Lavante Recovery is the industry’s premier statement audit product.  The Lavante Recovery application and services are built on the industry’s most powerful platform for communicating with suppliers, collecting AR data, discovering credits and delivering recoveries to clients.  Lavante Recovery targets the entire addressable supplier population without bias and commonly achieves compliance rates above 90%.  It is systematically impossible for any other competitive statement audit process to out-recover Lavante’s process.

Lavante’s outreach includes initial and ongoing requests for AR data as well as follow up requests for non-compliant suppliers.  Follow-up requests alternate by email, fax, mail and phone to maximize exposure and response rates.   Lavante electronically archives all incoming documentation and data per supplier per client for retrieval at any time. Dedicated auditors review all documents for potential credits and communicate directly with the supplier to secure written verification of all claims.  Recoveries are delivered to clients via an on-demand application in weekly batches accompanied by supporting documents and communication detail.

Based on ten years of benchmarking, Lavante has determined that 61% of credit-generating suppliers are distributed throughout the lower 80% of a company’s addressable vendor master file.  Through their expansive review, Lavante delivers clients between $600,000 and $900,000 per every $1 Billion audited.  In addition, Lavante delivers a complete suite of supplier reports and best practice recommendations for vendor file management.

A statement audit, done correctly, should include a review of all addressable suppliers and will uncover 10–20 times the statement audit claims of a traditional recovery audit.  A specialized statement audit firm focuses their attention on nuances of the vendor master file as well as the AR records of the individual supplier.  A proper statement audit includes a thorough review of supplier relationships and should also provide some mechanism for patching the missing and/or inaccurate data that commonly plagues a company’s supplier records. 

Specialized statement audit firms must perform two-way communications with a massive volume of companies and should demonstrate an automated method for soliciting, tracking, re-soliciting (if necessary), collecting, archiving, retrieving, and performing workflow for supplier AR records.  An ideal system will also include consideration for leveraging many different forms of outreach (email, phone, fax & mail) to maximize compliance. 

Considering the communication and work flow demands of a proper statement audit, it is understandable why traditional firms cannot perform the large scale review.  Traditional methods for reviewing client-side data simply do not translate into a successful statement audit.   Only a firm specializing in statement auditing should perform the review.

The Short Answer:

It takes very little of your time or resources to support a Lavante recovery audit.  All you need do is send a basic vendor file and dedicate one employee for typically an hour per week.

How is this possible?

To begin an audit: Lavante can get started working from a data file that in many instances requires less than an hour for clients to generate. AP typically can create the data file Lavante needs and client IT does not need to get involved.  This is all that’s required for a full recovery audit.

To support an ongoing audit: Clients working with Lavante typically require less than one hour per week to receive and upload verified claims and vendor file updates into their system. No onsite Lavante personnel are ever needed to support the effort.

Clients who wish to save additional time can work with their Lavante Account Manager to integrate claims directly into their ERP system.  Lavante will automatically match claims against an internal credit listing, thus pre-checking the credits and enabling clients to upload credits directly as ledger entries with no manual intervention.

Lavante InSight™

For companies concerned about the time commitment or skeptical of the potential benefits of performing a recovery audit, Lavante offers a way for clients to test and sample the service before fully engaging. 

Lavante InSight™ gives you a view of the recovery audit you might have. It generates an estimate of the likely cash recoveries and vendor updates you will receive if you choose to engage in a Lavante Strategic Recovery audit. Utilizing your master vendor file, InSight leverages Lavante’s extensive database of historical audit detail, a proprietary, on-demand software application and our Supplier Network of over two million companies to develop a comprehensive vendor and recovery analysis. InSight previews potential cash recoveries, duplicate and related vendors, recovery projections over time, vendor updates, and more.

Every industry has its fair share of reports, surveys, data points, and sound bites.  The Profit Recovery industry is no different.  In the last few years we have performed quite a bit of analysis and benchmarking to uncovered some compelling data  about recovering credits from your vendors and suppliers.

From a survey of over 100 clients and prospects we have discovered that most traditional recovery providers sample only the top 5-20% of your vendor population when reviewing vendor-side credits?  Our survey elaborates (based on feed back from AP professionals) that without the aid of a communication compliance engine (Lavante is the only firm with such an app.)  traditional statement audit reviews, whether they are done by third party firms or by internal efforts simply cannot support indepth vendor penetration with manual methods and cap out at 20%. 

