When transactions increase and vendor bills pile up, managing them can be a tedious and time consuming task. Unfortunately, this is a fact of life with many companies. Companies can either spend too much time auditing vendor bills or they do not spend enough time resulting in overpayment and duplicate bills. At the same time, the complexity of purchasing procedures can also lead to financial losses. This is why it is important to have your vendor bills audited
The broad areas covered by a vendor audit are vendor viability, management responsibility, system accuracy and data integrity. One of the most common services provided by auditing companies is auditing vendor bills. This can reduce your operational costs in the following ways:
Eliminates Overpayment: Overpayment to vendors is quite common and affects your company’s profitability. It can be attributed to errors such as miscalculations, neglected rebates, duplicate payments, charges for goods and services not received, tax overpayment and misunderstanding of contract terms. Vendor auditing identifies and eliminates these errors and saves a lot of money your company may be losing every year in overpayment.
Frees up Time and Resources: Auditing vendor bills take up a lot of time and resources that a company can use profitably in other areas. If the volume is excessively large, it can hold up the entire organization for several days. By entrusting the task to professionals, you can re-allocate valuable time and resources to other areas that need immediate attention. This increases efficiency and leads to growth and increase in profit margin.
Identifies Discount Opportunities: Buried under the volume of bills are often rebates and volume discount opportunities that a company often misses to capitalize on. Without proper auditing, these opportunities are often not found. Many companies lose several opportunities like these every year. Discount and rebates can make significant contributions to a company’s profitability. Vendor audits can identify these opportunities and help take advantage of them.
Helps Consolidate the Payment Process: Paying vendor bills can take up a lot of time and resources. Auditing ensures that all the bills are in order and that the vendors are in full compliance with the contractual requirements. It also identifies the bills that need to be paid. This helps in consolidating the payment process by issuing a single cheque to an “IN TRUST” account for the disbursement to vendors.
Improves Decision Making: There is a huge cache of information in vendor bills, which can only be extracted and given a meaning after a proper audit of the bills. An audit provides you with the management tools and reports that will be invaluable in making the right decision at the right time. The information thus obtained can be very useful in the bid tendering process.
Vendor audit services provide your organization with the assurance that all the financial controls are in place, access to financial records are tightly controlled, eliminates double billing, identifies volume discount and rebate opportunities, helps consolidate the payment process, frees up valuable time and resources that can be used elsewhere and, thus, enhances overall profitability of your company.
At 3PL Links, we offer vendor audit and payment services that allow you to increase your sales and reduce your operational costs. Contact us today to learn more about or vendor audit services.