terms may be
based on one of the following factors included in the following list:
Another random document with
no related content on Scribd:
The Harpy Eagle.
 Owls and Eagles.

It has been remarked, that, as mankind apply themselves to

various trades and pursuits, some being carpenters, some house-
builders, some hunters, some fishermen, so we find that the animal
tribes appear to be severally devoted to various professions. And as
we find among men bold, open pirates, who rob by day, and secret
thieves, who plunder by night; so, among animals, we find those that
seem to have taken up similar vocations.
The eagles, for instance, are daylight robbers; and it is wonderful
to observe, how well adapted they are for the life they are designed
to lead. They are strong of wing, with powerful talons to grasp their
prey, and a sharp, hooked beak, calculated, like the knife of a
butcher, to cut their food in pieces. Their eye is keen and long-
sighted, so that they can mark their victim afar off; and their flight is
swift, so that they may strike down upon it with certainty. Thus
qualified to pursue a life of rapine and plunder, their very air and
bearing correspond with their profession. They have a bold, haughty,
and merciless look. The description in the thirty-ninth chapter of Job,
portrays the character of these birds in a few sentences, and it is
impossible to mend the description: “Doth the eagle mount up at thy
command,” saith the inspired writer, “and make her nest on high?
She dwelleth and abideth on the rock, upon the crag of the rock, and
the strong place. From thence she seeketh the prey, and her eyes
behold afar off. Her young ones, also, suck up blood; and where the
slain are, there is she.”
 The Eagle Owl.
Thus, if the eagles are the open, daylight robbers, the owls are
the secret thieves and plunderers by night. And it is interesting to
observe how well these creatures, also, are fitted for their vocation.
In order to see at night, they need large eyes, and, accordingly, they
have large heads to accommodate these organs. Their business is
to steal upon their prey in the darkness and silence of the night.
Accordingly, they are covered with an abundance of light, yielding
feathers, so that they may glide through the air on a noiseless wing,
and come upon their victim unheard and unsuspected. If you have
ever seen an owl at evening, or during a cloudy day, (for it is seldom
that they venture abroad in the sunshine,) you must have noticed,
that he skims along as if he were almost as buoyant as a soap-
bubble. How different is this from the whistling rush of the pigeon, or
the whirring flight of the partridge!
Among the owls there are at least fifty kinds; and, taken all
together, they are a most curious and interesting family. Among
these, the largest is the great eagle owl, which is found in Europe. Its
home is among the deep recesses of mighty forests, and the clefts of
rocks amidst the mountains. From its lonely retreat, where it reposes
in silence during the day, it issues forth, as the dusk of evening
throws a yet deeper gloom over the dark pine forest or rocky glen, to
prowl in quest of prey. On silent wing it skims through the wood, and
marks the fawn, the hare, or the rabbit nibbling the herbage.
Suddenly wheeling, it sweeps upon the unsuspecting victim, and, if
not too large, bears it off in its talons. Other and less noble game is
also to be reckoned as its prey, such as rats, mice, squirrels, and
frogs. These are swallowed entire, after being merely crushed into a
mass by the efforts of the bill; the bones, skins, feathers, or hair,
rolled into a ball, are afterwards ejected from the stomach.
In our American forests, we have an owl very similar to the one I
have described, both in looks, size, and habits. These large owls
seldom approach the abodes of men; but the little barn owl is more
familiar. He often takes up his residence in a barn, and, hiding in
some nook by day, sallies forth at night, making prey of such little
animals as he can find. He is very useful in destroying rats and mice.
Mr. Waterton says that he has seen one of these little owls bring a
mouse to its nest of young ones, every twelve or fifteen minutes
during the evening. It is also stated, that this bird will sometimes take
up its residence in a pigeon-house, and live there, without giving the
pigeons the least disturbance, or even taking their young ones.
The ancients called the owl the bird of wisdom, because he
looked so sober and solemn. Many superstitious people now-a-days
