The obvious answer is a resounding “No, of course not.” Why would anyone in their right mind knowingly toss money? Well, you might be surprised to know that in some cases it stems from a inability to act which results in millions of dollars worth of losses.
In accounts payable departments across the country, errors and fraud contribute to corporate losses in a huge way, yet many of them refuse to take on risk reforming endeavors like Recovery Audits.
When confronted with the possibility of this risk, I am astonished at how many managers and CFO’s want to avoid the topic. The look in their eyes says “Please stop talking about this.” Or their half-hearted nodding when I bring up the statistics – that even though their accounts payable department likely has a 99% accuracy rate (or better), the truth remains that the sliver of remaining inaccuracies can mean millions.
Yes, you read that right. A 1% error can mean millions of dollars.
Fear, anxiety and trepidation drive most managers away from exploring their organization in search of problems. Perhaps it’s what they don’t want to know. That a long-term employee is committing fraud. That the error rate is higher than they thought. That in their case, it’s not just one million, but many millions of dollars in lost revenue.
Yet these are the things a company needs to know to operate more efficiently. To operate at capacity, to expand, improve and move forward. Competing in today’s marketplace, either as a private or public company means a dedication to productive transparency. By productive transparency, I mean finding the best way to find errors and fix them proactively – not static reporting after the fact that only ends up clouding the real issues.
I encourage people to put aside the dread and seek out the weak spots. To walk down that dark hallway like the hero or heroine in the horror flick. Your brain might be shouting for you to stop, but don’t listen, simply keep moving forward. When you get to the door at the end of the hall, open it… because it just might be the way out or the way forward for your business.
To know more, join Karl Andersson, CEO of Technology Insight in a series of webinars dedicated to Best Practices in Accounts Payable. Click here to view the list of upcoming webinars.