How to Be a Hero!…
…by harnessing the inherent power of Oracle Payables software to recover lost profits
Submitted to Oracle Applications Users Group
Jeffrey Masich
AmeriSystems®
May 27, 2003
During 2002, new profit recovery software that extends Oracle application opportunities was introduced for users of Oracle Payables. This is the time to be a hero and recover lost profits for organizations that have wisely chosen the Oracle Payables application.
Business and government organizations overpay their vendors and suppliers to the detriment of their stakeholders. The average Fortune 1000 company overpays by an average of $2 million annually. For organizations with annual payables of $250 million, payment mistakes equal .1 to .25% of all checks tendered. A distribution company with a cost of goods sold of $500 million usually overpays suppliers $600,000 per year. A government institution with disbursements of $2 billion annually overpays vendors at a $2.4 million cost to tax payers.
Why? Humans make mistakes! Due to reduced staffing, pressure to do more with less and cut backs in training, purchasing and accounts payable organizations are pushed to the limit. The results are often devastating to stockholders and tax payers and usually are never uncovered.
Overpayment Types
On any given day, a person is ill or moves on to a new department. The resulting vacancy creates an opportunity for overpayments. A $10,100 invoice that was on the desk of the absent person, may be brought to the replacement person’s attention by a supplier with a past due invoice. Not realizing the supplier had more than one vendor number for their various divisions, the invoice is entered and paid under the wrong vendor number.
Later in a similar situation, an invoice for $2,400 is entered with and without an “INV” prefix. The replacement person does not see where invoice “INV-325987 has been paid. Not realizing the absent person had already entered the invoice as “325987” the invoice is paid again.
An accounts payable employee in a hurry to get home for her daughter’s concert is trying to get the month end invoices entered. Her boss provided her with a stack of past due invoices faxed to him by their largest supplier. In a hurry she transposes two digits on a $35,000 invoice. Another employee had entered the original invoice earlier that day. Both invoices are paid.
Another employee enters a $55,000 invoice from ABC Software Inc. incorrectly to ABC Services Co. due to the very similar name. The two companies are unrelated. ABC Software, thirty days later calls, upset that their invoice has not been paid. After checking the payables, for ABC Software Inc., sure enough the invoice had not been paid to them. So, another payment goes out for the same invoice to the correct vendor. The incorrect payment to ABC Services Co. is never uncovered.
There are hundreds of scenarios where invoices are overpaid. The integrity of the Oracle Payables software has been pierced by human mistakes. No payables software is fool proof. Mistakes do and will continue to happen. Not all mistakes are caught during invoice entry or identified in the delivered “Oracle Invoice Audit Report”, “Supplier Payment History Report”, or the “Payment Exceptions Report”.
Audit of Accounts Payable
All organizations should conduct an annual audit of their accounts payable. Every check should be analyzed for payments to the wrong vendors, duplication, and overpayments.
Although, organizations often audit for large dollar mistakes, most of the overpayments are for smaller amounts (under $100,000). Typically, an audit of every check is a manually grueling experience, as auditors set up in an organization’s facility and/or remove important payables files from the premises. Some traditional auditors use generic software that attempts to work on all types of accounting software packages. However, the “one size fits all” software cannot find all payments scenarios available in the Oracle Payables application.
With the introduction of AmeriSystems OSS Software, Oracle Payables users are able for the first time to reap the benefit of a software accounts payable audit that focuses on their specific application. No other audit firm is able to understand the intricacies of Oracle Payables.
Even for organizations that have conducted an audit, a “re-audit” of Oracle Payables utilizing the OSS Software will yield significant results. The software audit offered by AmeriSystems finds overpayments that are left on the table by other traditional audit firms that they have no ability to find.
All organizations, as a business practice should audit their payables. Now the smartest organizations, through the inherent power of their Oracle Payables application and the OSS Software will find over payments that had previously gone undetected.
Software Solution
Now, through a breakthrough software introduction and subsequent audit and recovery services, users of Oracle Payables can utilize the inherent power of their Oracle application to put a preventative hammer lock on overpayments and also recover overpayments going back six years!
AmeriSystems has introduced AmeriSystems OSS Software that has been designed to set up and loaded by an Oracle DBA in 30 minutes. Hundreds of scenarios are analyzed as every single check processed through Oracle Payables is analyzed with hundreds of complex algorithms. The result is identification with validation of overpayments and creation of Audit Chargeback Invoices to payees to start the recovery process. Each Audit Chargeback invoice is complete and provides all supporting information for the recovery to be made.
Organizations that use Oracle Payables running under Oracle Financials 10.7 GUI (SmartClient) and 11i are eligible to load and run the AmeriSystems OSS Software. The software is loaded in 30 minutes and the audit is completed in one day. All work is done remotely without burdening busy staff.
Seven Steps to Recover Lost AP Profits
1.Program Loading
AmeriSystems sends or emails the DBA proprietary OSS software along with run instructions.
2. AmeriSystems Software© processes Oracle Payables data
The AmeriSystems Oracle Series Software (OSS) runs and locates incorrect payments to vendors covering a six year time period and processes a minimal amount of extracted data from the Oracle Payables tables.
3. Processing at the AmeriSystems computer lab
The resulting files are emailed to the AmeriSystems computer lab for final processing.
4. Creation of Audit Chargebacks
Utilizing the AmeriSystems Software, AmeriSystems will create Audit Chargebacks to vendors with a full explanation and supporting information of the payment errors.
5. Recovery begins
"Audit Operations Center" will contact and recover the Audit Chargebacks from vendors or payees. Or, if the Oracle user wishes they can “collect” the Audit Chargebacks internally.
6. Profit recovery checks forwarded to client
As recoveries are made by the Audit Operations Center, checks are sent to the client.
7. Payment mistakes are summarized so internal controls can be improved
Written communication is sent regularly to the client summarizing payment errors and the status of collection activities. The client is able to make training, process and control improvements
Summary
AmeriSystems leverages their focused functional and technical knowledge of the Oracle financial system, to locate and recover accounts payable mistakes for users of Oracle Payables. Overpayments are found quickly and efficiently through a non-intrusive software approach. All work is done remotely, 100% through software.
Even after completing a traditional computer assisted or manual audit of accounts payable, the AmeriSystems OSS profit recovery software locates payment mistakes that traditional auditors have no capability of finding. In addition, the software application finds $5.00 overpayments in addition to $50,000.00 overpayments. Traditional auditors focus on larger dollar items. Through the power of the OSS software and the inherent power of the Oracle Payables application, all overpayments, regardless of the dollar amount are targeted and uncovered.
The software is so easy to run that an accounts payable organization may not even know that an audit was conducted.
This is an opportunity to leverage the power of Oracle Payables to recover lost profits and be a hero!
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