look upon him with foolish dread. The owl is frequently mentioned in
the Bible; but the most interesting allusion is that of Isaiah, chap. xiii.,
in which the prophet foretells the coming destruction and desolation
of Babylon, then a great and powerful city. His words are, “Wild
beasts of the desert shall lie there, and their houses shall be full of
doleful creatures, and owls shall dwell there.” This prophecy has
been literally fulfilled. Many years after the time of Isaiah, Babylon
was destroyed, and the place became a scene of desolation.
Travellers tell us, that now the place is surrounded with caverns,
which are the refuge of jackals and other savage animals, and that in
these cavities there are numbers of bats and owls.
 Origin of “The House that Jack
Built.”
The following curious article shows that the idea of the popular
legend of “The House that Jack built,” is of ancient date, and derived
from the Jews. That famous story is in fact modelled after an ancient
hymn, conceived in the form of a parable, sung by the Jews at the
feast of the passover, and commemorative of the principal events of
the history of that people. The original, in the Chaldee language, is
known to scholars; and, as it may not be uninteresting to my readers,
I will furnish the literal translation, which is as follows:
1. A Kid, a Kid, my Father bought for two pieces of money.
A Kid, a Kid.
2. Then came the Cat, And ate the Kid, That my Father
bought for two pieces of money.
A Kid, a Kid.
3. Then came the Dog, And bit the Cat, That ate the Kid,
That my Father bought for two pieces of money.
A Kid, a Kid.
4. Then came the Staff, And beat the Dog, That bit the Cat,
That ate the Kid, That my Father bought for two pieces
of money.
A Kid, a Kid.
5. Then came the Fire, And burned the Staff, That beat the
Dog, That bit the Cat, That ate the Kid, That my Father
bought for two pieces of money.
A Kid, a Kid.
6. Then came the Water, And quenched the Fire, That
burned the Staff, That beat the Dog, That bit the Cat,
 That ate the Kid, That my Father bought for two pieces
of money.
A Kid, a Kid.
7. Then came the Ox, And drank the Water, That quenched
the Fire, That burned the Staff, That beat the Dog, That
bit the Cat, That ate the Kid, That my Father bought for
two pieces of money.
A Kid, a Kid.
8. Then came the Butcher, And slew the Ox, That drank the
Water, That quenched the Fire, That burned the Staff,
That beat the Dog, That bit the Cat, That ate the Kid,
That my Father bought for two pieces of money.
A Kid, a Kid.
9. Then came the Angel of Death, And killed the Butcher,
That slew the Ox, That drank the Water, That
quenched the Fire, That burned the Staff, That beat the
Dog, That bit the Cat, That ate the Kid, That my Father
bought for two pieces of money.
A Kid, a Kid.
10. Then came the Holy One, blessed be He!
9. And killed the Angel of Death,
8. That killed the Butcher,
7. That slew the Ox,
6. That drank the Water,
5. That quenched the Fire,
4. That burned the Staff,
3. That beat the Dog,
2. That bit the Cat,
1. That ate the Kid that my Father bought for two pieces of
money.
A Kid, a Kid.
The following is the interpretation:
1. The Kid, which was, among the Jews, one of the pure animals,
denotes the Hebrews. The Father by whom it was purchased is
Jehovah, who is represented as sustaining this relation to the
Hebrew nation. The two pieces of money signify Moses and Aaron,
through whose mediation the Hebrews were brought out of Egypt.
2. The Cat denotes the ancient Assyrians, by whom the ten tribes
were carried into captivity.
3. The Dog is symbolical of the ancient Babylonians.
4. The Staff signifies the Persians, a powerful nation of antiquity.
5. The Fire indicates the Grecian empire, under Alexander the
Great.
6. The Water betokens the Romans, or the fourth of the great
monarchies, to whose dominion the Jews were subjected.
7. The Ox is a symbol of the Saracens, who subdued Palestine
and brought it under the Caliphs of Bagdad.
8. The Butcher, that killed the Ox, denotes the Crusaders, by
whom the Holy Land was wrested out of the hands of the Saracens,
for a time.
9. The Angel of Death signifies the Turkish power, by which the
land of Palestine was taken from the Crusaders, and to which it is
still subject.
10. The commencement of the 10th stanza is designed to show,
that God will take signal vengeance on the Turks, immediately after
whose overthrow the Jews are to be restored to their own land, and
to live under the government of the long-expected Messiah.
 My own Life and Adventures; by Robert Merry.

