Category: Software

Is an Accounts Payable Audit worth the trouble?

To err is human, even for humans who work in the accounts department. Sooner or later, someone is going to make a mistake paying an invoice, and it will cost you. That’s obvious: it’s just the law of averages. The question is, how often will it happen and what will the total cost be to your company? Intuitively, you might assume it’s minimal, but the reality is quite different. Industry estimates suggest that one in every thousand transactions is an overpayment. There are many different reasons this can occur, but the most frequent is duplicate payments – where, by accident or dishonest design, the same invoice is paid twice. One in a thousand may not seem like much, but it all adds up. And if you’re a business that relies on very large volumes of minor transactions – high numbers of low-margin payments – then you could be in a lot of trouble. Recovery audit software will show where this is happening and help you claim back the money paid, assuming you act fast. An accounts payable audit shows you who still owes you money that, due to oversight or problems in your accounting systems, has never been collected.

The larger your organisation, the greater this problem is likely to be – and not just because it means a larger number of transactions to go wrong. When you are making and receiving a lot of payments, it gets harder and harder to pinpoint the incorrect ones. These could be due to genuine misunderstanding, or sometimes fraud. If a supplier is sending the same invoice every month, it gets easier to send in a repeat which goes under the radar: the source of many duplicate payments. Of course, the same thing can happen through forgetfulness or accident. Either way, you’ll end up overpaying unless someone recognises it, and in a busy accounts department there’s no way that someone will be able to remember and check all of your payments personally. That’s why recovery audit software can be so useful, usually paying for itself the first time you use it. And problems with your accounts cut both ways. You may be overpaying other people, and your customers and others could be underpaying you. These payments can become lost in the system, with nothing in place to chase them up. An accounts payable audit seeks out the offenders and ensures that they settle their bills.

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Bacs, or Bankers Automated Clearing Software, has been around a long time. Essentially, though, bacs payments just mean transferring money directly from one bank account into another. FPS or Faster Payments Service is much the same, but it generally happens almost immediately, whereas Bacs takes up to three working days. Bacs software is therefore different to credit or debit card transfer, and has advantages and disadvantages in comparison.

Since bacs payments are made directly from one bank account into another, they are effectively irreversible. With credit cards, the transaction can be cancelled and the funds returned to you if there is good reason (such as fraud, or the goods you ordered turned out not to be as advertised, or never arrived at all). With bacs, this is far harder. That is a good thing for merchants, since you won’t have to worry about customers making unnecessary chargebacks if they change their minds. For buyers, though, it means transactions cannot be undone. In most cases, this will not be a problem because bacs tends to be used for paying suppliers and for staff’s wages, and so on. These are generally predictable and are paid in arrears. However, if a mistake (such as a typo) happens, it is not a simple matter to reclaim the money. Without the goodwill of the recipient, it can be extremely time-consuming. If you are making monthly payments, it might simply be easier to reduce the next one rather than rectify the last one.

Bacs software can be linked into your accounting package to ensure that mistakes don’t routinely happen due to human error, but it’s impossible to eliminate them altogether. That bacs payments are made in their millions every day shows that this need not be a fatal flaw for bacs, and that there’s no reason your organisation should not use it too. Indeed, the advantages far outweigh any minor problems that might arise from its use. Bacs is more secure, faster and easier than paying by cash or cheque. It’s also the standard, now – or, at least, FPS is – which means that if you’re still paying by more traditional methods then you will naturally find yourself at a competitive disadvantage. There is really no good reason to hold large amounts of cash on the premises or to use time-consuming and inefficient cheques when fast and straightforward transfers are possible at minimal cost.

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Bacs software is now a well-established tool that enables you to pay customers and suppliers quickly, securely and easily by means of electronic transfer. bacs payments are a far more reliable option than paying by cheque or cash, since you don’t have to worry about keeping big quantities of cash on the premises – a potential security problem – or cash-flow problems brought about by people cashing their cheques at unexpected days in your financial month. Bacs, the acronym for for bankers’ automated clearing standard, is a well-tried and tested means of payment that can save you a lot of time and money, as well as having other advantages.

Bacs usually takes three days to go through as standard, although depending on the sending and receiving banks it can be virtually instant. If you are concerned or there is reason to make a fast transfer, SWIFT (Society for Worldwide Interbank Financial Telecommunication) is guaranteed same-day. However, this means an additional cost, so for modest payments it is rarely worth it. For larger sums or urgent orders and payments, SWIFT may be a good choice and the costs will be proportionately smaller if the transfer is large.

One of the top things about Bacs software is that it can be integrated with your other accounting systems and databases. If you haven’t done this, it can be a real headache and a drain on resources, because different transactions have to be logged and entered into various systems. If you take the time to set up your systems correctly, however, you can save a significant amount of time (and potentially expensive errors) and streamline your accounts in a way that is simply not an option if you are using several applications or processes.

Bacs software consultants will be able to advise you on the best programmes for your accounts, and whether your present systems can be used in conjunction with bacs payments. Migrating your accounts can be a lengthy task, though the benefits are exceptional. Once you have completed the process, you can use Bacs automatically – paying workers on time, every time; ensuring that suppliers are paid and that customers are respecting their commitments to you; and recording every transaction to make sure that there are no surprises hiding in your accounts to cause problems at the end of the tax or accounting year. Moreover, auditing processes can be started to identify and fix past accounting errors – something which can cost businesses a significant proportion of turnover.

