How to add money to your bottom line with rigorous audit and recovery
Finance shared services, Purchase to pay
Duplicate payments are unfortunately a common issue for many accounts payable departments. Even though it might be a small percentage of your transactions, if you are processing hundreds of thousands of invoices, this can amount to a significant drain on your working capital.
Duplicate payments can be caused by a number of factors including human error, system error, or fraud. How can you ensure you are doing what you can to prevent such losses to your business?
First find the low hanging fruit yourself
Make sure your processes and standards for invoices, master vendor, and invoice numbers are strict. If you have policies such as no-PO, no-pay and automated data entry, you will likely have fairly low rates of duplicate payments and be should be able to identify them quickly.
At our recent Summit for Leaders in Finance Shared Services, Mary Schaeffer of AP Now & Tomorrow warned that a lot of duplicate payments happen when organizations migrate to new systems. If you are moving onto a new system that affects your payment process, you may lose visibility on your old system, so consider using a third party audit recovery firm to ensure you don’t lose out by duplicating payments.
Audit recovery firms can also find payments you didn’t know you lost.
Then call in the professionals
Also at the Summit, Eric Jones, Director of Corporate Payables at Lowes also said the audit recovery professionals can be a great help to your organization. “You can learn from what they do and build those routines yourself more cost effectively. No matter how clean your processes are, it’s always good to have a third party come and look over your shoulder every now and again”.
What about the costs?
While employing consultants might seem like a large cost, you’ll never know what the cost of not hiring them may be.
For an example let’s say (to make the math easy) a recovery firm charges 25% of the money they recover on a no-win, no-fee basis. If they find $1,000,000, you pay them $250,000. What is the cost of not hiring them? The $750,000 that can go to your bottom line.
As many recovery firms will operate on a no-win no-fee basis, you can employ their services before the customer even asks. Presenting the customer savings will show initiative and can bring savings the customers didn’t know existed.
You can find some leading audit recovery firms in our solution directory.
Have you had success with audit recovery in your firm?