How an Accounts Payables Health Check Can Help You Uncover the Unknown

Health is at the forefront of all our minds these days, and it is especially important when it comes to the state of your Accounts Payable. Pearsall Smith discusses how a ‘health check’ could help you uncover the unknown opportunities already in your accounts.

What is a ‘Health Check’ of Accounts Payables?

A “health check”, or audit, of your AP system is a thorough review that isolates any issues that you are unaware of in the field.

Do you have issues with keying errors internally?

Are your field locations paying invoices outside of your system?

Are you missing discounts or overpaying your vendors?

Are your vendors holding up their end of the bargain on negotiated contract agreements?

An accounts payable recovery audit helps your organization stay on top of complications before they turn into serious problems, an essential part of maintaining a healthy operation.

How Much Profit Will a Health Check or Recovery Audit Return?

It’s true—in some cases, an accounts payable recovery audit will return profits that can be up to millions of dollars. But one of the other major benefits of a health check is that it gives your team much needed direction for better ways to prevent financial loss.

After all, you don’t know what you don’t know. A health check uncovers that unknown to help you identify potential for errors and implement the right controls to prevent them.

Where to Start with an Accounts Payable Health Check

Begin by thinking through your business and identifying areas of focus where there may be leakage.
Whether it be a full AP historical payment review, a deep dive into your contracts to examine pricing, rebates, time and materials, or even checking your utilities for best rates, these are all areas you should be aware of that could be potential sources of lost revenue.

Recovery Auditing Real Results

A healthcheck, or recovery audit, was particularly helpful for one of our clients in the Heavy Equipment Rental business, whose individual locations were buying and returning products in a way that left AP unknowingly in the dark. This client had over 425 locations across the US.
Each location routinely ordered many different items like filters, hydraulic lines, etc. They would then return a substantial amount of the items every month, creating credits on vendors accounts that weren’t processed because AP had no knowledge of them.

We helped our client recover profits by identifying all of the unapplied credits our client was owed.

But it didn’t stop there.

After we were done with the audit, the Accounts Payable auditors used the information we found or ‘diagnosis’ of what was happening to create their own internal controls.

They implemented a return purchase order process that would alert AP and let them track each return so that the AP audit firm could capture credits going forward, saving them hundreds of thousands of dollars in the process.

 

Begin a Health Check of Your Organization’s Accounts Payable

Get in touch to find out more about how our accounts payable recovery experts can help your organization understand the health of your accounts payable. Fill out the form below.

 

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