CHAPTER I.
introduction.

I am inclined to think, that, among the various pleasures of life,

talking is one of the greatest. Eating and drinking are very good
things, especially when one is hungry and thirsty, and has a good
meal before him. But they are very short in their duration. The
heartiest supper is over in a few minutes, and drinking, in as many
seconds. Beside, these are selfish pleasures, and afford only the
single satisfaction of an immediate appetite. But talking is not
confined to self, nor is it limited to the body. It exercises the mind,
and extends alike to the speaker and the listener.
The love of talking exhibits itself in very infancy. The little prattler,
even before he can speak words, tries to amuse you with his
inarticulate gabble. And when he has learned a word, with what glory
does he repeat it to you! A young soldier touches off a cannon with
less exultation than the infant pronounces his first articulate syllable.
And then, look at a group of children! How eager are they to
speak to each other! How their little tongues rattle! Sometimes all will
speak at once, whether anybody listens or not. It is often hard to get
a word in edgewise among such a set of orators.
Suppose some child has been away, and comes home with a
piece of news. How does he rush into the room, scarcely taking time
to hang up his hat or cap, and with staring eyes and ruddy cheeks,
set forth the wondrous tale! Suppose a child has seen something
new, as a lion or an elephant; how does he talk of it to his
companions! Or, suppose he has been rambling in the woods, and
has seen an eagle, or a gray squirrel, or a woodchuck,—something
he had never seen before,—how eager is he to talk about it!
Thus it is with the young; they love to talk of things that interest
them; and thus it is with those who have passed from the morning of
life toward its setting sun. It may be that old people are less talkative
than young ones; but still we all love to speak to others of that which
excites our own feelings, or occupies our minds. Talking, then, is one
of the great pleasures of life, and God has no doubt made it so for
good and wise purposes. How large a portion of the happiness of life
would be cut off, if we were all dumb!
For myself, I was a great rattler in youth, and, even now that my
hair is grizzled with years, I must confess that I am not greatly
altered in this respect. My life has been a varied one, and I have
seen a good deal of the world. I cannot pretend to be so great a
traveller as Peter Parley, nor can I match him in telling stories to
babies. But still, give me a good listener, and something to speak
about, and I can talk from sunrise to sunset.
I love better to talk to youth than to others. Those who are from
eight to sixteen years old, are my chosen friends. I always find some
way of entertaining them. Several bright-eyed girls and boys are in
the habit of coming to see me, and I tell them my long stories. They
come again and again, and I infer that they are pleased with them. I
tell them sometimes of giants and fairies; but it is curious, that, while
most young people prefer these tales of fancy, I succeed much
better in pleasing my listeners by talking to them about things that
really exist, or have really happened. Truth, after all, is more
attractive than fiction, if it is only dressed in a proper guise.
My own adventures seem to give my listeners the most pleasure;
for I have been all over the United States; have been a soldier, and
seen service; have been a pedler, and travelled thousands of miles
on foot; have met with strange accidents and hairbreadth escapes
from danger; and have had my share of what is called hard luck.
Still, I have reason to thank Heaven that my heart is happy, and my
mind cheerful. I love sunshine as well as when I was a boy, and see
much more occasion to laugh than to cry. I have indeed my serious
moods, for there are some subjects that demand seriousness and
reverence. Religion claims some of our time, and much of our
thought. The Sabbath is with me a day of solemn reflection and
prayer. I bend over the Bible, with a feeling that I am listening to the
voice of God. These things make me serious, but not sad. As the
sun seems to shine brighter, when it comes out from a cloud, so my
heart is ever more serene and cheerful, for its communion with holy
things.
But this is enough for an introduction. I am now going to tell the
story of my own life, which I hope may prove both amusing and
instructive.

CHAPTER II.
About my Birth.—​The Death of my Parents.—​My first Journey.—​My
Wonder at seeing the Country.—​Lambs.—​I find out where
Milk comes from.—​Reflections and good Advice.

