How PRGX helps category management and merchandising leaders.
Most shared service centers (SSCs) had crisis plans prepared when COVID-19 struck. They shifted to remote working, reduced capacity, implemented new collaboration tools, and adapted processes as conditions changed.
That stabilized operations, but now the long-term effects of so much sweeping change are starting to appear.
The cohesive teams SSCs had established over years suddenly turned into atomized groups of isolated individuals working from remote locations. Changing workflow and implementing new processes with fewer people there to manage has hit SSCs hard.
Some are grappling with a loss of experience and institutional knowledge. Others are attempting to achieve full-time output with part-time capacity. It’s created a fertile environment for invoicing errors and erroneous payments.
Businesses engage shared service centers to gain from efficiencies, the pooling of hard-to-find skill sets, and the cost savings that result. Recovery audits are now helping SSCs protect those core values.
How Recovery Audits Can Help SSCs Stay Efficient
Broken collaboration, fewer resources, new technologies, and the need to do as much — or more — with less, are all driving up the incidence of invoicing and payment errors.
That’s why recovery audits take on renewed importance for SSCs under COVID-19. With so many factors increasing the chances for transactional errors, it’s time to look at engaging in some form of recovery audit.
Recovery audits are an effective way to bring in resources that can quickly backstop processes and provide best-practice oversight of accounts payable operations.
They can mitigate many of the issues arising from COVID-19 by reviewing all relevant invoice information and double-checking payments, vendor funding, available discounts, vendor compliance with policies, and a wide range of other areas that internal staff may not have time to manage themselves.
For example, a large retailer might be seeing a higher volume of sales, but watching margins erode by higher costs and reduced promotional funding from suppliers. A recovery audit can show SSC teams where margins have been impacted. It can also provide valuable feedback on error rates and root causes, setting the stage for proactive prevention rather than retrospective recovery.
COVID-19 has also brought new hard costs that need to be offset. Upgraded personal and company technology, personal protective equipment, and physical changes to facilities all require unplanned expenditure that needs to be closely managed.
For retailers continuing to serve the public in physical locations, new costs could include new signage to direct traffic flow and ensure social distancing, or protective plastic screens between customers and employees.
The marginal costs of these will be higher as the supply chain providing them is unestablished and likely inefficient. That makes it even more important to recover any systemic leakage that could help offset pandemic-related expenditures.
The Value of Reliable Partners
Very often in business, it takes time to find out that something is dragging margins down. In a time when SSCs are operating amid so much disruption, there’s a risk that lack of information is lulling them into a false sense of security.
Most organizations face a host of unknown unknowns. In a situation like this, you need reliable partners who can offer skilled assistance and fill in the gaps.
The pressure to operate under conditions of short staffing, remote working, and broken collaboration has created an environment where invoicing errors will mushroom, as fewer people struggle to deal with a higher volume of work in less than ideal conditions.
Recovery audit can provide meaningful feedback and identify where significant leakage is happening. By measuring the scale of the problem and pinpointing the specific areas involved, recovery audits can also provide root cause analysis, leading to new controls that stop leakage from happening at all.
In that sense, recovery audits are like the canary in the coal mine, an early-warning system flagging the first signs of trouble — but then going further to identify the source and fix it.
At PRGX, we often speak to our ability to dig deeper and act faster. As we look beyond COVID-19, we’re as committed to those values as ever.
After more than five decades in recovery audit, PRGX knows that change and uncertainty drive increases in invoice processing errors. We saw it during the Y2K furore and after 9/11. We see it today as SSCs struggle to adapt to the realities of reduced staffing and technical disruption.
Every shared service center has to make difficult decisions about what’s essential. Recovery audit has to make that list. Almost every Fortune 500 company relies on recovery audits as standard practice. For businesses that haven’t yet embraced them, time is of the essence.
Recovery audits must remain a priority for shared service centers. Don’t cancel. Don’t delay. Integrate them into your monthly or quarterly financial processes, and let PRGX help you see maximum value for your recovery efforts.
Want to learn more?
For more information, watch PRGX’s webinar: Shared Services: Managing Risk and Finding Opportunity in a Remote Environment or download the e-book Shared Services: Managing Risk and Finding Opportunity in a Remote-Work Environment.