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Prevention is better than cure: why it’s time to replace your AP recovery audit

Alisa McPhail

Apr 2021

Prevention is better than cure: why it’s time to replace your AP recovery audit

You don’t have to be a doctor to know that prevention is better than cure. From car maintenance, to vaccination and even wrinkle control, prevention is cheaper, time-saving and far less painful. So why do businesses continue to take a retrospective approach to Accounts Payable problems? And what’s the cost recovery alternative to the traditional AP recovery audit?

Accounts Payable recovery audits are a useful, but flawed approach to AP payment errors. AP mistakes happen in any organisation processing large quantities of invoices, working with insufficient staff or exercising inadequate AP controls.

Whether it’s through overpayment, duplicate invoices, wrong supplier payments, fraud or a number of other issues, up to 1% of a company’s spend is lost to overpayments and up to 5% of a company’s revenue is lost to fraud each year, resulting in a high number of lost profit.

 

The problem with AP recovery audits

To protect against any financial loss like overpayment, duplicate payments or fraud, a combination of automated and human checks is used to spot payment errors before the pay run. And Accounts Payable audits are used to attempt to claw back erroneous payments after they’ve been made.

Recovering payments through AP audits can often feel reactive, focusing on rectifying errors without offering thorough insights into why they happened in the first place. It often involves a long process, taking months to reclaim payments, with the added burden of high recovery audit fees. 

The problems with this approach include:

  • Conventional ERP software and manual checks are not sophisticated – or fast – enough to catch every payment error
  • AP staff get trapped in a cycle of exhausting manual work, checking audit results instead of addressing the underlying issues
  • Not every overpayment can be recovered (as Citibank’s fight to recover erroneous payments of a staggering $900 million after a mere 24 hours demonstrates)
  • And often, with the payments that can be recovered, audit firms charge commission on (usually between 10% to 40% on the retrieved fund), so it can become very costly

All of this impacts your business’s bottom line and the resources you have to thrive and grow. As a result, many finance departments are shifting towards more sophisticated AI solutions for a more proactive approach. The goal is to prevent any overpayment, duplicate invoices or payments before pay run, eliminating the necessity for expensive recovery audits and driving process improvements.

 

A better way to protect Accounts Payable

If you’re an AP professional thinking ‘there must be a better way’ - you’re right. Preventing AP errors is easier and more efficient than ever thanks to Xelix’s AI-powered invoice intelligence platform. Not only does Xelix identify a wider range of errors, it surfaces them before your pay run.

So instead of using an ‘uncover and recover’ sticking plaster approach to lost revenue, you can prevent it from leaving your account in the first place.

Xelix pulls data from your ERP and finance system(s) and performs a real-time audit process, meaning issues can be resolved before the pay run. It uses advanced AI to analyse invoices across 400 data points, spotting everything from simple data entry errors to complex fraud attempts.

 

How Xelix proved to be 4x more cost-effective than recovery audit firm for US Healthcare organisation

“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 in their financial recovery auditing. 

After introducing Xelix, the organisation: 

  • Detected and prevented over £1.8 million of duplicate payments within the first three months
  • Reached a 98% level of accuracy in detecting payment errors

 

Why using Xelix over a recovery audit

  • 4x more errors surfaced than via a recovery audit
  • More sophisticated analysis, using 400 data points across each invoice
  • Prevents costly payment errors before they're made
  • Learn the trends of your transaction data for ever-more-accurate error identification
  • 10x reduction in time staff spent on manual audit result checks

 

Free retrospective audit and sample report

Ready to see what you’ve been missing? We’re so sure you’ll be blown away by Xelix that we offer all businesses a free – no-obligation – historic payment audit and report. You’ll get to see the payment errors that your current AP processes have been missing, as well as see why other businesses are such passionate advocates for our revolutionary live prevention software.

 

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