recovery audit

Why Recovery Auditing?

The top 10 questions to ask when deciding to do a recovery audit.  If you can answer "yes" to one or more of the following questions, it may be time to consider a recovery audit:

1. Is your organization under pressure to reduce costs, increase cash flow, and thereby raise profitability and shareholder value? Finance professionals need to spend more time working on strategic finance initiatives that deliver more value, rather than plug profit leaks, which is a detailed-driven, time-consuming activity.
    
2. Has your organization had a merger or acquisition recently, resulting in stretched limits of IT capacity and increased opportunities for profit leaks?Fragmented across disparate systems, applications and organizational boundaries, the procure-to-pay cycle and processes suffer, opening the door for payment errors.
    
3. Has your organization experienced rapid growth, increasing business demands and exposure? Transaction volume rises and processes become even more complex, laying fertile ground for profit loss. The results are duplicate and erroneous payments, unrecognized returns, pricing errors, penalties and unclaimed discounts.
    
4. Has your organization experienced turnover in its AP department? Even if controls are in place, employee turnover can be draining on a company's process knowledge and efficiency.
    
5. Has your organization recently had a system conversion? With new technologies or system implementations, the priority becomes simply ensuring the transactions are processed, with little time left for verifying their accuracy.
    
6. Does your organization process a large number of disbursements, demanding higher levels of thoroughness and security? When hundreds of thousands of transactions are handled each year, all it takes is for one-tenth of one percent to be inaccurate, therefore leading to vendor overpayments.
    
7. Does your organization experience a large volume of returns to vendors or adjustments to their accounts? Vendors do not send credit memos and many do not mail credits. It is the policy of many vendor companies to take old overpayments into income that are one year old. This presents an opportunity for recovering credits that are due to the company.
    
8. Are your organizations contracts complicated, producing greater price volatility and multiple sourcing options? Even a good contract can end up exposing a company to legal liabilities and unforeseen expenses if a company does not ensure that the terms of the contract are properly enforced.
    
9. Does your organization experience frequent price changes on goods, or increasing transactional volumes? Changes in vendor relationships present a need for organizational structures and policies. Recovery vendors can provide these best practices and assess whether the changes are being properly reflected in the vendor payments.
    
10. Does your organization have complex freight arrangements? Freight terms and freight payment processes need to be closely monitored in an effort to keep transportation expenditures down and ensure accurate processing of related invoices.