What is an Accounts Payable Recovery Audit? 

 

Mr. Schor: Quite simply, it is a review of your accounts payable historical data which will identify erroneous overpayments and under-deductions made to your suppliers. The areas of recovery include duplicate or wrong payments, open/unapplied supplier credits, payment term opportunities, unrecorded accruals/rebates/allowances, pricing errors, transportation overbilling, escheatment avoidance, real estate lease overbilling and additional areas of the overall business.

 

Why should my company conduct an accounts payable recovery audit? We already have great controls, people and systems. 

 

Mr. Schor:  Respectfully, no system or individuals operating within your procure-to-payment cycle are 100% error free. My family throughout our 50 years in this business can safely say that, "No system is perfect as it is part of the overall business." Do not be afraid to engage in an Recovery Audit! The opportunity to circumvent or exploit internal financial or buying control systems will always exist in every retailer or wholesaler around the country. Communication between vendors, brokers, procurement, receiving and accounts payable is effective most of the time, but not all of the time. While your systems are designed for the efficient payment of invoices, in an environment with a large volume of transactions, a small percentage of leakage inevitably occurs. These dollars can add up to a significant amount and represents pure lost profit when it can be recovered and recorded as a PROFIT. 

 

So what does an accounts payable recovery audit entail, and what are the costs? 

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Mr. Schor: It really is a simple and painless process. The best part is that there is a 100% contingency fee based solely on our findings which means there is NO COST until you actually receive economic benefit for any realized recovery. The review is a backward look at historical supplier spend utilizing a comprehensive audit process and proprietary software, and thus does not interfere with your day-to-day activities. The involvement of client staff is minimal and data collection is a simple dump of certain files. No special programming is required. Supplier communication, chargeback creation and collection are handled by CJ Audit. 

 

What should I expect from an audit? 

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Mr. Schor: The audit will identify and recapture lost profits due to errors within your procure-to-payment environment. On average, recoveries can range from .05% to .1% of revenue, or $500 thousand to $1 million for firms with $1 billion in revenue. Additionally, the review will identify systemic or procedural weaknesses and make recommendations for business process improvements.

 

So... what am I missing? 

 

Mr. Schor: Nothing. The engagement is a 100% contingency fee based and requires minimal time to support the review. It is a collaborative effort that maintains confidentiality of sensitive information and respect for your vendor/broker relationships. Some believe the true benefit of the recovery audit process is the recommendations within professional management report that is delivered at the conclusion of the yearly, which includes details of the findings, audit opportunities and additional recommendations on how to avoid future problems.  An accounts payable recovery audit is a recommended best practice for most major corporations within the Supermarket Industry.