Accounts Payable Audit
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.
We also offer AP recovery audit services for those interested in such solutions.
Accounts payable audit – when is it required?
|Type of service|| |
Software-based, integrated with Artificial Intelligence algorithms
Types of companies addressed
|Medium and large-sized enterprises|
Possibility of integration with in-house accounting program
|Documents verified|| |
Purchase invoices and the AP ledger
|Number of documents verified per session (approx.)|| |
|Employee operational effort|| |
Reduced by 50%
|Report generation service|| |
|Program accuracy||30% higher accuracy compared to traditional programs|
|Our services|| |
- improves error detection rate,
- helps in discovering duplicate payments and financial recovery,
- improves internal accounting procedures
- verification of incoming invoices;
- verification of outgoing payments;
- checks of other documents, as instructed.
Steps during the accounts payable audit
- verification of new invoices;
- comparison to existing information in the system;
- data compilation;
- report issuance.
Possibility to check for double payments (YES/NO)
Yes, an accounts payable audit can be used for the verification of double payments.
|Possibility to detect other accounting issues (YES/NO)||Yes, such an audit can be used to detect other accounting issues, such as fraud.|
|Possibility to perform regular checks (YES/NO)||
Yes, the audit can be performed on a regular basis.
|Elements of accounts payable audits||
- incoming invoice approval;
- purchase order approval;
- matching invoices to master file;
- invoice payment
|Accounting regulations compliant solution (YES/NO)||
Yes, our audit software complies with the accounting regulations and standards.
|Error detection solution (YES/NO)||
Yes, an accounts payable audit can be employed as an error detection solution.
|Difficult to use (YES/NO)||
No, our software is not difficult to use.
|Duration of an audit (approx.)||A few minutes, thanks to the artificial intelligence.|
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.
There are also specialized recovery audit firms that can offer such services.
Procedures related to accounts payable audits
In most companies, especially in medium and large-sized ones, the accounts payable audit is part of a larger process which includes the verification of the entire accounting department and extensive financial documents. Even so, the AP department remains one of the most important to verify, as this where the registration of payments is made.
Audits are one of the most important tools when it comes to the verification of payments already made but also of those to be made, which is why it is good to start with the accounts payable division.
The accounts payable audit will imply checking the accuracy of payments, invoices, various ledgers and other financial documents and it is one of the most strenuous and time-consuming procedures available.
Thanks to technology, Artificial Intelligence can now be used to verify if not all documents mentioned above, at least part of them, thus improving significantly the time spent during the audit process.
In order to be effective, during an accounts payable audit, all invoices and transactions must be verified and reconciled, and an automated program can perform such tasks much faster.
Our overpayment protection software can be used for accounts payable audits which will help business owners reduce the amounts of money lost during various types of transactions.
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:
- the examination of the accounts payable standard operating procedures (SOPs);
- the analysis of financial documents which implies purchase invoices and vendor orders, as well as other documents;
- 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:
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.
You don't need to worry about the cost of a recovery audit with our software. You can also watch our video on this subject:
Avoidance of double invoicing and payments with the help of AP audits
Double invoicing is one most common problems companies face. These usually appear because of the accounting program and human errors, however, the most important task is to find out why they occur in order to correct them. This is one of the main reasons to use an AI-based accounts payable audit program which will filter and classify all information entered into the system in order to reveal the most common mistakes that lead to the repetition of double invoices.
Generally speaking, double invoicing errors are usually caused by not using automated programs, bookkeeping errors, the lack of personnel, and even printing errors. Most of these issues can be solved with the help of our overpayment recovery software and specialized accounts payable audits.
Apart from double invoicing, another common accounting error is represented by double payments which can lead to important financial loss. These too can be prevented with the help of regular accounts payable audit procedures.
The use of AI in the accounting department
Artificial Intelligence has been around for some years now, and many business owners have found it useful in many areas. Now, it is time to use it in the accounting department by employing the newest technologies in activities such as an accounts payable internal audit program.
The best part about it is not that it works much faster than the human eye, but once the information introduced in our software it will be used to detect and correct multiple errors and thus improve the entire accounts payable audit risks.
AI can be used for various purposes, among which correcting and preventing future errors. With the help of our internal audit of accounts payable, you will no longer need to schedule such procedures, as you can simply enter the information you want verified and let our software do the work.
