While companies are always open to exploring new ways to increase cashflow and reduce risk, one often-overlooked method is through the evolution and expansion of existing accounts payable (AP) recovery audits.
An AP recovery audit is designed to help companies uncover errors in their AP process – things like payment discrepancies, duplicate payments and more that can slip through the cracks of even the most automated, highly controlled systems. Once an AP recovery audit is underway, though, it’s possible to expand the audit scope to include additional spend areas that aren’t directly available in the raw payment.
Here are four opportunities to expand your AP recovery audit and uncover new sources of profit leakage:
- Third-party payment applications – Are your third-party payment application transactions (purchases with P-cards, temp labor pools, etc.) reviewed against the regular payment pool? Are suppliers being paid from two different payment sources?
- Rebates – How are rebates being tracked, managed and reconciled? Many times, the calculations are based on data that isn’t always readily available, which can cause companies to accept the amount as presented without verification.
- Pricing – Is the price-change information compared against invoices to ensure that the price changes were enacted appropriately? This is especially helpful for companies with frequent price-change scenarios.
- Returns – Are returns processes and transactions regularly reviewed?
If your company has already maximized the scope of your AP recovery audit, there are other options you can pursue to get even more value and insights out of your audit activities.
Contract compliance audit – Contracts are supposed to clarify and ensure compliance but can frequently hide noncompliance and profit leakage. A contract compliance audit helps you ensure that your agreed-upon terms are being met and that you’re actually receiving the pricing and benefits you were promised.
Advanced analytics – Most companies are overflowing with data, but few have the tools, technology and expertise to extract value from it. Advanced analytics uses artificial intelligence, machine learning and data science to deliver actionable insight and revenue-generating opportunities above and beyond what can be found in a traditional source-to-pay audit.