I was born in the city of New York, in the year 1790. My parents
were both English people. At first, they were in poor circumstances,
but my father became a merchant, and acquired some property. He
died, however, in the midst of success; and in a few months after my
mother followed. I was thus left an orphan, at the age of six years,
but with a fortune of about ten thousand dollars.
My mother had a brother living in the small town of Salem,
situated upon the eastern border of the State of New York, and
touching the line of Connecticut. He kept a tavern; and, as it was
upon the great road that was then the route between Boston and
New York, he had a good situation and a thriving business.
To the care of this uncle I was committed by my mother’s will, and
immediately after her death I was taken to my uncle’s residence. I
had never been out of the city of New York, and had never seen the
country. I had supposed the world one great city, and never fancied
that there were hills, and forests, and rivers, and fields without any
houses. I still remember my journey from New York to Salem very
well. I remember that the sight of so many new things, put the
recollection of my father and my mother out of my mind, and
banished the sorrow I had felt at seeing my parents laid into the
coffin, and carried away, to return to me no more. I was delighted at
everything I met, and particularly remember some lambs that I saw
playing on a hill-side. They were scampering about, jumping from
rock to rock, and chasing each other at full speed. I had never seen
a lamb before, and I thought these the prettiest creatures that were
ever made. I have since seen lions and tigers, and many other
strange creatures; but I have never met with any animal, that excited
in me half the admiration that I felt when I saw those little lambs.
I suppose some of my young friends in the country will laugh at
what I am now going to tell them; but it is nevertheless true. As I was
going from New York to Salem, we stopped one night at a small inn.
When we arrived at this place, the sun was an hour high, and I had
some time to play about the house. As I was running around,
peeping at every new and strange thing, I saw some cows in the
barn-yard. I had seen cows before, but still I went up to the gate and
looked through, and there I saw a woman, sitting upon a little stool,
and milking one of the cows. Now I had never seen a cow milked
before, nor, indeed, did I know where milk came from. I had not
thought about it at all. If I had been asked the question, I should
probably have said, that we got milk as we do water, by pumping it
from the cistern, or drawing it out of the well.
I looked at the woman for some time, wondering what she could
be about. When she had done, she came out of the yard, and I saw
that her pail was full of milk. “What is that that you have got?” said I.
“It is milk,” said the woman. “Where did you get it?” said I. “I got it
from the cow, you little simpleton!” said the woman; and then she
went into the house.
I did not like to be called a simpleton, for I had come all the way
from the great city of New York, and supposed that I knew
everything. I soon found, however, that I was ignorant of many useful
things that children of my age in the country were well acquainted
with.
 The little incident, however, that I have just related, was not
without its use to me. It set me thinking about other things, and I
began to ask questions about every article of food and dress,—
where they came from, and how they were made; and, in this way, I
obtained a great deal of knowledge. I would recommend it to my
young readers to follow my example in this respect. They will find it
very amusing to study into these matters. Let them one day inquire
about hats, what they are made of, where the materials come from,
how they are obtained, and how they are wrought into hats. Another
day, let them take up the subject of coats, and learn all about the
cloth, the buckram, silk, twist, and buttons, that are used in making
them. So let them go through with dress; and then they may inquire
about bread, and other articles of food; and then they may learn all
about the furniture in the house. From this subject, they may go on
and learn how houses are built. I can assure my young readers, that,
in this way, they may spend their time very pleasantly, and become
well acquainted with all those useful things with which we are
surrounded. If I had done this before I went to Salem, I should have
known where milk came from, and not been called simpleton by a
milkmaid.

CHAPTER III.
Wise Observations.—Story of the Hat.

