Businesses are constantly transforming and changing and these changes can lead to overpayments. At the same time, businesses do not have the luxury of extra staff to perform a thorough internal AP Audit review. It is estimated that for every billion dollars of payables there can be a million dollars in overpayments! Whether your own recovered bucket of money is big or small though, the non-financial benefits can be just as critical to the success of your business.
Over 45 years, Broniec Associates has performed recovery audits for scores of industry segments. They all, however, had the same goal when they approached us for help. They wanted to find and recover overpayments, learn root causes and operational, identify problem vendors and learn way to resolve and eliminate the potential for future overpayments.
Identify Operational Gaps
Operational gaps develop over time. It is fairly common for an accounts payable department to experience department sprawl. As technology changes, the department grows, or new branches get tied into the system, it is difficult to remain efficient. Sometimes it takes a third party to come in and evaluate how the procure-to-pay function is executed and offer solutions.
Identify Problem Vendors
A lot of time and attention goes into negotiating contracts. However, contract terms and obligations are not always met. We recovered over $500,000 for a health insurance client after a careful manual review of contracts. In their case, they had been billed for project hours that should have be free according to the contract and were never given the agreed upon volume discounts.
Reduce the Risk of Fraud
Accounts payable audits are designed to find those weak gaps and raise any red flags.
Compliment to Internal Audit
The role and responsibilities of an organizations internal audit department has grown, due to increased scrutiny of business security and risks, as well as ensuring your organization is compliant with governing Acts overseeing financial reporting, such as Sarbannes-Oxley. Often Broniec is engaged by internal audit departments to provide an independent assurance of their Accounts Payable controls, processes, and operating efficiencies since they most likely only have time, resources, and tools to perform a “sample” review. By engaging in a comprehensive Broniec Accounts Payable Audit, Internal Audit can gain insights and learn of risks which will provide the team a clear direction of areas to focus on, which would bring the most value to your organization.
Recoup Lost dollars
A key benefit of an accounts payable audit is to identify and recover overpaid dollars (hidden profits) from your suppliers/vendors. It is estimated that for every billion dollars of payables there can be a million dollars in overpayments! If your vendors are holding onto your money, would you want your rightful money returned to you?
Prepare for State Audits
AP Audits are voluntary, but when the state wants to look at your books, you don’t have a choice. You can, however, prepare in advance by performing regular recovery audits. Companies like Broniec Associates offer contingency-based audits, so fees are only assessed on recovered funds. As a bonus, you get to walk away with a professional evaluation of your internal processes and the current best practices in Accounts Payable.