Earlier this year, Lavante Recovery+ recovered an over $300,000 credit for our client, a leading healthcare provider. The story of how this credit was identified and recovered is a testament to the effectiveness of an ongoing, continuous audit that leverages technology to update supplier contact details through an extensive supplier network all while providing real time visibility into the relevant supplier communications and audit details.
Here’s how it happened. In late 2009, a statement was received from a vendor showing little activity and no credits. A few months later, as a part of the periodic supplier statement refresh process, Lavante requested updated information from this vendor. At first, the vendor did not respond and the credit, created only two months after the last statement was received at Lavante, went unnoticed. Luckily for this healthcare provider, however, Lavante’s communications with the supplier didn’t stop there. When subsequent automated requests went unanswered, they were followed up with phone calls to obtain updated information, a process which was accelerated because several key pieces of contact information (phone number and fax number) were updated automatically through Lavante Supplier Network™. Once the statement was received from the supplier and processed through Lavante”s automated Fax to OCR technology, the credit was quickly identified. Immediately, follow up began as Lavante’s experienced audit specialist went to work to contact the vendor and verify the claim. In subsequent discussions with the vendor, she discovered that the credit was generated when the healthcare company cancelled an already paid-for project and the money was left on the books and overlooked. The vendor told the auditor that they would be willing to issue a refund check to clear the item. For nearly two and a half years, the vendor was just waiting for someone to claim this money and was glad when they were able to properly close the transaction.
In this example, over 7,000 suppliers have been updated, which equals over 60% of the suppliers contacted.
Successful credit recoveries after communications between the buyer and the supplier have ceased depends on access to up-to-date supplier contact information. This credit had been aging undetected for over two years, and without updated records that could drive successful outreach, this large credit could have eventually been lost forever. Mary Schaeffer, Editor & Publisher of AP Now and Tomorrow, speaks to this danger in the whitepaper, The Case of the Disappearing Credits , in which she exposes the potential for companies to permanently lose vendor credits if an ongoing, comprehensive statement audit is not practiced. The paper reinforces the lessons learned with this large credit recovery that a continuous recovery methodology is critical to a successful statement audit. With such an effort, companies realize on-going dollars to the bottom line coupled with the reassurance that no vendor credit goes unnoticed and unclaimed. Furthermore, it is critical that vendor outreach is part of the Accounts Payable process to ensure credits are identified accurately and on a timely basis.
Another part of this recovery process is giving the user full visibility into the audit process – in real time. As shown in the Figure 2 below, the Lavante Recovery+ user had full access to all related documents, including the credit verification and check request forms, through an automated workflow interface. The Lavante auditor was able to coordinate all efforts via this same portal, and the refund was delivered in less than 30 days after it was first identified.
Figure 2: Users can quickly review and process credits online through the Lavante Recovery+ application interface, which provides click-through access to all back-up documents.
Needless to say, the healthcare provider was delighted with the results, and saw yet another benefit from an ongoing recovery process instead of using more infrequent project-oriented audits. They stated they would have been impressed with a $30,000 credit, but were absolutely amazed that a credit over ten times as large had gone undetected by normal AP controls and was quickly resolved by Lavante.
As Mary Schaeffer finds in The Case of the Disappearing Credits, “…an ongoing process means the maximum credit dollars can be recovered in a timely basis.” The very real impact of a continuous recovery process detailed in this example reinforces the critical components a recovery solution must contain in order to drive this level of results, which include: including the ability to:
- • Perform ongoing outreach to the breadth of the supplier base;
- • Leverage an expansive supplier network;
- • Provide real-time access to the entire audit process through an on-demand web portal;
- • Include an experienced audit team that can see claims through to the end.
A more traditional audit project simply does not have the capability and software to execute this level of success. Lavante’s process ensures statements are received, credits identified, and accurate results are delivered to customers on a regular basis. I welcome your feedback about this process and learn more about how you are working to resolve unclaimed credits at your company.
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Added note. Jeff recently joined Lavante as a Sr. Consultant, coming to Lavante after his position as Director of AP at Rite Aid. Click here to learn more about Jeff’s experience in the AP industry.
