Accounts payable review helps recover "lost" profit.

A review of your company's accounts payable system may find lost dollars.

In recent years many companies, with the help of an accounts payable review, have closed a gaping hole through which stunning amounts of profits fall in the form of vendor overpayments. Shirley Maxey, a University

of Southern California Professor specializing in accounts payable issues, recently told the Wall Street Journal that accounts payable losses have risen 30 percent nationwide in each of the past two years and may top $10 billion annually. Most payable systems today are highly computerized, with multiple checks and balances. They correctly pay bills more than 99.9 percent of the time. Nevertheless, a small percentage of incorrect payments may result in a substantial sum of money slipping through the cracks (for example, a company with $100,000,000 in annual payables that pays 99.95 percent of the payables correctly will lose $150,000 over the course of three years). A three year audit may recover that money and return it to the current year's bottom line.

The problem can be attributed to several factors:

* Downsizing of A/P Department personnel.

* A period of steady economic growth pushing A/P Department resources to the limit of their capabilities.

* Mergers and acquisitions consolidating A/P Departments and systems.

* Companies outgrowing their computer systems or their current computer systems becoming obsolete. When these systems are replaced, a new set of procedures must be implemented. In addition, every computer system has characteristic strengths and weaknesses. These take time to identify and address.

* Provincial and Federal governments are constantly changing the tax laws. A/P Departments which are already very busy, must stay up to date and insure that the computer system and A/P procedures are properly applying these ever-changing laws.

Overpayments to vendors can cost a corporation hundreds of thousands of dollars in lost profit, but a service available to major corporations can recover those overpayments and add significantly to a company's bottom line. To uncover a corporation's "hidden treasure," an international team of experienced accounts payable auditors comb through stacks of business records for clients, looking for evidence of overpayments. At any given moment a piece of paper can become a clue leading to the recovery of a significant overpayment. It is like finding a treasure ship that sank in a hurricane of invoices!