You pay a recovery audit firm up to 20% of error value found. When you process 600,000 invoices annually, it’s easy to see how the numbers add up.
An American healthcare company was right here. A common Accounts Payable headache, it wanted to find a better way and become more cash flow positive.
This company is a multi-hospital health system with over 126 practices and five hospitals across Pennsylvania, USA. Employing 17,000 staff and with 11,000 vendors, they constantly look for new efficiencies.
The Director of Expenditure for this company previously worked for two major hospital systems in the Chicago area. Meanwhile, their Accounts Payable Manager, joined the company after having spent six years as AP Manager at a major health insurer. Both have substantial finance management experience in the USA healthcare sector.
A team of 20, their company’s AP department uses Infor as its Enterprise Resource Planning (ERP) system. Since working remotely during Covid, they’ve experienced challenges when relying on manual AP processes.
Finding errors "after the event"
Like many large AP departments, they were using a recovery audit firm to spot costly invoice processing errors. But it wasn’t achieving what they wanted.
Their AP manager explained: “We were finding things, but it’s costly to rely on a recovery audit firm. You typically pay a 15-20% finder’s fee every time they uncover a duplicate payment or unpaid credit, for example. That soon adds up.
And the recovery firm is finding errors after the event. Once the money’s gone out the door. We wanted to uncover these problems before the recovery audit and stop paying for issues we should be catching ourselves. We felt maybe, with the right tool, we could do this.”
They knew that invoices paid in error and high audit fees were impacting cash flow and, also felt recovery audit firms couldn’t stop errors happening again. That wasn’t how they wanted to work. As a result, the fee level continued as the same problems kept being found by the auditors. It wasn’t the efficient system their AP manager wanted to have.
“We wanted to start finding these things ourselves and nipping them in the bud before they became a large problem. Solving the root cause. Certainly low-hanging fruit like mis- keying or invoicing the wrong vendor.
But like many AP departments, we struggled to find the time and resources to achieve this,” they added.
Why the health company chose Xelix
The Director of Expenditure had developed many internal processes to catch duplicate payments. Then, as they were leaving their previous role, they met Xelix.
“Xelix went way beyond what I’d been able to do, either internally, or using other software. So, I wanted to assess it when I joined this US healthcare company. The Xelix tool was a clear winner to me for two reasons.
Firstly, Xelix uses Artificial Intelligence. This goes a long way towards eliminating false positives with its machine learning models. It goes beyond what your ERP does. And the more you use Xelix the more accurate it gets.
Secondly, Xelix has a Statements module. I was using an Excel add-in called Able Bits to do data comparisons, but it was still very manual. With Xelix, it's an automated process - even emailing the vendor,” they said.
They then had to sell the investment to the senior leadership team.
“When it comes to being innovative, we have a very supportive leadership team. So, they immediately saw the savings we could make on our recovery audit fees. Xelix sold itself. It was easy because Xelix is a positive cash flow tool. It stops money going out the door and reduces your recovery audit fees,” they said.
Implementation took six weeks with them describing it as “straightforward”. The Xelix team provided training and has been on hand since.
The Xelix process is simple. The company auto- sends Xelix a daily data file of vendors and invoices in the system. Xelix reviews the data and presents the results in the platform. The AP can then assess and action them.
4x more cost efficetive than a recovery audit firm
From the moment you implement Xelix you have errors to action. At first, the tool reviews two years of historical data. Their AP manager reflected on the early experience with Xelix’s duplicate checking Transactions module.
“On day one Xelix located hundreds of potential duplicates and errors in our historical data. That was before looking at current information. It helped us play catch up by cleaning our past as well as our present.
Of course, the recovery audit firm would have found some of these issues. But there were errors Xelix detected that were not found by them,” they said. When it comes to data accuracy, Xelix’s machine learning is quick to reduce false positives. And this was certainly the case for their company, they explained.
“I checked the numbers to see how Xelix was performing after three months. Looking at the most recent 246 duplicate it gave us, 98% were duplicates. Only 2% were false positives.
This level of accuracy encourages staff to use the data. They know it’s not wasting their time as the system finds legitimate stuff and saves them from making an error.”
In fact, Xelix correctly identified $1.8 million of duplicate errors during the first three months of use.
“That’s a big multiplier over what we spend on Xelix,” their Director of Expenditure said. “If I assume half these duplicates would have been found by a recovery audit firm, that still gives Xelix credit for anything up to $900,000. It’s easy to estimate that Xelix is four times more cost-effective for us,” added their AP manager.
Fast automated statement reconciliation
The Xelix Statements module is a big plus for their director and he expects significant savings as they “grow into it”.
“Statement reconciliation always takes second place to invoice processing. Like many AP departments, we often struggle to get to it. Until now, we’ve been lucky if we reconcile up to 10% of our statements. And we’d have to download data to match each one. It’s been very manual, even though we incorporated an Excel tool into our process.
Using Xelix, the entire process is automated. It’s so quick and you can upload PDF statements too. Xelix even emails the vendor on our behalf,” they said.
They added that Xelix does a more thorough check by looking at the system as well as the statement.
“Using Excel, you’re only checking what’s on the statement. It’s one-way. But Xelix looks both ways and spots things on the system that aren’t on the statement.”
Currently freeing up AP time by automating invoice payments they both intend to use this to reconcile more statement, knowing it will help their cash flow.
Becoming AP analysts
The US healthcare company still engages a recovery audit firm but expects to stop in time. For now, it monitors improvements and cost reductions. Xelix helps them identify the root of process downfalls and prevents cash leaving the business in error – an issue many businesses are prioritising given the current economic headwinds.
So, what does the future AP function look like now? “Three months on, we’re still adapting and making the most of Xelix. But I can see our AP team becoming more like analysts. Instead of manual processes, they’ll look at things that benefit the company. Like making sure we’re getting our discounts for early payments and checking we’re approving invoices quickly.
Also, Xelix spots things you wouldn’t always pick up with the naked eye. Like two vendors with similar names. As your master vendor file is at the centre of everything, keeping it clean has a direct impact on your performance,” they said.
"Do the math"
Technology is only valuable when it does exactly what you need and improves over time. they feel Xelix achieves this with ease.
In my experience, Xelix is the most receptive vendor I’ve worked with. Their desire to improve their product and their responsiveness to customers is top notch.It’s impressive how they’ve involved us to make sure the tool is meeting our needs. We can ask them to add some information to the system and it’ll be done in days,” they said.
For those still relying on “after the event” recovery audit firms and enduring high costs, they had this to say.
“Do the math. Consider the money going out the door due to mistakes you’re not finding upfront. Then consider the money you’re paying the recovery firm. Now compare this with Xelix. I think you’ll find it’s going to save you money in the long run.
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