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Using bacs software for all your business’s financial transactions gives greater reliability to your operations, a more fluid cashflow and makes instant cost savings on apparatus such as cheque stationary and postage costs. Bacs can be used to pay wages and salaries, for supplier payments, refunds, pensions, dividends, employee expenses and insurance settlements, covering all expenditure requirements of any size of organisation. What is more, bacs payments benefit both payer and payee.
For the payer, bacs reduces on administration costs and time spent banking. Sorting, preparing and collating cheques is a time-consuming task, not to mention adhering to relevant remittance advice – whereas using bacs to make and authorise a payment is simple and inexpensive. Bacs payments also give the payer greater control over cashflow management, so that the payer always knows precisely when the payment leaves their account. Thanks to this always up-to-date information, you can make your money work for you right up until the moment it leaves your account.

By generating only a single debit from your account on a specified date, the need to track individual payments is obviated. As well as cutting down on reconciliation, bacs payments improve efficiency and put you, the payer, in the position of being able to settle more favourable payment terms.
As a payee, bacs software makes your life much easier. Organisations that pay using this system tend to pay earlier than those who do not use bacs. They also tend to be more reliable, as they rely less on more fallible human handling of payments. On top of being reliable, its is more secure than cheques and cash, which are more likely to go missing.

Like the payer, as a bacs payee you will save time handling and banking cheques and cash – with bacs, the money goes straight into your account electronically. Cashflow is smoother, as payments instantly appear as cleared funds, ready to be withdrawn directly. And all this time-saving means you’ll earn interest earlier, too.

In conclusion, bacs software can really provide you with dependable solutions to slow financial transactions, greatly reducing the margin for error, easing cashflow and saving time. For both payer and payee, bacs payments are faster and smoother, which leads to other benefits, such as negotiating potential and early interest. To make the most efficient use of your finance resources, bacs provides a solution and more.

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An Accounts Payable audit is a very important part of most workplaces.  However experienced and careful accounts teams might be, duplicate payments often remain a problem, and these can incur major costs. Lots of companies pay professional recovery auditors, but this can be an very expensive way of doing things.  If you can train your own in-house Accounts Payable teams to deal with the recovery auditing, this can be a great way to save money and improve internal processes.  Performing an in-house audit is now usually quite simple thanks to the development of recovery audit software.

With this software, you can pre-process your upcoming payments, which means that you should never have to pay a duplicate invoice again.  It is possible to audit all your past payment data in one easy step, and regain any money that you have gained back, which often substantially increases your surplus.  Significantly, the software tells you the reason for each duplicate, which means that the audit becomes a way of improving processes rather than just finding individual errors, so that they are unlikely to happen in the future.  Taking control of your accounts payable audit process if often a positive thing.  It can be reassuring to see an outside team of experts come in and handle the entire invoice, but the knowledge and overview that can be gained from  this process in-house is often invaluable.

This program finds duplicate payments, invoicing errors, compliance issues and supplier fraud.  Since it can be used by Accounts Payable teams, it not only increases control but also improves processes, thus preventing future errors from happening.  Using a combination of search algorithms and pattern matching technology, the software gives a detailed report of potential duplicate payments and errors that may have been made.  The benefits of using this technology are surely clear.

What is more, fairly little training is needed to use the software.  Usually everybody in an Accounts Payable team can use it, without need for any auditing or accounting qualifications.  This is another cost-saving factor, as it means there are no expenses involved in training staff. The installation of this software also tends to incur fairly little by way of cost.  It is a particularly swift process, and designed to work immediately.  Free online training is provided annually, which keeps running costs at a fairly low level.

For many businesses, recovery audit software makes a major difference to the accounts payable audit process. Much can be learnt from the process of looking for duplicate payments, particularly in terms of how the accounts payable department works and any weaknesses it might have, so using your existing team to find these errors is often a wise business decision.

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Conducting an accounts payable audit is a very important activity for all businesses. Installing recovery audit software in your business’s accounts department can make the process much simpler and could save your business a considerable amount of money. Potential duplicate payments, for example, can easily be tracked down and weeded out when your organisation uses this software. Auditing software is designed to be quick and easy to use for any finance professional and can help lower costs, detect fraud and optimise working capital. A great many businesses have installed it already.

Errors in processing payments affect all businesses, however expert and diligent your accounting staff may be. The Institute of Internal Auditors (IIA), established in 1941, has examined the problem and estimates that as many as one in every thousand payments may be a duplicate. Other common problems that affect the accounts department of organisations are overpayments, process and input errors, typographical mistakes, fraud, compliancy issues and data inefficiencies. All of these can be avoided by using auditing software.

Auditing software can be run on a daily or on a weekly basis which means that your accounting systems are being monitored frequently and regularly. They can be set up to run alongside an existing system, or they can be integrated into it directly. In addition to the time that auditing software will save your staff, the software will also serve to give you peace of mind. This will enable you to concentrate fully on managing your business and allow you to manage your business’ working capital more effectively.

Although money can be recovered after an error has been found in the accounting system, prevention is certainly much better than cure. There is a low cost for ownership of auditing software and the fees your business pays to external auditors will also be reduced. In addition to increasing your level of control over your business’ finances, running auditing software in your accounts department can lead to process and compliance improvements. Auditing software will help make sure your business has first class automated accounting practices.

Recovery audit software has been available for a number of years and the best providers have been consulting with their clients over that period to ensure that the best possible service is provided. When choosing a supplier, consider asking for testimonials and reports of the success of their software being used in clients’ businesses. An accounts payable audit is a requirement for all businesses, but, with regular monitoring, costly errors such as duplicate payments can be avoided.

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