Businesses lose millions every year to simple Accounts Payable errors. These errors can occur for any number of reasons. They could be human errors due to manual processes, errors caused by erp or system upgrades and transitions, or the result of new technology that’s not fit for purpose.
Not to mention, these mistakes might be due to new team members, suppliers, or even fraud. Regardless of why they happen, AP teams find themselves with problems like inaccurate vendor data, inaccurate invoice processing and duplicate payments.
As a result, AP departments often turn to AP recovery services to help them identify errors and recover things like overpayments. The issue with these services is that by the time the error is surfaced, the money has already left your account - and you're paying a significant percentage to the firm that spotted the mistake for you.
The best way to deal with duplicate payments or invoice errors is to prevent them from happening in the first place. In this post, we'll go over what an AP recovery is, how it can help your business and how a proactive AP automation software can be even more beneficial to your business.
What is AP recovery?
AP recovery is the process by which a company retrospectively identifies and corrects errors in its accounts payable process. AP recovery usually involves an initial recovery audit that flags errors such as duplicate payments or inaccurate invoice processing.
Once these are flagged, the recovery audit firm can recover lost profits due to overpayments and prevent financial losses.
What are AP recovery services?
AP recovery services run AP recovery audits to identify and recover financial losses for AP teams. They search for errors in the form of duplicate payments, overpayments, credit notes, fraud and even non-compliance with contracts and flag these errors so AP teams can retroactively recover the money they've lost. These services look at a number of things in their audit, including invoices, payments and internal processes.
How can AP recovery services help financial efficency?
Because AP recovery services flag and recover overpayments and resolve errors, these services create more financial efficiency for your team in the long term.
These services give your team more visibility over errors, which is beneficial for creating reports for financial auditing. These services help streamline internal processes in accounts payable, helping drive corrective action across your AP processes and tech stack.
Why you don't need AP recovery services
While AP recovery services identify errors and recover funds, the reactive nature of these services drives huge inefficiencies and hinders cashflow optimisation.
These services often charge high fees and take a percentage for every error they find. Usually, recovery audit commission sits at around 20%. So, if you’ve overpaid by $2,000,000, your recovery firm will take $400,000. At Xelix, we find that on average 0.3% of a company’s spend is lost to duplicate payments alone.
For all they're charging, they're not guaranteed to find 100% of your errors. Additionally, some firms don't offer any kind of insight into why these errors happened in the first place, leaving your business vulnerable to making the same mistakes and paying for these mistakes again the next year.
Furthermore, running error prone processes can impact your reputation and relationships with your suppliers. Mistakes will also impact on their cashflow and you might find, if you keep knocking on their door for refunds, their experience working with your business may be damaged.
When it comes to Accounts Payable solutions and financial recovery strategies, robust, proactive AP controls are a smarter alternative to traditional recovery audits. With a preventative AP solution in place, errors can be rectified in the moment, saving your cashflow and supplier relationships. Tools like Xelix also enable your team to explore root cause analysis and understand why errors are happening so changes can be made to prevent them happening again.
The ideal Accounts Payable solution: Xelix
Xelix is a proactive payment auditing solution that removes the need of costly AP recovery services.
The Xelix platform monitors transactions using AI and Machine Learning to proactively spot errors like duplicate payments, incorrect sales tax, wrong amount, payment to wrong vendor, fraud and more before the payment run, helping you avoid overpayments. The platform learns the trends and nuances of your historic invoice data, ensuring accurate error detection, unlike rules-based controls like your ERP, which tend to deliver ‘false positives’. This will save your team a lot of time when investigating issues.
Although the Xelix solution is proactive, when you first become a Xelix customer, we apply our technology backwards and conduct a free of charge historic payments audit. This enables your team to recover lost funds and learn why these errors were made in the first place.
The best AP recovery services
As established, AP recovery services often aren't as financially efficient a choice as proactive controls. However, you may find that AP recovery services are better suited for your business for one reason or another. We've compiled some of the best providers so you can make an informed decision.
It’s advised to choose an AP recovery service that has a track record in Accounts Payable and can focus on easily identifying errors and successfully recovering overpayments. Most importantly, because an AP audit and recovery may not be enough to optimise your financial processes, you may want to consider looking for AP recovery firms that have AP controls as part of their service offering.
1. Ilumis Global
Illumis Global provides global, industry wide recovery audits and business intelligence solutions. Their MeetIQ tool analyses details about every vendor, supplier, contact, transaction, query and even phone calls using business intelligence to determine where our analysts should focus their attention. This way you pinpoint the reason for each error and prevent them from happening again.
2. SC&H
SC&H obtains data from systems and examine controls and processes within P2P cycles to investigate and pinpoint overpayments and errors, send automated forms to vendors to collect statements and identify missing credits. They then communicate with vendors to collate money. You can recover your money in as little at 30 days, and your vendor relationships won't have to suffer.
3. SpendMend
What sets SpendMend apart is their exclusive focus on healthcare, ensuring compliance with complex regulations like Medicare/Medicaid. They conduct audits across payment systems, supply chains and vendor contracts to recover lost revenue from overpayments, missed rebates and inefficiencies.
4. auditec solutions
Auditec solutions specialises in recovery audits across industries like Non-Merchandise, Retail, Contract Compliance, Healthcare and Construction, providing you with industry specific expertise tailored to your business' needs.
5. Capgemini
Capgemini's duplicate payment review system looks at duplicate payments and prevents similar errors from happening again. More than many other AP recovery services, their system analyses findings and feeds the root causes back to the processing team for improvement so not only can you spot errors, but your team can help prevent them from happening again.
6. Strategic Audit Solutions (SAS)
With over six decades of recovery audit industry experience, SAS begins every project with a recovery audit plan tailored to their clients' unique specifications. Their web-based Claims Approval System, The Vault, monitors and tracks claim production and supplier and internal communications, and it produces real-time reporting.
7. Transparent Global
Transparent global combines technology with more than 20 years of industry experience to identify and resolve discrepancies in transactional and vendor data. They assess process accuracy, data quality and controls, giving you insights to better manage operations, data, vendor performance and internal controls.
Some red flags to look out for when choosing your provider include: vague pricing structures, lack of experience in recovery audits, inadequate technology tools, limited industry expertise, inconsistent communication and slow response times.
With Xelix, you can avoid reactive recovery audits that leave you at risk of losing profits and instead use AI to detect and correct duplicate payments, fraud, incorrect payments and invoice errors before the payment run.
You can learn about how Xelix is four times more effective than a recovery audit firm for a major US health system.
