One of the biggest misconceptions is “It’s just AP.” On the contrary, Accounts Payable is multifaceted, touching on many aspects of your business. These areas include your purchasing departments, business units, general ledger, internal staff, expense reports, and vendors. From a process standpoint, these areas often run independently of each other without the ability to coalesce. An AP recovery audit can provide you with a mile-high view of your Accounts Payable. This provides you with a much-needed snapshot, to understand the entirety of your AP universe.
An Accounts Payable audit will effectively deliver results that provide insight into improving your internal processes.
There comes a time in every business when you are faced with the challenge of reducing costs. You have tried to reduce budgets but are not hitting those goal numbers. Why not consider an Accounts Payable Recovery Audit!
What Does an AP Recovery Audit Cover?
Some items reviewed during this process may include duplicate and erroneous payments, missed or shorted discounts, allowances, rebates, contract review (including compliance), pricing and purchase order analysis, p-card review, freight errors, incorrect balance forward payments, leases (including capital), escheatment issues, abandoned property, and a complete vendor statement of account review to reconcile recorded liabilities on our client’s trial balance.
An Accounts Payable audit can help you hit the following points
- Reconcile your vendor statements to discover open credits
- Collect unapplied cash that may be sitting on your vendor accounts
- Analyze your payment history to uncover duplicate payments
- Review your AP processes to look for holes in your workflow
- Provide highly valued process improvement suggestions
The fundamental yet most valuable part of an audit is not only to recover money due back to you but to also understand the findings via high-level summaries to help you SAVE money. Being proactive will not only help you save money but will also help you avoid future losses on overpayments, duplicates, and gaps in your process. The goal is to provide you with audit findings through user-friendly visuals and metrics and by doing so, your management teams can easily pinpoint areas of the business that may need additional attention. The audit summaries and the issues they may uncover, give you the option to do a deep dive straight to the root cause of a particular issue within your AP process.
Let’s Not Forget about Compliance and Corporate Fraud
There are many gaps that can be uncovered in an Accounts Payable Audit. Employee abuse of corporate funds via your AP department, erroneous or falsely filed expense reports, employees doubling up as vendors, employees colluding with vendors, and kickbacks. This is often a topic swept under the rug for a few reasons. Possible lack of resources to dedicate towards a review, apprehension of what you might find, unsure of where to start, and the common misconception of AP recovery audits being a daunting task. Don’t let that stop you!
Given the variables, we emphasize the importance and value of an AP compliance and fraud review during the course of your standard AP recovery audit. Of course, considering the overall sensitivity, this topic should be handled with the utmost privacy and professionalism. That said, this process is 100% added value for your business. As a result, you will either uncover areas of concern needing further review or walk away with peace of mind in your process! As an added benefit and to stay ahead of the game, your audit summary should include a checklist of important points to help you avoid future abuses within your AP flow.
Let’s Keep Our Eyes Wide Open
You may think that you have the right people and proper processes in place to avoid such overpayments and unused credits, but no process is perfect. There is always a risk involved concerning human error. Also, businesses with recent organizational changes might prompt the need for an Accounts Payable recovery audit. Here are a few:
- Recent organizational and/or staff changes presenting training issues
- Multiple supplier and disbursement locations such as duplicate vendors resulting in duplicate payments
- Implementing new technology or system upgrades where system limitations or gaps may be present
- Recent mergers, acquisitions, and expansions where systems are not integrated and erroneous/duplicate payments are made across multiple corporate entities.
Each company has it’s own set of challenges and unique circumstances while functioning in a fluid and ever-changing business world. Now is the time to keep your eyes wide open so your bottom line isn’t negatively impacted by the complexities of your business!