I fancy that some of my readers imagine, that it would be a dull

business to study into the history of hats and coats, bread and butter,
and such other common-place things. But there is an old proverb
which says, “Look ere you leap;” and another which says, “Think
twice and speak once.” These admonish us never to be over-hasty in
speaking or acting; and, on the present occasion, I shall endeavor to
show, that this good rule has been transgressed by those who
despise my advice about hats and coats, bread and butter.
Here, Philip! give me a hat; let it speak for itself. Come, old hat,
tell us your story! tell us what you are made of; where the materials
of which you are made were obtained, how they were put together,
and the price at which you were sold. Come, old beaver, speak out!
What! dumb? Not a word? Then I will speak for you. So here is
the story of the hat, supposed to be told by itself.
“I am made partly of wool, which is the hair of sheep, and
partly of furs, of different kinds. There is some beaver’s fur,
some musquash’s, and some wildcat’s in me.
“I suppose that everybody knows how we get wool,—by
shearing it from the sheep’s back; but we do not get furs in
the same way. Musquashes, beavers, and wildcats are not
tame, like sheep, and they will not let you take them into a
barn, and shear off their nice, soft fur. These creatures live far
away from the abodes of men; they seek the distant solitudes
beyond the hills and mountains, and those who would catch
them must go and find them in these wild retreats.
“Sometimes, it is true, a beaver is found nearer to our
houses, and now and then a wildcat, that has strayed from his
native forest, is found in the neighboring woods. The
musquash builds his habitation on the banks of streams, and
is not very uncommon even in districts frequented by man.
“But these animals are, on the whole, so scarce, that, in
order to obtain a supply of their fur, a great many hunters and
trappers spend their time in roaming through the mountains,
valleys, and prairies of the far West, in order to obtain them.
These people meet with a great many strange adventures.
Sometimes they will follow the branch of a river for five
hundred miles, in a boat, during which time they will not meet
with a human habitation, save the wigwams of the Indians.
Sometimes they will sleep at night upon the ground, with no
covering but a blanket; sometimes they will meet with a party
of Indians, and have a fight with them. Sometimes they will
meet with friendly Indians, who receive them into their lodges,
and entertain them kindly; sometimes they are confronted by
a grizzly bear, who places himself in their path, and must
receive at least a dozen bullets in his breast before he is
killed. Sometimes they will roam over wide deserts, and suffer
very much for want of water. Sometimes they will be in the
midst of a vast prairie, the grass of which is on fire, and then
they have the greatest difficulty to escape from the flames.
Sometimes they are robbed of all their furs by hostile Indians,
and sometimes they meet with Indians who sell them large
quantities of fur.
“After a great many cares, and trials, and dangers, and
often after an absence of two years, the fur-hunter comes
back with his load of skins; and a pretty figure he is. The
clothes he carried with him are worn out, and he is now attired
in the skins of various wild beasts. On his head you see the
grizzled fur of a raccoon, with his tail hanging down behind.
His coat is made of a wolf’s skin, and his vest of the skin of an
otter. But his trowsers are the drollest part of his attire. They
are made of a bear’s skin, and each leg looks like a great,
shaggy, black dog, standing upright! Altogether, the hunter is
a most curious object. He looks like three or four wild animals
all sewed into one!
“What a great variety of adventures has this man met with
in his wanderings of two years. How many pleasant stories
could he tell, if he would sit down of a long winter night, and
recount all that happened to him; all about the bears, the
foxes, the wolves, and the wild Indians that he saw. How
much this poor man must have suffered; what toil, hunger,
thirst, danger and privation; and all this, that master Philip
might have a hat; all this to get furs to make hats of.
“The wool and fur being obtained, these are prepared by
the hatter, who, in the first place, makes a sort of cap, shaped
something like a sugar-loaf. This is then soaked in hot water,
and, being put upon a block, the crown is made of a proper
shape. The whole is stiffened with gum, colored, dressed, put
in boxes, and sent to the hat-seller. The price paid for me was
two dollars. Philip has worn me for about a year, but I am in a
sad condition. The hole in my crown was made by a stick,
which went through me one day when Philip threw me at a
 red squirrel on the fence. The rent on my brim was caused by
a saucy fellow, that tried to pull me off one day; but I chose to
be torn, rather than see Philip insulted by having his hat
knocked off; for, though the boy has his faults, I like him better
than anybody else.”
Such is the story of the hat. My object in giving it to you is, to
show, that the commonest article of daily use has its history, if we will
only inquire into it.