Perform regular accounts payable controls with our software
An audit can ensure a clean accounts payable testing audit for a better control of the entire accounting department by focusing on prevention rather than financial recoveries which take more time and can generate further losses in time and money.
Our accounts payable audits can deliver outstanding results in only a fraction of the time it would take auditors to verify all relevant documents. With the help of our accounts payable recovery audit, you will only need to introduce and validate the data you want checked once. Also, the dashboard can be customized to your needs, while the information you want verified can be updated whenever required.
The main benefits of our AI-based software
Our overpayment protection software can be used in various areas of the accounting department in a business, however, in the accounts payable it has rendered remarkable results, among which:
- an average reduction of operational efforts of the staff by 50% from the first day of use;
- an improved image of the internal accounting procedures and what needs to be changed;
- automated error detection services which can save up to 1,5 million euros per year in the case of large companies.
When adding the fact that it is easy to install and use, our software can become clients’ go-to solution for accurate accounts payable audits without having to hire specialists for completing internal audits.
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.
When is an accounts payable control necessary?
Accounts payable controls are regular checks of the division handling incoming invoices. These controls are usually employed to mitigate the risks of registering losses when processing invoices that need to be paid to third-parties. Accounts payable controls are related to the verification of the obligation of a company to pay its suppliers, the entering of payment information in the accounting software, and the actual payment of the amounts of money due.
Our accounts payable software can be a good solution for those who need to avoid duplicate payments and ensure accurate AP recovery audit.
We also recommend an accounts payable audit in order to verify the efficiency of the accounts payable division. You can also rely on us for recovery audit solutions.
The main elements of an accounts payable control
Ensuring effective accounts payable control is one of the main purposes of a business. Its importance lies in making sure no payment errors are registered.
In most cases, accounts payable controls consist in:
- the approval of the invoices entered into the accounting system which is usually given by one of the employees;
- the purchase order approval which implies staying in touch with the purchasing department;
- matching the supplier invoice with the purchase order and checking the receipt before authorizing the payment;
- the duplicate payment search which can be done manually, however, automated searches are available nowadays.
Each of these tasks takes time and is difficult to complete when they fall on the staff in the accounting department, however, with the help of our overpayment protection software, the accounts payable controls are much faster and accurate thanks to Artificial Intelligence. Our software uses performant tools, just like recovery audit firms. However, the cost of a recovery audit is lower with us.
How can our overpayment protection software help?
Our overpayment recovery software was created in a way that can handle large volumes of data entered into the system, therefore it will prove a much-needed tool for companies receiving more than 10,000 invoices per year. Duplicate payment searches and matching purchase orders with the supplier invoices will imply less work for the employees. An important thing to consider is that our overpayment protection software was created to avoid duplicate payments and provide real help in financial recoveries, therefore, ensuring accurate accounts payable control.
Our overpayment recovery software can help with:
- the data entry controls by checking the invoices entered into our software and comparing them against each other in order to ensure no duplicate payment have been made;
- lower processing time and a reduction of the operational effort by 50% on the employees in the accounting department;
- lower leakage risk by preventing financial losses of millions of euros per year;
- an automated accounts payable control which can verify up to 1.5 million transactions in a short period of time;
- high accuracy – a 30% higher accuracy rate compared to other software that does not rely on Artificial Intelligence.
The most important roles of our automated overpayment protection software reside in avoiding duplicate payments and helping in financial recoveries when such payments are detected. These will ultimately lead to preventing future losses due to payment errors. The software developed by PAIDAnalytix was created in order to help medium and large-sized enterprises dealing with large numbers of invoices that need to be processed in a fast manner.
When used after an accounts payable audit, our automated software can make a difference in recovering amounts of money that some business owners didn’t know they were losing.
For complete accounts payable audit and overpayment recovery services, do not hesitate to contact us. You can also get in touch with us for tailored recovery audit solutions.
Radu Fertonea is the founder of Paid Analytix and Senior Manager with Executive MBA degree (Maastricht School of Management). He was director of operations at Societe Generale European Business Services, in charge with: Management of the Source to Report practice (Procurement, Accounts Payable, Accounts Receivable, Management Accounting) | Global redesign of end-to-end source to report activities | Consolidation of the Finance exercise for the European operations of Société Générale (100% coverage target by 2020) | Transition Management, Process Standardization and Continuous Improvement | People Management – team of 150+. With a broad experience in the financial field and after working with large societies which handle thousands of payments every year, came up with the idea which led to the creation of Paid Analytix.