Unlocking the door to big savings and powerful insights
The Hidden Gateway to Unimagined Savings and Insight
Finance departments aren’t what they used to be. No longer languishing behind other business functions in terms of perceived dynamism, finance is taking its rightful place at the very heart of business transformation, thanks to digital technology and big data. And these advancements are also turbo-boosting the humble recovery audit; helping finance teams unlock the door to big savings and powerful insight. Proactive CFOs are embracing this development and reaping impressive results. So, is it time you viewed auditing in a new light?
How you approach the recovery audit process can make a world of difference. It’s easy to see auditing as a ‘necessary evil’ but, done in the right way, it can be an innovative tool, offering a host of benefits to your business and making finance team members the heroes of the day. Here’s are just a few examples of what extraordinary auditing can do…
Boost the Bottom Line
With finance departments delivering a wider remit than ever and supply chains becoming more complex, there is a greater risk of errors being made and profits leaking as a result.
An estimated 88% of spreadsheets contain errors, and incorrect invoices are a frequent occurrence. In any organisation, these mistakes can happen but in large, multi-faceted companies they may occur many times over, if not identified and stopped.
In basic terms, recovery audits gather and analyse supplier invoice and payment data to identify where such errors have taken place and seek to recover any funds lost or outstanding as a consequence.
By bringing in external recovery audit support, to complement your in-house team and provide additional resource and technology, errors can be flagged, and savings locked down quickly and efficiently.
Amongst the most common types of issue that Barcanet unearths during client recovery audits are missed or incorrect allowances and rebates, pricing errors and overpayments, and duplicate payments. Identifying and pursuing monies lost through these inevitable mistakes can result in large amounts being recovered.
On average, for example, we recover £250-£500k for client organisations, with the average recovery per error being £4k. To date, the most we have recovered for a single client is £1.9m, and that amount is increasing all of the time.
Limit Future Risk
Recovery audits have moved on from being purely retrospective. Now they have the power to stem capital seepage and limit future risk. Once issues have been highlighted, procedures can be put in place – process automation, for instance – to ensure they don't happen again.
So, a recovery audit has value far beyond a simple cash recovery exercise. It drives long-term efficiency, creating a positive ripple-effect. And the data it uncovers is even more valuable still.
Mine and Collate a Wealth of Data
By gathering financial data from disparate sources across the business and collating it all in one place, a recovery audit creates a deep seam of information to be mined.
Leveraging this data by applying advanced analytics, AI and subject matter expertise to it, enables you to surface insights that can address your key business challenges and inform your day-to-day decision making.
There is huge potential in this data to support good decisions, through historic and predictive analytics. And this might encompass decisions and policy on anything from carbon efficiency, to procurement and training.
Strengthen Supplier Relations
It's natural to be concerned that the recovery audit process could damage supplier relationships but, approached in a sensitive manner, it can actually enhance supply chain links through greater clarity and mutual efficiency.
The detailed spending data revealed through the audit process can be shared with suppliers, in order that they can adapt and strengthen their own processes. Where a supplier has been in receipt of overpayments, unintentionally, they will be keen to know how and where this has happened, to avoid it taking place again. The important thing here is to work with suppliers, rather than against them.
Put Your Team In Charge
A successful recovery audit shouldn't be about finger-pointing. It should be about equipping your finance team with the ability to catalyse business transformation. Far from being a witch hunt, the process should involve members of in-house team working
alongside external auditors to trouble-shoot, and add value. The correct approach should result in a finance team being given the data and automated tools it needs to drive change and improve business performance.
Market-leading businesses across the UK are switching on to the hidden potential of recovery audits. Now is a good time to look at them with fresh eyes – check out our recovery audit product - or risk being left behind.
To talk to us about any of the information in this blog, please contact email@example.com. We’d love to hear from you.
Ian Yates – Director, Barcanet