By David Hewitt, RVP of Sales
As of seven years ago, SpendMend had 64 clients and nearly every one of them (over 90%) were doing a traditional profit recovery audit. Meaning, we were performing a review on our client’s historical AP data. Typically, we would go back 1, 2, or even 3 years and review aged data. On average, in a traditional audit, we identified and recaptured .084% in dollar recoveries. That means for every $1B that our client spent in a year, we validated and returned $840,000 to them. Not bad by traditional standards – and well ahead of our competitors at the time.
Unfortunately, in that model, our work was always at least a year old. So, if we identified a problem or an unfortunate trend, it had already been left to linger for months – or even years – before we could provide insight that could fix the problem. In addition, we uncovered a large population of errors that were no longer actionable. Often, we could see evidence of overpayments, duplicate payments, missed discounts, and more, but due to reasons related to timing, and due to decisions made outside of AP, our clients could not recover many of the lost dollars.
Because of these trends, we made a concerted effort to move our clients away from a traditional aged recovery audit and into a 90-Day Mending Review. Some clients worried that we would be too close to the transaction, and we would bump into their work, but that was not the case.
We discovered, through a thorough inspection of the data, that 98% of the claims clients found on their own occurred within 90 days of the transaction. In other words, if they didn’t find and reverse an error within 90 days, they likely would never discover and correct it.
We introduced this concept to our clients and initiated reviews of transactions aged at least 90 days. Currently, out of our more than 150 current clients, over 90% of them take advantage of our 90-Day Mending Review. As a result, our credit totals have surged to .14%. This translates to an average of $1.4M per $1B in client spend. These new averages account for an 83% increase over the traditional audit model and significantly outpace the recovery rates of competitive firms.
What’s even more important than the dollars recovered are the insights and visibility we provide to our clients. In the 90-Day model, we can suggest actionable solutions in near real-time, ensuring errors can be promptly addressed. .
By transitioning to the 90-Day Mending Review and by initiating audits more quickly, we can also address high-dollar issues before they are incorrectly settled by non-AP staff members and vendors. These lost dollars are often swept from the financial ledger with no opportunity to correctly recover and apply them later.
The 90-Day Mending Review is a steep improvement over traditional profit recovery audits. Our clients are asked to provide the same data and support, but their results are greater and more timely. If you’re currently using a traditional recovery audit, we strongly encourage you to reach out to SpendMend and learn how we simplify the process while improving your results.
