How Recession-Hit Companies Can Recover Losses They Don't Even Know About

Cash-strapped companies can often claim back tens of thousands of dollars worth of accidental overpayments to suppliers. But most companies simply don't bother, because they don't believe they have a problem. Evidence very strongly suggests they're wrong.

Ask any CFO or Finance Manager of a medium or large organisation if the accounts department pays many supplier invoices twice, and you'll probably hear the response "Definitely not, our systems prevent it, and if it was a problem, our auditors would tell us". But there's a mountain of evidence to the contrary. Duplicate payments can lead to huge, but recoverable, losses. Cash-strapped companies should detect and recover the lost cash, and take steps to prevent future losses.

According to Simon Conroy, of ConroyAutomation.com, the reality of the problem is proved by the existence of the Recovery Audit (RA) industry, which is fast approaching a billion dollars of annual turnover. RA firms earn a percentage of the cash they recover from their clients' suppliers, typically between 30% and 50%.

But Conroy has a warning for those about to hire RAs. "Most companies vastly underestimate the extent of their duplicate payment problem. Hiring a recovery auditor as a first step can be very expensive". He points to evidence available on the internet of RAs recovering hundreds of thousands, sometimes millions, of dollars. "CFOs should remember that for every story of a huge recovery, there was also a huge commission to pay out to the auditor, often for just a couple of weeks work".

"Don't assume you're immune just because Internal or Statutory auditors have reviewed your Accounts Payable system. They do sample tests to make sure systems work within limits", states Conroy, who has experience in both audit disciplines. "They aren't trying to discover every error".

There are tools available cheaply which allow companies to audit themselves thoroughly, as well as to prevent duplicates before they occur. "One of our clients recently recovered almost $200,000 using a simple Microsoft Access-based tool. Only after exhaustive internal tests should you bring in Recovery Auditors, to mop up what you've missed."

ConroyAutomation.com has published two reports containing information and advice. "Are You Paying Your Bills Twice?" explores the whole issue of duplicate payment, including the story of how NASA paid a contractor twice because a clerk typed a letter O instead of a zero. A second report, "Your Duplicate Payment Strategy", proposes an overall strategy and specific tactics to combat the problem.

Both reports are available free from www.conroyautomation.com