Our vendor credit recovery benchmarking demonstrates that 61% of vendor credit opportunity resides in the lower 80% of your vendor file.  To put it another way, traditional manual methods, will find, at most, 39% of credits available to you.

Another fact you may not be aware of is that 37% of vendor-side claims come from product returns.  This category is by far the largest we are tracking.  And it has huge implications not only to the existing process you have for returns transactions, but also on where your profit recovery audits should focus.  In contrast, we’ve found that only 9% of vendor-side claims are the result of duplicate payments.  Keep in mind that hese numbers vary depending on industry.   

Some other interesting metrics indicate that the average claim amount from a vendor credit recovery review is $817.  (with a range of about $400-$1200)  We have also discovered that the actual recovery potential for vendor credit recovery is $600,000 -$900,000 per $1Billion in addressable spend volume. Although we are the only recovery provider to project recoveries below the typical industry benchmark ($1M per $1B in spend) we feel confident that this carefully calculated metric passes both the scientific test and a gut test as well.  When we approach new prospects and we explain that depending on their industry they stand to recovery within this range that data is always well received based on what they have actually seen from other firms and not what they have been promised.

Based on our discoveries, we have also determined that for every month you do not perform an in depth automated vendor credit review you risk  losing $63,000 per billion dollars of spend with no chance of recovering it.  While $63,000 may not be a huge amount for you, if you spend multiple billions of dollars, and delay just a quarter’s time, that $63,000 figure becomes a large sum of money.

If you have any more questions about our benchmarking survey please join the conversation…

The Short Answer

You may not be aware of it, but credits age and disappear over time. Once gone, they can’t be recovered. Our results show that delaying Lavante’s review could cost your company $62,500 per month for every billion dollars of your annualized spend. That’s for every month you delay. 

Why?

Lavante’s core product focuses on the AR balances of your vendors and discovers credits that you didn’t even know existed.  However, vendors are constantly reconciling and cleaning their AR records.  Unapplied credits have a “shelf-life:” as they age and go unclaimed, they’re applied by the vendor to offset unrelated disputed invoices or unearned discounts, or eventually written-off.  Unlike client AP records, there often isn’t a historic database that preserves ledger entries after they have been removed.  Thus, if a vendor removes a credit from their AR record, then it’s usually lost with no possibility of recovery. 

Lavante’s exhaustive benchmarking metrics point to a number of reasons why it is vital to begin the review immediately. 

• Based on over a million data points, Lavante research suggests that after an open credit has aged over 90 days, you have less than a 20% chance of recovering that credit without third party intervention.  This subset of credits that age beyond 90 days accounts for potentially millions of dollars on an annual basis and should be part of your existing standards for managing working capital.
• Lavante recovers for clients a consistent range of between $600,000 and $900,000 per every billion dollars in addressable spend. If not audited, this is the amount lost annually (see the figure below) due to vendor aging activity. This recovery history suggests that every month you delay reviewing these dynamic vendor records, you stand to lose $63,000 per billion dollars you spend (1/12^th or 8% of your potential annual recovery opportunity).  

A thought occurred… it is very common for associations to sponsor events where a large volume of workshops are presented for pure peer-to-peer education purposes.  Sadly these presentations are one-time events, but the value they present is relevant for many months or years beyond the show at which they are featured.  I think folks in the AP field that are looking for answers and resources to help solve business problems can  rely on large associations.  Any person looking for material need only call into their preferred association and ask for the person that oversees education for the association and you will likely be connected with the person that oversees workshops, panel discussions and presentations.  That person will be connected to a number of professionals with very insightful things to say about nearly unlimited business issues.  In addition, that person will also know what the feedback is like about the speakers and can point you in the right direction.

Even if you do not attend national or regional events and you have not been exposed to peer-to-peer educational seminars you are still only a couple phone calls away from someone who has not only accomplished what you are attempting to do at work, they have become an expert on the subject and they are now trying to educate others.    Just remember that when you become the expert to return the favor.

The Short Answer

The Lavante Profit Recovery product is complementary to alternative recovery solutions.  Whether you are currently engaged with another provider, wrapping up an engagement, or planning to engage in the near future, Lavante’s unique offering is effective alongside a competitive firm or as a standalone engagement. The result in either case will be increased overall cash recoveries.

Why?

