Even though most organisations have implemented robust accounting and payment processing systems, errors still exist. In today’s world it is common for organisations to operate sophisticated ERP(s), often with the misconception that the systems capabilities are preventing errors.

Let’s look at some common recovery types which are not prevented by an ERP or finance system.

Duplicate Invoices / Payments

Whilst most ERP(s) will prevent the entry of an identical invoice (same invoice number), they will not prevent a duplicate entry if ANY details are different.

• Invoice Number
  
  In manual processing environments it is very easy for a miss-entry of an invoice number. This could be a simple typing error, or the misreading of a character. In environments using automation for invoice processing, it is possible for scanning solutions to misread a character.
  
  Examples:
  1001 / 1OO1, 00058742 / 000058742, L472 / 1472, 86521 / B6521


• Vendor Number
  
  It is very common for organisations to have the same vendor created multiple times in an ERP. If the same invoice is processed using two different variables of the vendor, then the ERP will be unable to intervene and prevent the duplication.
  
  Examples:
  Invoice 12345 processed on vendor John Smith Ltd
  Invoice 12345 processed on vendor John Smith Limited



• Multiple ERPs
  
  In large organisations, there may be multiple ERPs in operation. This complexity can cause duplicate invoice payment due to the same invoice being processed on two or more separate systems.
  
  Examples:
  Invoice 12345 processed on SAP
  Invoice 12345 processed on Peoplesoft

Unknown Credit Notes

Data analysis can be carried out on all transactions that exist in the ERP. However, what about those transactions that an organisation is unaware of?

There will always be occasions where a credit note owed to an organisation has not been received for various reasons, and therefore the financial benefit has not been realised.

The only way to identify these occurrences is to reconcile 100% of supplier statements. However, very few organisations have the resources to carry out such a task. The statement review is a big part of a recovery audit, and a very cost-effective way to identify and recover those credits, including cash on account and open rebates.

Why consider a 3rd party for the recovery audit project?

Due to the nature of a recovery audit project, it can often be beneficial for the review to be carried out by a 3rd party organisation due to impartiality. When reviewing errors, a 3rd party will have a complete unbiased approach which leads to the best results.

It is also common that internal audit or accounts payable teams simply do not have the resources, expertise, or technology to dedicate to this type of project.

In many case 3rd party recovery audit firms are paid only on a contingency basis on the results of their findings. This makes it a risk-free project.