For busy AP teams, recovery audits are a massive benefit, providing extra assistance to tidy your ledgers and return cash to your organisation. This blog details 10 of the main problems our specialist services team have discovered when conducting recovery audits, and our tips on how to deal with them.
Issues we find in invoices and suppliers
When the FISCAL team conduct an audit, we comb through your invoices, supplier file and supplier statements. Here are the most common issues we find in our clients’ Accounts Payable data:
Duplicate payments, due to:
- Invoice keying error. For example, a letter I inputted as a 1, a 0 becomes a letter O. The underlying cause of this may be on your end of the process, or your suppliers’. If you have a supplier portal, it’s possible for suppliers to also input data incorrectly.
- Duplicate invoice entry. We’ve seen many duplicate invoices that were forced through the system by staff adding a number, letter or special character to the invoice number.
- OCR scanning error. It’s not just human error – computers can get it wrong too. Invoices can be read incorrectly by your software, resulting in incorrect data being inputted into your ERP.
Master Supplier File error.
These are often separate suppliers that are essentially duplicated but have slight differences. One might include ‘Ltd’ on the end of the name while the other doesn’t, for example.
Wrong supplier.
An invoice can have the wrong supplier attributed to it, such as ones with similar supplier names/numbers as the real supplier. It gets more complicated when there are genuinely two different suppliers, but the incorrect one is chosen. For example, parts and non-parts, or a supplier ‘doing business’ as another supplier name.
Invoices as credit notes.
This is commonly seen on statements as an overpayment.
Invoice date.
Some staff often input the date they keyed the invoice into the system rather than the date they were invoiced. US-to-UK date conversion can also be an issue here.
Wrong values.
We tend to see this as numbers the wrong way round – 2008 rather than 2080, or with numbers added or removed in a value. 200 rather than 2000, for example.
Overpayments due to multiple page invoices.
This issue commonly occurs when a person inputs the first page value, or subtotal, as opposed to the grand total. Someone else then inputs the grand total, so you get an overpayment.
Dealing with data discrepancies in Accounts Payable
It’s essential to perform checks regularly to minimise errors and overpayments. However, we know that reviewing all transactions and suppliers manually is heavy on resources and isn’t always effective. So, we recommend completing these checks via an automated, purpose-built software to save time and gain efficiency.
Our Accounts Payable software uses forensic level tests and AI to complete checks for all these issues, resulting in a simple list for staff to review.
Common problems faced in the audit and how to overcome them
In every audit, whether internal or external, there are a few key sticking points. In our experience, it comes down to people, and time.
Stakeholder collaboration
Getting all stakeholders together gathered is extremely important. Not only does it get everyone on the same page and informed on the details, but it also means they can help you troubleshoot any issues immediately. Sometimes the biggest blocker to a project is people not having the time to talk and think the process over.
Supplier engagement
It’s a common issue that suppliers won’t get back to you. You won’t get any replies and end up chasing them with emails and phone calls. So, before you do anything, let them know in advance that the audit is happening so they can organise themselves. Although it might seem obvious, if you’re still stuck chasing, trying them at different times of the day, at the beginning or end of an hour, can help to get things moving.
Team involvement
Before undertaking any audit, our most important tip is to ensure your team are on board from the get-go. AP staff are often concerned that negative findings will reflect badly on them, and so there is a sense of judgement, and perhaps impending doom, before an audit.
Therefore, it’s important to let them know why the audit is taking place, and importantly that it is not a witch hunt but an an opportunity for you to improve as a team and be the best in class. Share the scope of the work and the measures that might be taken if non-compliance is found. Settle their nerves and work together to iron out any concerns or errors.
Getting staff buy in and involvement throughout the process will ensure a smoother and less stressful accounts payable audit.
Conclusion.
- Recovery audits help busy AP teams tidy ledgers and return cash.
- Common issues found include duplicate payments, master supplier file errors, wrong suppliers, invoices as credit notes, incorrect invoice dates, wrong values, and overpayments due to multiple page invoices.
- Regular checks are essential to minimise data errors, ideally using automated software for efficiency.
- Key audit challenges include stakeholder collaboration, supplier engagement, and team involvement.
- Preparing the team and ensuring their buy-in can lead to a smoother audit process.
