Accounting errors are a part of life, but they can have a devastating effect on your business. They come in many diverse forms, some of which are more noticeable than others. One of the most common forms, duplicate payments, tend to be down to simple invoicing error or fraud. These alone are thought to account for one in every thousand payments. These all add up, particularly if your business is dealing with large volumes of payments for small amounts of money. An accounts payable audit can turn up problems that you might have assumed your present accounting software would have caught – but frequently doesn’t. The reason for this is that invoices are typically quite complex, containing maybe ten or twelve different fields. It is a simple matter to introduce an error – intentionally or accidentally – which your accounting software will miss, resulting in an extra payment. Recovery audit software is intended to comb through your historic accounts and identify all of the occasions when this, or another mistaken payment, has been processed.
The results can be staggering, especially for larger organisations. If 0.1 percent of payments are mistakes – a figure which is generally accepted by the industry – then even medium-sized businesses can be losing tens or hundreds of thousands of pounds per year. Consequently, buying recovery audit software can pay for itself the very first time you use it.
Moreover, there is a shelf-life on reclaiming those extra payments. Suppliers go out of business, making it impossible to demand your money back. In cases of fraud, that could entail legal expenses without any realistic prospect of a pay-out at the end. This is something no company would realistically countenance, meaning that there is no option but to let the offence go and the criminal walk free.
If recovery audit software allows you to clean up past mistakes, an accounts payable audit ensures that these errors will not happen again. There is a lot to be said for peace of mind at a time when uncertainty is running high thanks to the wider economic situation and the European background. If duplicate payments and other accounting errors can be removed, that is one fewer thing to worry about. When businesses are running close to the wire and reserves are low, every little helps – and you might be surprised to find out just how much you could be saving.
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