Our experience shows that two of the most simple processes – Accounts Payable (AP) and Accounts Receivable (AR) – are prone to duplicate or overpayments as well as under charging or short recoveries.
It is proven that these two processes, despite the existence of state of art ERP and control mechanism are still vulnerable to revenue leakages and 70% of these errors are normally not identified with the system built controls.
Some typical scenarios where these leakages commonly occur are –
Accounts Payable – Payment for the same goods and or services more than once or in excess of what should actually be paid; payment not in line with the contract; non-utilisation of payment term discounts etc.,
Accounts Receivable – Raising invoices for lower prices, offering discounts in excess of the norms, customer claims being over paid, to name a few cases of revenue leakages in the AR Process.
Vendor and Customer Masters – Duplicate vendor masters which bypass inbuilt system controls on duplicates, old vendor and customer masters who are not deactivated on time are a few common areas of leakages. The exposure on account of the above increases during the phase of Mergers and Acquisitions, System Migration, System Integrations, System Upgrades, Shift from Decentralized to Shared Services environment, Shift from hard copy to image based processing, Multiple stand alone systems and database for processing transactions, Too many process exceptions, to name a few.