Traditional recovery audit firms specialize in client-side AP auditing.  The techniques needed to perform AP auditing are not the same as those needed to perform two-way communications with a virtually unlimited number of vendors.  When it comes to vendor contacts, traditional AP audit firms offer a cursory review at best and focus on a small subset of vendors.  Lavante does encounter instances when a client’s existing vendor review is contributing to the overall recovery effort, but in every instance where Lavante has been awarded the engagement, the vendor-side recovery dollar total has increased by a multiple while adding a comprehensive vendor file management component.

Lavante has the ability to penetrate much more deeply into a client’s vendor base due to three main factors.

1)      Our Proprietary Communication Application:  Lavante has developed a proprietary software application to perform automated, ongoing communication with virtually an unlimited number of your vendors.  Sophisticated tracking and workflow adjusts the communications process based on responders and non-responders, helping drive compliance from the largest proportion of vendors possible.

2)      The Lavante Supplier Network:  Lavante has built and maintains a supplier network that is leveraged constantly to help update client vendor records and pursue communication with non-respondents.

3)      Vendor File Management Services:  Lavante staffs every engagement with a team of experts to review vendor documents and facilitate communication efforts with vendors.  ’What’s more, our vendor analytics software helps spot vendor relationships that are not otherwise obvious. By combining automation with persistent and experienced auditors, vendor compliance rises dramatically. 

Because no other company in the industry has the same vendor focus and reach that Lavante does, it’s possible to work alongside an existing audit firm with little overlap. Overall, audit recoveries will rise dramatically as a result. Of course, Lavante can also perform the complete audit and totally replace another audit firm’s efforts.

When I was young on Easter morning my parents used to hide plastic eggs around the house with little surprises in them. Some eggs had candy. Some eggs contained dental floss in them (I didn’t care for those eggs so much) and some eggs contained money. (I liked those eggs the most)   As the youngest of four siblings by a couple years there were a few years when I was the only child still taking part in the hunt. The older kids had given up the hunt in favor of helping my folks prepare and hide the eggs. And boy did they get into it.  They hid more eggs in more ridiculous locations, but keep in mind that meant more money… and it was all mine.  I simply had to find it, and that was no small order.  I was now one person in search of four dozen eggs spread across the entire house. I remember one year in particular when I had searched for almost ten minutes and discovered only a single egg.   So… what did I do?

A) Look in a few obvious places find a small number of eggs and quit

B) Diligently go through the entire house and locate all of the eggs 

The same multiple choice can be applied to how you want your profit recovery audit firm to approach recovery. When the decision is about maximizing your cash flow recapture how can anyone settle on sampling as opposed to a steady and thorough approach. Every room, every corner counts.

If the moral of the story is not clear, traditonal AP recovery practices sampling, especially when reviewing vendor and supplier AR records.  Lavante has built a proprietary soaftware application that communicates with your entire population of vendors and maximizes recoveries for clients of all sizes across all industries.  That will buy your AP department a lot of chocolate eggs.

Happy Easter Everybody!

Our own website will soon grow to include many of the things that Rich is doing for consumers.  For now you can see what is currently available at:  http://tinyurl.com/ydzgcbc

Before and since my original post I have made it a personal mission to reach out to different journals and periodicals in the AP space and challenge them to cover  recovery audit providers.  Many of us are newsmakers.  I have been quite pleased with the feedback and the growing coverage.  Sometimes it only requires a few friendly phone calls.

Admittedly the Profit Recovery industry may not be the most exciting, but it does offer a very direct value to clients.   Assume a Profit Recovery firm finds $100,000 for your company.  Consider what number of sales or what amount of effort would be required to generate that revenue.  In most cases, Profit Recovery delivers dollars to an enterprise with one of the most favorible ROI’s possible.

A few weeks ago PRG rang the bell at Nasdaq and as they are our primary competitor the occasion did not go unnoticed.  Rather than feel any envy, I was actually thrilled for them and for us as a result.  Any major publicity that they earn is easily translatable into publicity for the Profit Recovery space.  I still believe, based on overwhelming evidence from our audits, that recovery auditing is alive and well.  I am glad when that message is reinforced.

In one of my recent briefings with a fairly major analysts I was told that PRG’s decision to migrate slightly away from recovery makes the conversation more interesting.  A company like Lavante is investing in software to further tap into what we believe to be a rich recovery vein when other firms are moving slowly away.