Are you losing money without even knowing it? Every year, businesses lose millions of dollars through payment errors that occur in their payment systems. What if you could recover that lost revenue while improving your financial revenue processes?
Welcome to AP Recovery Audits. You can choose a manual approach or use AI attention to analyze differences, helping your business save significant money. Determine which suits your organization better.
What is an AP Recovery Audit?
An AP recovery audit examines the history of payments your business or company has made. This covers areas such as lost discounts, duplicate invoices, and even overpayments. This is a healthcare exercise to check whether your cash flow has any hidden leaks and whether any repairs can be made to the business payments structure.
AP recovery audits in the industry recover approximately 1M for every 1B in supplier spend. That is a lot of business money for a relatively small investment. Furthermore, companies lose 23% of potential audit recoveries for every year they don't perform an audit. This shows the importance of an audit.
The Manual Approach
As a result of a manual approach to recovery audits, auditors examine your accounts payable records, line by line, to recover payments. This method has been the classic approach for decades. Here’s how it works:
The Process
The auditors analyze your documents: invoices, purchase orders, and contracts. This may take weeks or even months as each document is painstakingly examined for pricing discrepancies, duplicate payments, and other unclaimed credits. Issues are reported, and the auditors assume the recovery role by communicating with your vendors to get the funds
Advantages of Manual Audits
Very experienced human resources professionals are a real asset to this approach, as they understand and become familiar with the complex vendor relationships and can negotiate as needed. They understand the complex relationships between vendors and customers, and identify exceptions and unusual situations when audits do not conform to standard models.
Limitations you should know
Time is the most significant drawback of this manual audit method. The auditors can only analyze a 1-3-year range of payment history. Accounts payable specialists are estimated to handle almost 6,500 manual invoices each year, leading to many errors.
Large datasets can reveal intricate patterns, leading human reviewers to overlook subtle discrepancies. As a result, the reviewing process tends to become costly, primarily due to time-consuming, skilled labor. In manual audits, time delays become a critical issue. Months can go by, and your company potentially loses the opportunity to reclaim working capital.
The AI Revolution
An example of a modern solution for recovery audits is AI-powered systems. These systems can leverage machine learning to evaluate millions of transactions rapidly. In recovery audits, AI advances efficiency in ways we have never seen before.
How AI Works
AI recovery audit software integrates with your accounting systems and automates scans to complete payment history evaluations. This software goes beyond simply automating tasks; it can identify patterns that even experienced auditors can miss and highlight discrepancies. Most importantly, it prioritizes tasks and risky anomalies. As a result, many accounts payable teams have determined analytics and audit reporting as their primary focus. This is the result of a rapid technological advancement within their practices.
Key Advantages
Increased speed becomes the most evident case of process automation. The time lost is a critical opportunity cost; in the case of working capital, it is cash flow. AI systems can assess 100 percent of all transactions. In contrast, manual audits assess only a small portion. Those proficient in AI save much more time: 71 percent more time, in fact, which equates to almost seven weeks of work for each employee.
AI significantly improves the accuracy of the work. Unlike humans, AI systems do not get tired over time, ensuring consistent execution of the rules and guidelines applicable to each transaction. AI improves with experience, learning from previous audits and transactions, thereby enhancing its capabilities over time.
Side-by-Side Comparison
In this section, we will directly compare different methods in various categories:
1. Speed and Efficiency
The typical completion timeframe for manual audits is 3 to 6 months. By contrast, AI solutions produce results in a matter of days or weeks. Given the urgency of cash flow, these time differences are vital for decision-making.
2. Coverage and Depth
Manual auditors tend to review a sample of the documents. AI, on the other hand, reviews every transaction in your archival documents. This thoroughness will identify and uncover problems that sampling may overlook.
3. Accuracy and Consistency
Human judges can have their sparing moments of brilliance, but that doesn't account for the inevitable. Performance is dramatically affected by fatigue, and AI will consistently deliver unwavering consistency at every level.
4. Cost Structure
In manual audits, the costs are upfront via a fixed fee or hourly billing. With AI solutions, costs are mainly dependent on the solution's output, and you will only be charged for payments that have been successfully collected.
5. Scalability
The manual audit process is not only time-consuming but also costly as your business grows. AI, however, can scale seamlessly and handle increased transaction volumes at no extra cost.
Which Approach Is Best for Your Business?
Multiple factors help determine the most appropriate approach for your business.
Select Manual Audits Where:
- Business transactions for your company are infrequent.
- You need niche, highly specialized knowledge for your industry.
- Interpersonal relationships with your vendors require attention.
- You enjoy the conventional approach, and time is not of the essence.
Select AI-Driven Solutions Where:
- Your business transactions exceed thousands every month.
- You need instant results with quicker cash flow.
- You require monitoring to manage future risks proactively.
- You desire total transactional oversight.
Conclusion: Making the Right Choice for Your Business
The question of whether to use manual or AI to drive AP recovery audits is not about right or wrong, but about alignment and the best fit for the organization's size, structure, and objectives.
Discover Dollar leverages advanced AI to deliver unique value. Our AI platform reviews all your business transactions to uncover errors and missed recovery opportunities.
We have worked with Fortune 500 companies, and they have achieved a minimum 4x ROI, along with millions in lost revenue recovered. Our integration ensures smooth operation during the revision of your systems.
Take control of hidden payment errors that cost you a profit every single day. Reach out to Discover Dollar to get a free consultation. We will show you how much money you can recover within your accounts payable system.