6 Key Steps for a Successful Accounts Payable Recovery Audit

Efficient accounts payable (AP) management is crucial for any healthcare system’s financial health. Yet, many healthcare systems face challenges related to duplicate payments, vendor overpayments, and unclaimed credits. Conducting an AP recovery audit can help organizations identify and recover these funds, ultimately improving their bottom line. Here are six key steps for a successful AP recovery audit.

Step 1: Define Your Objectives

Before embarking on an accounts payable recovery audit, it’s essential to clearly define your objectives. What do you hope to achieve through this audit? Common goals include identifying and recovering overpayments, eliminating duplicate payments, and ensuring compliance with vendor contracts. Understanding your objectives will help guide the audit process and measure its success.

 

Step 2: Choose Your Audit Firm

Selecting the right AP recovery audit firm is a critical decision that requires careful consideration. It’s imperative to choose an accounts payable recovery audit firm with in-depth understanding of the healthcare sector with a proven track record of working exclusively in healthcare and a network of contacts within industry vendors.

The cornerstone to a successful AP recovery audit is clear communication between the auditors and your company. Communication between all parties fosters transparency and eliminates the likelihood of duplicating work efforts with vendors, your auditors, and your accounts payable team.

 

Step 3: Gather Data

Data is the lifeblood of any audit. Accounts payable recovery audit firms will gather all relevant AP data, including invoices, payment records, vendor contracts, and any other documents that may be pertinent to your audit objectives. Auditors with access to invoices are able to conduct a more non-intrusive accounts payable audit because they can validate transactions without burdening your internal accounts payable staff.

During this step, your AP auditors should analyze all of your internal accounting data rather than relying solely on vendor statements to ensure all payments are logged, including those that may not appear on vendor account statements. This step can be time-consuming, but it’s crucial for the audit’s accuracy and effectiveness.

 

Step 4: Let Your AP Audit Firm Analyze the Data

Once you and your chosen accounts payable audit firm has gathered all the necessary data, it’s time for your audit firm to analyze it. Auditors who take a holistic approach to the P2P cycle by reviewing the data for pricing variability, missing credits for returned products, rebates earned but not paid and trade-in allowances not honored can maximize the amount of money they recover for your organization.

Advanced data analytics tools can be incredibly helpful in identifying irregularities, such as duplicate payments, overpayments, and vendor discrepancies. Using our specialized software and exclusive audit methodology, we deliver the proper combination of technological resources and experienced-based intellectual know-how.

 

Step 5: Communicate With Vendors

Effective communication with vendors is key during an AP recovery audit. Vendors do not always respond to the first, second or third inquiry for overpayments. Auditors need to be respectfully diligent in their efforts to obtain information while respecting the existing relationships between your company and each of your vendors. Auditors who prioritize establishing collaborative relationships can deliver a more successful recovery process.

 

Step 6: Implement Process Improvements

The final step in a successful AP recovery audit is to implement process improvements. Based on the findings of your accounts payable recovery audit, develop and implement strategies to prevent future discrepancies and errors. This may involve updating internal controls, revising AP policies and procedures, or enhancing vendor management practices.

We provide valuable web-based expenditure reporting that promotes long-term cost reduction, evaluates supplier terms, provides performance metrics, and presents the opportunity for continuous improvement.

 

Conducting an AP recovery audit can be a valuable exercise for organizations looking to improve their financial health. By following these six key steps – defining objectives, assembling the right team, gathering and analyzing data, communicating with vendors, and implementing process improvements – you can maximize the benefits of your audit. Recovering overpayments, eliminating duplicate payments, and ensuring compliance with vendor contracts will ultimately contribute to a more efficient and financially sound AP department for your healthcare system.

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