Key Takeaways for Accelerated AP Profit Recovery and Preventive Audits
- Traditional 2-3 year audit timelines can create compounding problems most retailers underestimate.
- Leading retailers are now capturing 75-90% of recoveries within the current fiscal year.
- Preventive audits drove a 15% increase in projected recoveries at Waitrose—by catching errors before they become disputes.
By the time most retailers discover pricing discrepancies, promotional funding issues, or contract compliance failures, the negotiators who structured the original deals have moved on. Suppliers can’t locate supporting documentation. And the friction generated by aged deductions damages the very relationships retailers depend on for margin optimization.
In a recent PRGXplore Live session, “Accelerate Cash Recovery and Error Prevention in Retail with AI,” Brad Royer, Senior Vice President of Global Retail Operations at PRGX, shared how retailers are compressing these timelines—and why the traditional approach no longer qualifies as best practice.
“The way things move these days and technology is changing…any kind of feedback or actionable insights 24 months later doesn’t really do anybody any good,” Royer explained. “It causes a lot of vendor abrasion with the suppliers and your merchants because they’re having to deal with issues where they weren’t at the desk when these things happened.”
The Four True Costs of Stale Data for Accounts Payable Audits
Traditional post-transaction audits deliver significant value—delivering recoveries, identifying root causes, and revealing patterns that drive long-term improvement. But when audit firms receive data 6 to 24 months after the fact, the timeline can generate several compounding issues:
- Root cause analysis becomes more complex. When errors surface a year or more after occurrence, identifying why they happened proves extremely difficult. Systems may have changed, processes evolved, and the institutional knowledge required for meaningful remediation has dispersed across job changes and organizational shifts.
- Supplier relationships can deteriorate. Accounts receivable teams at supplier organizations receive deductions for transactions they have no context for, forcing them to track down former category managers who may no longer be with the company. As Royer noted, “There’s a tremendous amount of cost borne by both sides—our clients and the suppliers—in this process.”
- Cash flow remains unpredictable. When recoveries arrive in large, infrequent batches 18 months post-transaction, finance teams struggle to budget accurately. More critically, these funds typically can’t be applied to cost of goods sold for the original period, creating margin reporting challenges that obscure true product profitability.
- Errors continue unchecked. Without timely feedback, systemic issues in pricing logic, promotional setup, or contract administration perpetuate for months—or years—before detection.
How AI Accelerates Discovery Without Adding Headcount
Retailers managing hundreds of suppliers and thousands of promotional events generate millions of emails containing critical contract details and pricing agreements. Manually reviewing this volume? Nearly impossible.
Purpose-built AI models now classify emails by issue type, automatically routing scan-related problems to different specialists than pricing disputes or movement discrepancies. These systems extract structured data from attachments, including Excel spreadsheets and PDFs, populating databases that can be cross-referenced against payment records and promotional calendars.
“We’re receiving millions and millions of emails every month,” Royer explained. “There’s no possible way that our teams can actually physically go through and read all those. By teaching our AI model to identify which emails are relevant…it significantly reduces the amount of effort and time.”
This automation doesn’t replace audit expertise—it eliminates the time auditors previously spent on data gathering, allowing them to focus on analysis, supplier communication, and root cause identification.
The Accelerated Audit Model in Practice
Several large retailers have shifted from annual audit cycles to rolling reviews that begin 35 to 120 days post-transaction. This requires internal process changes, particularly establishing firm deadlines for accounting reconciliations. But once those disciplines are in place, the benefits compound quickly.
Case Study: Large Grocery Retailer
A retailer that previously conducted all recovery audits within 24 months after fiscal year-end moved to a rolling review starting 35 days post-transaction. Results included 75-80% of recoveries delivered within the current fiscal year and reduced vendor abrasion.
“We got feedback from suppliers saying although they don’t like the deductions, they’re thrilled that it’s more current,” Royer shared. “The people are still around on their side, the merchants are still around… so we can come to resolution much more quickly.”
Case Study: North American Retailer
Another major retailer implementing a similar timeline shift started audits 120 days post-transaction and realized 90% of recoveries within the current fiscal year while reducing vendor abrasion.
The shift to rolling reviews also created more even cash flow distribution. Rather than receiving large recovery batches once or twice annually, finance teams see steady, predictable returns that are easier to forecast and manage.
Moving Beyond Recovery to Preventive Audits
Some error types lend themselves to identification before transactions occur or payments process. By applying the same analytical approach earlier in the timeline, retailers can prevent errors rather than recovering from them after the fact.
“We take our post-audit process expertise and technology and move it pre-transaction,” Royer explained. “Instead of issuing a claim and pursuing payment from suppliers, the error gets corrected and everybody continues on with their daily lives.”
Preventive audits focus on high-volume claim types where early intervention delivers clear value:
- Product inclusion verification: A yogurt promotion might be negotiated for existing SKUs, but a new flavor launches between contract signing and performance. Preventive monitoring catches the missing item before the promotion runs.
- Performance timing mismatches: When merchants or suppliers shift promotional windows at the last minute, contract updates don’t always follow. Continuous monitoring identifies these discrepancies before billing occurs.
- Rate accuracy confirmation: Rebate contracts occasionally contain data entry errors where per-unit allowances should be per-case, or vice versa. Identifying these before payment eliminates recovery action entirely.
Waitrose: 40-50% of Recoveries Moved Upstream, Removing Later Disputes
John Lewis Partnership wanted to know how they could increase collection of negotiated funding. PRGX implemented a monitoring process that shifted certain recovery activities upstream, catching errors before payments processed. The results exceeded expectations: a 15% increase in projected recoveries, with nearly half requiring no deduction at all.
The approach also improved compliance with UK GSCOP (Groceries Supply Code of Practice) requirements around supplier notification timelines—a critical consideration for UK grocery retailers.
Keith Rosser from John Lewis Partnership noted the transformation:
“Previously, certain types of profit leakage were almost impossible to recover retrospectively due to contractual limitations, supplier resistance, or a lack of compelling insight. Now, Waitrose has successfully deployed the new preventive capability, namely real-time visibility and analysis on upcoming deals, enabling teams to detect, question and prevent potential margin erosion before it occurs.”
Implementation Considerations for Accelerated AP Profit Recovery
Moving from traditional audit cycles to accelerated or preventive approaches requires several organizational adjustments:
- Internal timeline discipline: Accounting and finance teams need firm deadlines for reconciliation completion so audit work can begin on schedule.
- Data delivery frequency: Accelerated audits typically require at least monthly data delivery, with many retailers providing weekly or even daily feeds.
- Cross-functional collaboration: Merchandising, finance, and audit teams need regular communication channels to share insights and implement corrective actions quickly.
Organizations undergoing system conversions or ERP migrations find particular value in accelerated audits. Rather than waiting months to discover migration errors, early detection allows course correction while implementation teams remain engaged. In one case, PRGX identified a calculation error in a client’s new system—feedback that would have taken over a year to surface under traditional timelines. The client addressed the issue within a couple of months.
Ready to accelerate your cash recovery?
Watch the full webinar to hear Brad Royer’s complete insights on AI-driven audit acceleration and prevention. Or speak with an expert about how PRGX can help compress your audit timelines and recover cash faster.
