Recovery audits are an important part of business; they can help you recover crucial lost income and identify weaknesses in their accounts payable workflows. Although many businesses know why they should run recovery audits, they may not give as much thought to who is actually running them.
Not all recovery audit companies are created equal, and choosing the right one can have a direct impact on your bottom line based on how much income they’re equipped to recover. These are our top tips for making sure you choose the best recovery audit partner for your business.
Make sure they know the why
Every recovery audit company should be scanning for duplicate payments and unclaimed vendor credits. But a top-notch recovery audit company understands why erroneous payments occur, including:
- Vendor master errors
- Inconsistent invoice processing procedures
- Misaligned ERPs
- Overlap of P-cards and invoices
With this added context, recovery audit companies will have a better idea of where to look and what to look for during their audit. This will reduce the amount of time spent on false positives, and uncover more income that might be overlooked otherwise.
Additionally, these companies will have the expertise to help you reduce A/P errors in the future through strategic process recommendations. Win-win.
Combine technology and processes
There are two key components to every recovery audit: the technology and the processes.
For the most thorough recovery audit, you’ll want to partner with a company that employs automated software to scan for duplicate payments and unclaimed credits in your A/P software. This technology can quickly analyze hundreds of thousands of payments, spotting errors on a much greater scale than anyone could accomplish manually. DataShark, for example, scans for errors even when data comes from disparate sources or is difficult to compare, allowing it to deliver a higher-than-average rate of true duplicates.
Without automated technology, recovery auditors have to manually scan for errors using spreadsheets. This significantly reduces the chances of them finding every error, while increasing the risk of false positives from human error. To compensate, these auditors may rely heavily on statement audits from vendors to see if any duplicate payments have been made.
Unfortunately, this approach is more reactive than proactive, and wastes time for both you and your vendors. Instead, it’s much more efficient to identify potential payment errors before you seek a statement of accounts.
Trusting a company to run your recovery audit is a big deal; they’re orchestrating a complex and nuanced transaction between you and your vendors. This is why visibility and communication throughout the entire process is crucial.
Instead of having to call up the auditor and ask for the status of the audit — including how many erroneous payments have been detected and from whom — it’s much more efficient to have a centrally located audit portal.
This portal should outline:
- Which accounts and transactions have been flagged
- Which of these accounts have been contacted
- How much money has been recovered from each account
- How much money is still outstanding
This visibility not only increases trust and communication between you and your auditors, but also gives you the opportunity to review which processes and partnerships need improvement in real-time.
Maintain your relationships
More than anything, business is all about relationships. That’s why it’s so important that your recovery audit company knows how to maintain good relationships with your vendors throughout the entire recovery process — even if they owe you money.
One of the worst thing that can happen is that your suppliers see your recovery audit company as a collection agency. To avoid this, you’ll want to sign off on any communications with vendors before they get sent out. After all, no one knows your vendor relationships better than you.
At the end of the day, nobody’s A/P system is flawless. Hiring a recovery audit company at least once every two years ensures that your business isn’t leaving any money on the table.
The right company will not only recover the maximum amount of funds possible, but also help you identify — and close — any gaps in your A/P system that are contributing to leakage.
Want to learn more about how to protect against unnecessary losses in accounts payable? Download our free guide today.