Attend a free  webinar to help you understand the effects that the new 1099 laws will have on your company and department. The presentation will be hosted by Sherry DePew the former head of Boise Cascade’s global  Shared Services Group and Mindy Harada a renown tax consultant with Armenino McKenna LLP. 

The webinar is scheduled for Friday, Sept 17, 2010 at 11AM PDT

REGISTER HERE

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I’d like to use this format to repeat a few of the Lavante SIM features called out by Sears in her article.

1. It drives compliance from suppliers. It automates the process of gathering information that would cost your company money, time, and resources if it were missing. Perhaps most importantly this year, with the 1099 tussle, Lavante SIM performs an automating taxpayer identification number (TIN) match to ensure quality data. In addition, it automates the process of collecting data and documents by pinging suppliers when their expiration dates are approaching. Lavante SIM also offers an out-of-the-box solution for new supplier set-up and data collection, taking note of details such as the supplier’s status as woman- or minority-owned.

2. It’s affordable.Lavante SIM is a software-as-a-service (SaaS), so organizations don’t have to invest their IT time in setting it up in-house. Also, organizations can start with one or two components and add others as they go. Known for its high-yielding audits in the profit recovery space, Lavante offers a unique solution for keeping the cost of its vendor portal product low. Lavante’s recovery services can pay for the project.

3. It‘s scalable. Charges are based on the application’s ability to get suppliers to comply with data requests. It’s a subscription model based on the number of suppliers per month per tier.

Check back for more links to media coverage of Lavante SIM.

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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.

I am very proud to announce that Lavante SIM was released for general availability on August 9th.  This launch marks the expansion of our vendor file management services into a larger suite of supplier information management products and services.

Lavante SIM has been created specifically to address the feedback that we have received from the market over the years about the challenges that all of you face.   Lavante has learned that supplier information is integral to optimizing relationships with suppliers and for maximizing the value from your ERP system and other automated solutions.  Used correctly, a well-kept supplier master data file is a strategic asset that you can leverage into time savings, resource savings and dollars to your bottom line. 

The collection and management of supplier data is more important now than ever based on the growing number of regulations and controls that your departments are faced with.  In that last years alone stricter penalties and controls have accompanied new OFAC screening laws, Sarbanes Oxley and diversity mandates (to name a few).  In just the last few months, 1099 tax legislation was included in the new health care bill which will require you to collect TINs, W-9s and W-8s and to perform 1099 reporting on a larger scale than ever before.  Your companies will likely need to implement new policies and new systems to manage supplier information and stay in compliance.

Lavante SIM has been built as a direct solution to the challenges that you and your departments face.  The on-demand application is the industry’s most advanced solution and enables companies to proactively engage with suppliers on an ongoing basis.  The product drives 8 times the compliance of any other competitive solution and manages communication across the entire supplier lifecycle, from on-boarding, to data capture and validation, to automated maintenance.  Lavante SIM can help you with vendor master file cleansing as well as TIN collection and validation against the IRS website.  The product will even help to reduce costs and labor of ERP installs and upgrades.

We are proud to announce the delivery of this revolutionary product and we are proud to work so closely with our clients to create real solutions to major industry problems.  I encourage you to reach to your Lavante contact person or to visit the Lavante website at www.lavante.com to learn more.

Thanks for taking the time to read this,

Joe Flynn, Founder and CEO, Lavante Inc.

When one panelist asked aloud if the room was engaging successfully in the practice only about 3 hands when up all the way…  there were one or two of those “half-up-but-not-really hands.”  I will not call anyone out but among the firms successfully using dynamic discounting were two large fortune 50 stalwarts.  Even they had to admit that they targeted vendors were of a select group and that procurement was still very much debating if they should negotiate longer terms and stay away from the early pay discounts.

Just thought I would shed a little light for those in the crowd that think they missed this train.  The conclusion:  People LOVE the idea of a successful dynamic discounting program and this topic has major buzz, but like most things… not many people can really sustain the practice and it remains in “when-I-have-time-to-get-around-to-it” limbo.

Please comment if you have plans to make this practice work internally or if you have input on the topic.  Would love to get more data on this.

Sherry DePew followed  Joe’s lead with a standing room only workshop where she discussed portals and demonstrated our product. She was held after her session by attendees with lingering question for about thirty minutes.

This is a game changer!  Proud of the new developments and proud to be a Lavantine!

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…

I’d like to elaborate a little bit more on the story for the Lavante watchers in the audience.   Our new grade A facility is in the Santa Teresa area of San Jose and the property manger tells me it is over 26,000 square feet!  I do not want to risk a blister trying to walk through and measure it myself.  We plan to have our entire operation moved over in a couple months, but we are in the middle of three major trade events in the next month and we are rolling out a brand new product in three weeks so some of us are having a hard time packing our boxes.  (uh-oh… more phone call and emails from that “new product” teaser I am sure)

Regarding new business… how do I put this?  As the articles inicates, Q1 was a record quarter, but we’ve nearly already beat it in April alone.  Yes you read that correctly.  Clients are closing more quickly and they are growing larger in size…  In 2010 we have begun workng with three of the largest private companies in the U.S. and our new public clients are averaging a Fortune rating of F297.

I hope that answers any questions, but I am always available to discuss further.

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.

The short answer:

You don’t know what you don’t know. Especially if you don’t, or can’t look. Often, companies that we speak with have been underwhelmed by the volume of recoveries that traditional profit recovery firms have identified in the past, so they don’t believe there’s much money to be recovered.  They don’t realize they’re looking at only the tip of the iceberg. Lavante’s approach delivers expanded levels of recovery because Lavante does a much more comprehensive audit and thus reviews a completely different set of data than traditional firms can. This generates a completely different result.

Why?

Unlike traditional firms that primarily review historic client AP records, Lavante’s method focuses on opportunities beyond AP records and delivers a higher yield as a result.  Lavante begins with an exhaustive review of vendor AR statement data.  Where traditional firms review a sample of vendor records, Lavante leverages its proprietary communication application to correspond with virtually all of client’s active vendors.

Comprehensive vendor communication leads to significant opportunities for profit recovery in three major areas: 

1)      Although recovery totals are generally weighted toward larger vendors, our experience has shown that the lower 80% of the population (on the basis of spend) represents 61% of the vendors with credits. Since others don’t typically communicate with these vendors, these credits typically go unrealized. (see sidebar)

2)      Communicating directly with vendors enables Lavante to manage and clean the client’s vendor file – fewer duplicate vendors leads to fewer duplicate payments. Moreover, establishing the links and relationships between vendors opens the door to negotiate better pricing and terms across what may otherwise appeared to be unrelated vendors.

3)      Once Lavante establishes links and relationships within the vendor population, a more comprehensive duplicate payment AP review can be performed.