Accounts Payable Audit

Updated on Wednesday 08th January 2020

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The accounting of a company is made of several departments, among which accounts payable (AP) and accounts receivable (AR) are two of the most important. Accounts payable deals with the entry of invoices related to the payment of debts to suppliers and creditors. Considering the large number of invoices related to AP, errors can occur. When it comes to the improvement of the accounts payable, an audit can bring out to light some of the important issues and can offer solutions that can lead to fewer losses in terms of money.

At PaidAnalytix, we work with medium and large companies who benefit from Artificial Intelligence (AI) for accounts payable audits which are more effective than audits completed by another person.

Accounts payable audit – when is it required?

The accounts payable team handles invoices that need to be paid to suppliers and other creditors and, because of the short term for making these payments, errors such as duplicate entries when similar amounts of money are involved, haste and even fatigue of the personnel can occur.

Most of these errors will appear during an audit of the accounts payable, which now can be completed with the help of our AI solution. In order for you to obtain the maximum benefits from the services provided by PaidAnalytix, we can also help with an overpayment protection software that can help prevent further losses.

The main steps of an accounts payable audit

In order to complete an accounts payable audit, there are a few steps which need to be completed:
  1. the examination of the accounts payable standard operating procedures (SOPs);
  2. the analysis of financial documents which implies purchase invoices and vendor orders, as well as other documents;
  3. the verification of financial statements to the records of the accounts payable department.

Verifying all these aspects and especially a large number of financial documents involved can be strenuous even in the case of an audit. With the accounts payable audit services offered through our integrated software, the procedure can be reduced significantly while decreasing the error occurrence rate at the lowest.

Some of the benefits of an accounts payable audit are presented below:
The benefits of the accounts payable audit

Areas verified during an AP audit

If you decide to use our accounts payable audit services, you will benefit from a thorough verification of all the accounting documents which lead to a real picture of your company’s financial situation. During an audit of the accounts payable, the list of documents to be checked is quite extensive, however, with our software the verification of the purchase invoices, vendor orders, journal entries, AP inventory, bank records, and the AP ledger can be completed in a significantly shorter period of time compared to having them checked manually. At the same time, the conciliation of the company’s AP ledger and financial statements can be done in order to find all discrepancies and their corrections.

Paid Analytix software can be used to perform accounts payable audits and draw valuable insights about potential losses as well as process weaknesses that can lead to payment errors. Areas explored during an audit are duplicate payments, overpayments, currency errors, vendor master files process weak points and others. We aim to give our clients a quick overview of their main issues and provide the solution. We trained our artificial intelligence engine to bring this area to the forefront so clients can focus on solving the root cause rather than being burdened by the intensive manual work.

Fully compliant accounts payable audit services

Our solution is currently used by medium-sized and large companies and also by banks in several European countries. The ease of using our AI-based software resides in the fact that it can verify past and present accounting documents and, based on the errors found, it can make predictions that can help avoid such problems in the future.

You can also integrate our overpayment protection software in your own accounting system and thus reduce the losses registered during an entire year, which in the case of companies can reach 1 million euros for every 100 million euros paid.

Most of the accounting errors found during an audit occur because companies prefer to use the human factor and our research has revealed that:
  • more than 60% of the companies we work with used traditional accounting verification methods instead of digital ones;
  • a company makes an average of 30,000 payments per year, some of them resulting in errors;
  • because of operational errors, three of the companies we currently work with lost 3 million euros in one year in the past;
  • the amount of money lost by a company choosing to use its personnel to verify accounting errors can represent 1% of its total invoices paid. in one year.

For complete accounts payable audit and overpayment recovery services, do not hesitate to contact us.