At some point or another, your vendor management team has found themselves looking over an invoice wondering, “Why are there billing errors on these invoices? Where did they come from? Is my vendor trying to slip something by me?”
Some might assume fraud can only occur on an internal level by a company employee – but the truth of the matter is, on a rare occasion, fraudulent activity can be committed by both vendors and employees. Whether committed internally or externally, the effects of fraudulent activity are far-reaching and have dire consequences for all those involved. Businesses could experience grave financial losses, legal liability, and a damaged reputation from what may seem to be a simple billing error. Risks such as these, combined with a a few well-known cases of procurement fraud begs the question – are these errors the result of fraud, or mismanagement?
Despite their well-meaning intentions, mainstream media has created a misconception that corporations should be highly wary of malicious fraud occurring within the vendor management process. However, this level of concern is probably overstated. Realistically, the majority of invoices billing errors occur inadvertently, and usually entail:
- A general misunderstanding of contract terminology
- Accidental miscalculation by an individual using manual billing methods
- Technological errors and glitches
Although it may be tempting to take comfort in the fact that most of these errors are unintentional, it would be wise for executives to recognize the impact such errors can have in the short and long term. Even inadvertent errors such as those mentioned above can have a costly impact within an organization.
As a matter of fact, a recent report suggests as many as 3.6% of vendor invoices are riddled with errors. This statistic is bit unsettling when you consider the great number of businesses who rely on their vendors to execute their business strategy. Without close supervision and use of checks and balances, potential losses can really add up – especially when these mistakes are undetected for lengthy periods of time.
Fortunately, some “Do It For Me” vendor management service providers offer a team of experienced contract compliance auditors who specialize in discovering billing errors and other risk-related issues. The inclusion of third-party experts promotes improvements in areas that might otherwise go undetected until it’s too late. Businesses greatly benefit from the services offered by these providers as they often include error forecasting and offer notifications/escalations for renewals and criticalities for relevant business documents.
Acknowledging the risks of both fraud and inadvertent mistakes, and performing contract compliance audits to detect and thwart them, businesses can successfully enhance business processes. This reults in an increase in transparency and efficiency, and also can produce a considerable return on investment.
About Limitless Technology
Limitless Technology, LLC has been managing complex indirect spend and vendor documentation since 2006 for some of the largest companies in the USA saving them millions in costs.
Through our Billing Optimization and Vendor Management Solutions proprietary platforms we utilize technology, processes, expertise, time, and resources to improve our client’s bottom-line.
Limitless Technology manages your vendors, so you can manage and grow your business.
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