If there is one type of payment that the accounts payable staff does not want to have problems with, it is director fees paid to members of the board of directors. It is hardly useful for the directors to have a poor opinion of the accounting staff, just based on late or incorrect payments!
Director fees are authorized through a board motion, and typically require a higher attendance fee for a director's attendance at a board meeting, or a lower fee for telephonic attendance. There is usually an additional fee paid for each committee meeting attended by a director, such as the audit committee, compensation committee, and corporate governance committee. Further, the chairs of these committees are normally paid more than the other committee members. Given the large number of board and committee meetings that may take place over the course of a year, and a potentially large number of directors, it is evident that the payables staff may be issuing a considerable number of payments to directors.
A key problem is how to ensure that the payables staff is notified whenever a board or committee meeting has taken place, as well as which directors attended, and whether they did so in person or by telephone. The solution is quite simple - create a policy whereby the payables staff is only allowed to issue payments to directors when completed and signed board and committee minutes are received. Not only do the minutes provide excellent documentation of dates and attendance, but this also solves a second problem - ensuring that the directors provide legal evidence of their meetings. The corporate secretary is usually responsible for recording board meetings, but it may be much more difficult to obtain documentation of committee meetings. In short, both the corporate secretary and payables manager will benefit from this policy.
In addition, it is unusually difficult to get some directors to cash their checks (being high net worth individuals, they may not care), resulting in a cluster of extremely old open checks remaining on the bank reconciliation. The solution is to send electronic payments to directors. Since some directors may also be dilatory in forwarding their bank account information so that they can be set up for electronic payments, consider enrolling the chairman of the board or CFO in this effort. They can be highly effective in obtaining bank account information from their comrades on the board.