… sometimes you can find a gem. A costume jewelry gem, but still …
According to the article, while businesses spend a lot of time on the contracts and agreements, they spend little on price verification and contract compliance when all is said and done.
And that can be fixed with auditing, especially when contract compliance and audit work side-by-side.
Unfortunately it didn’t say how, or why, but presumably you’re supposed to contact the author’s chartered accounting firm (who are experts in ) for that information.
Well, fortunately for you, SI can fill in some of the gaps!
First of all, you need to audit key invoices beyond m-way match.
You all know about m-way match, where an invoice doesn’t get paid unless it has an associated PO or contract with valid pricing for valid products or services, that have been verified as delivered by a goods receipt or an accepted timesheet, but that’s just one way to prevent money from being wasted.
The next step is to ensure that the invoice is not duplicate, going to a verified supplier’s bank account or address, and complete. (Every processed invoiced, and payment, has a cost.)
And this is where most invoice processing platforms end. But there are still overspend prevention opportunities.
Were all the products undamaged and likely useable / re-saleable? And we’re they (immediately) rejected or returned? If so, a credit has to be captured and applied against the invoice immediately. It can’t go on a to-be processed list where it will sit there until the contract expires and the chance of collection is low.
Also, how many returns to the supplier since the last invoice? Were they under warranty/within the window and for the same products? If so, the organization should capture the credit right away.
And with modern electronic payment systems, it’s easy to send remittance notices that indicate what payment the invoice is for, what adjustments were made, why, and what contract the adjustments relate to (to justify them).
But this isn’t the full value of an audit.
A good audit can dive in and compare the units shipped against the estimates. The hours worked against the estimates. The expenses billed against averages. And so on. It can detect anomalies early, and detect new trends that may need to be investigated before they take over. Auditors find things other people miss. Sometimes they can find things even overworked Procurement people miss — and that’s why audit processes can help.