The role that Chief Accounting Officers (CAOs) hold today has evolved from simply closing the books and checking for compliance issues. They now also act as strategic advisors, managing costs while balancing risks and operational efficiency. One of the areas that has gained attention from CAOs is accounts payable (AP). It has now become known how error-ridden AP systems can be.
Overpayments and duplicate invoices can raise reputational and compliance issues. This can result in significant profit and loss as well. With high volumes of transactions, especially in retail, many leaders are exploring retail AP recovery solutions as part of their strategy.
To help solve this issue, there are two widely used methods - Recovery Audits and Continuous Monitoring. Each method has the same goal of reinforcing financial controls, but there is one question CAOs are faced with: Is the money spent going to bring a short-term profit or a long-term profit?
What is a Recovery Audit?
A recovery audit is a formal examination of historical accounts payable transactions, which are intended to reveal hidden financial leakages missed in normal operations. These include overpayments, duplicate invoices, missed discounts, and supplier discrepancies. Once identified, these funds can usually be recovered from suppliers in a realizable financial return.
For CAOs, the attraction of an AP recovery audit is its unambiguous, tangible effect. It produces fast results without demanding significant alterations to current processes and systems. In sectors such as retail—where volumes are high and vendor networks are complicated—Retail AP recovery solutions can bring considerable sums back to the bottom line.
Example
A major retailer with thousands of vendors conducted a recovery audit, discovering $2.5 million in duplicate payments and vendor credits. The money was recovered in months, and the audit also identified deficiencies in the vendor setup process. Although this did not prevent subsequent errors, it provided the CAO with a financial victory as well as a guide to process improvement.
What is Continuous Monitoring?
Continuous monitoring has a different premise. Rather than cast a backward glance, it deals with real-time viewing of accounts payable activity as it happens. Utilizing automation, sophisticated analytics, and rule-based notification, continuous monitoring systems alert on out-of-pattern behavior—e.g., duplicate invoices, unauthorized suppliers, or aberrant payment patterns—before funds leave the company.
This forward-looking model presents CAOs with important benefits. It minimizes dependence on manual checking, increases transparency throughout the payment cycle, and increases compliance with regulatory mandates. Continuous monitoring not only avoids financial loss but also gains trust from suppliers and regulators by proving effective internal controls.
Example
A multinational consumer goods corporation used continuous monitoring and detected a $750,000 duplicate invoice before payment. The system also alerted to an unauthorized vendor entry, which was a fraudulent attempt, preventing both saved not only money but also reputation of the company.
The compromise is simple: investment and integration. Continuous monitoring generally requires more initial effort up front, including technology implementation, process reengineering, and finance team training. But for CAOs who see themselves as both risk manager and strategic advisor, the long-term value—error avoidance, productivity improvements, and reputation protection—usually dwarfs the upfront expense.
Why the Choice Matters for CAOs
For Chief Accounting Officers, the decision between recovery audits and continuous monitoring is more than a technical choice—it’s a leadership call. CAOs today are expected to ensure accuracy, protect profitability, strengthen compliance, and create value for the business.
Cash flow priorities – If the company needs to address improving liquidity urgently, recovery audits can provide instant results by recovering lost cash. Alternatively, suppose the priority is to create persistent cost savings over the long term. In that case, ongoing monitoring avoids losses from happening in the first place, allowing CAOs to have more consistent control over cash flow.
Regulatory climate – As regulators increasingly scrutinize data security and financial reporting accuracy, proactive monitoring may better meet regulators' expectations. Monitoring on an ongoing basis affirms strong governance, whereas recovery audits, though beneficial, might not appease regulators who want controls in place to prevent breaches.
Operational capacity – Lean finance organizations, in some cases, can find it difficult to interpret and deal with continuous monitoring outputs. Recovery audit outsourced to experienced providers might be more feasible. For firms with better resources and digital maturity, there is an opportunity to link continuous monitoring perfectly to everyday workflows.
Strategic objectives – If the company perceives AP as a back-office cost center, then recovery audits can be a tactical solution. Yet for CAOs seeking to position AP as a source of intelligence and competitive edge, ongoing monitoring offers greater insights into supplier habits, process snags, and risk patterns. This transformation makes the CAO a more forward-thinking leader and not merely a compliance caretaker.
Finally, the decision is not just about error correction. It's about what type of finance organization the CAO desires to create—reactive and effective, or proactive and strategically astute.
The Benefits of Recovery Audits for CAOs
Recovery audits offer several obvious benefits to CAOs who are tasked with producing quick, noticeable results. They are particularly useful for leadership seeking quantifiable results without requiring lengthy implementation cycles or significant technical investments.
Quick wins
By recovering money that would have been lost otherwise, recovery audits offer instant financial gains. The return on investment is quite alluring because the cost of conducting the audit is frequently a small portion of the money recovered. This provides a simple method for CAOs who are under pressure to show value rapidly to improve bottom-line performance.
Practical thoughts
Recovery audits reveal the underlying reasons for payment problems in addition to the recovered funds. They draw attention to issues like inadequate employee training, shoddy approval workflows, or antiquated systems. These results lessen the possibility of recurrent errors by providing CAOs with useful information to direct future process enhancements.
Vendor accountability
Recovery audits also make supplier relationships more transparent. CAOs can resolve disagreements in a fact-based way by locating and elucidating contested payments. In addition to enhancing vendor trust, this positions the finance staff as an equitable and conscientious collaborator.
What CAOs Appreciate Reading Other Than Numbers
Unlike other executives, CAOs approach decisions with process improvement in mind, but also within the context of leadership and strategy. Other than the highly technical, these are some of the other accompanying considerations CAOs ponder as they deliberate on the value of recovery audits against monitoring:
Team Development - CAOs appreciate solutions that improve their teams and go beyond efficiency. Employees should be freed from monotonous work by automation so they may concentrate on higher-value pursuits like analysis, teamwork, and creativity. This change boosts team morale and professional development in addition to increasing production.
Leadership Vertical - It's critical to show value to the board, CFO, and other stakeholders. CAOs wish to explain in detail how their projects produce quantifiable return on investment. This puts them in a position to be strategic leaders whose choices have a direct impact on the performance of the company, in addition to being financial stewards.
Risk Culture - CAOs understand that their responsibilities go beyond ensuring compliance. Their goal is to create a culture in which control and responsibility are ingrained in routine procedures. Finance executives may persuade the company to view risk management as a shared duty rather than a back-office task. This would be done by implementing robust governance procedures, establishing clear standards, and employing technology to proactively identify risks.
Career Development - Aspiring CAOs frequently view their role as a springboard to become a CFO. They seek out activities that show strategic effect, such as driving digital transformation, leading cross-functional projects, and connecting financial insights to business growth. CAOs establish themselves as logical successors to the CFO position by demonstrating their capacity to strike a balance between financial rigor and forward-thinking leadership.
Conclusion
The choice between recovery audits and continuous monitoring goes beyond technology. It’s about investments, vision, the capability of the teams, and the broader objectives of the business. By adopting a balanced approach that integrates short-term recovery with sustainable long-term prevention, CAOs can create immediate and long-term financial impact.
Whether it's achieving short-term gains or establishing long-term resilience, as a Chief Accounting Officer, you are aware that every choice you make about AP directly represents your leadership. Helping finance professionals find hidden value while enhancing compliance and trust in their accounting procedures is our specialty at Discover Dollar.
Our customized solutions provide the flexibility to accomplish both your quick returns from an AP recovery audit and the long-term management of ongoing monitoring. So, let's get in touch and help you balance prevention and recovery to increase your influence as a financial leader.