CHAPTER IV.
Arrival at my Uncle’s.—​The Village.—​Bill Keeler.—​My first Day at
School.—​Trouble.
I must now return to the story of myself. The morning after I left
the little tavern where I discovered how milk was obtained, we
proceeded on our journey, and at evening arrived at my uncle’s
house. It was an old-fashioned building, painted red, with a large
sign swinging in front, upon one side of which was the picture of a
stout barn-yard cock, and on the other side was the head of a bull.
So my uncle’s tavern went by the name of the “Cock and Bull.”
I soon became acquainted with the family, and in a few weeks
was quite familiar with the main street and all the by-lanes in the
village. My uncle had no children, but there was living with him a boy
about ten years old, by the name of Bill Keeler. He became my
principal companion, and, being a very knowing sort of lad, gave me
an insight into many things, which I could not otherwise have
understood.
After I had been at my uncle’s about six months, it was concluded
to send me to school. I was now seven years of age, but, strange as
it may seem to boys and girls of the present day, I did not know my
letters, and, what is more remarkable, I had a great dislike to the
idea of going to school. I believe it is the case that all people who
grow up ignorant acquire a settled dislike to learning and learned
people. As an owl can see best in the dark, because the light seems
to put his eyes out, so ignorant people love ignorance and darkness,
because truth and knowledge offend and distress them. I mention
these things as a warning to my reader against growing up in
ignorance, and thereby becoming a lover of darkness, rather than
light.
Well, I went to school for the first time, and I remember all about it
to this day. The schoolhouse was situated in a large space, where
four roads met. It was a bleak and desolate hill-side, partly covered
with heaps of stones, thrown out of the path, or gathered from the
neighboring fields. There were a few groups of tangled briers and
stunted huckleberry bushes amid these heaps of stones. On the
lower side of the hill, there was an old gnarled oak growing out of a
heap of splintered rocks, at the foot of which there bubbled forth a
small stream of pure water. This fountain went by the pretty name of
“Silver Spring.”
Bill Keeler led me into the school, which was then kept by
Mistress Sally St. John. She looked at me through her spectacles,
and over her spectacles, and then patted me on the head, told me I
was a good boy, and sent me to a seat. In about an hour I was called
up, the spelling-book opened, and the alphabet being placed before
me, the mistress pointed to the first letter, and asked me what it was.
I looked at the letter very carefully, and then gazed in the face of
Mistress St. John, but said nothing. “What’s that?” said she,
peremptorily, still pointing to the first letter of the alphabet. Now I
hadn’t been used to being scolded, and therefore felt a little angry at
the manner in which the school-mistress addressed me. Beside, at
that moment I saw Bill Keeler at the other end of the room, looking at
me with a saucy twinkle in his eye, which made me still more angry.
“What’s that?” again said the school-mistress, still sharper than
before. It was time for me to do something. “I’ll not tell you!” said I.
“Why not?” said the school-mistress, greatly amazed at my conduct.
“Because I didn’t come here to teach you your letters; but I came
here to learn them.”
The school-mistress shut up her book. Bill Keeler rolled up his
eyes, and made his mouth into a round O. “Go to your seat!” said the
school-mistress. I turned to go. “Stop!” said the school-mistress,
fetching me a slap on the side of the head; at the same moment she
opened the book, and again presented the alphabet to my view.
“Look, there!” said she, pointing with her finger to the top letter; “do
you see that?” I answered, “Yes.” “Well, that’s A,” said she. “That’s
A?” said I, doubtingly. “Yes,” said the mistress sharply. “I don’t
believe it!” said I. “Why don’t you believe it?” said she. “Because I
never heard of it before,” I replied. “Go to your seat!” said the school-
mistress; and away I went.
Such was my first day’s schooling. In the evening, Mistress St.
John called upon my uncle, and told him I was the most stupid
creature she ever saw, and very ill-mannered beside; and she hoped
I would by no means be permitted to come again to her school. My
uncle was greatly offended, not with me, but with the school-
mistress. He declared I should not go near her again; and, for more
than a year, I was permitted to amuse myself in my own way. I was
greatly pleased with all this at the time, but I have since often
thought how severely I was punished for my ill behavior at school.
For more than a year, I was left to run about in idleness, getting bad
habits, and losing the precious time that should have been devoted
to the acquisition of knowledge. Thus it always happens, that, soon
or late, we are made to suffer for our misconduct.
(To be continued.)
 Swallows.

Of these birds there are several kinds, but I am going to speak of

only one or two of them now. The common barn swallow is one of
the most interesting. It does not come much among us at the north,
till the settled warm weather of May. A straggler now and then
appears before, which has led to the adage, “One swallow does not
make summer.”
The flight of the swallow is often low, but distinguished by great
rapidity, and sudden turns and evolutions, executed as if by magic.
Over fields and meadows, and the surface of pools and sheets of
water, all the day may this fleet, unwearied bird be seen, skimming
along, and describing, in its oft repeated circuit, the most intricate
mazes. The surface of the water is indeed its delight; its insect food
is there in great profusion; and it is beautiful to observe how
dexterously it skims along, and with what address it dips and
emerges, shaking the spray from its burnished plumage, as, hardly
interrupted by the plunge, it continues its career. Thus it feeds, and
drinks, and bathes upon the wing.
 Bank Swallows.
The swallow breeds twice a year, and constructs its nest of mud
or clay, mixed with hair and straw; the clay is tempered with the
saliva of the bird, (with which nature has supplied it,) in order to
make it tenacious and easily moulded. The shell or crust of the nest,
thus composed, is lined with fine grass or feathers, firmly fixed
against the rafters of barns or out-houses. The writer has heard of a
pair that yearly built in the rafters of a wheelwright’s shop,
undisturbed by the din of the hammer or the grating of the saw. The
propensity which these birds, in common with their family, exhibit to
return to the same spot, and to build in the same barn year after
year, is one of the most curious parts of their history. During their
sojourn in foreign climes, they forget not their old home, the spot
where they were bred, the spot where they have reared their
offspring; but, as soon as their instinct warns them to retrace their
pilgrimage, back they hasten, and, as experiments have repeatedly
proved, the identical pair that built last summer in the barn, again
take up their old quarters, passing in and out by the same opening.