recovery audit services
DESCRIPTION
Helping businesses conduct post-payment audit to recover excess payment from suppliers – through spend analytics and a continuous process improvement to eliminate sources of leakage.TRANSCRIPT
Recovery Audit ServicesPost-payment audit to recover excess payment from suppliers – through spend analytics and a continuous process improvement to eliminate sources of leakage
Gianni GiacomelliSenior Vice President, Genpact
Subhashis Nath Vice President, Genpact
PROCESS • ANALYTICS • TECHNOLOGY 2© 2014 Copyright Genpact. All Rights Reserved.
A Global Business Process Services Leader: Process Transformation and Outsourcing, Analytics, Technology
We help leaders of some of the largest enterprises transform and run their processes and operations, including the very complex and industry-specific
What we do
Unbiased, agile combination of process science, related technology and analytics limits upfront costs and enhances future adaptability
Right critical mass:
• we are large (64,000+ global staff) but our solutions appropriately flexible
• our top management is directly involved in our client partnerships
How we do it
Our impact
We help enterprises to be more competitive by becoming more intelligent: adaptive, innovative, globally effective and connected…
…by enabling tighter management of costs, risks, regulations, and supporting growth
The results: US$22B* of impact for 800+ global clients
PROCESS • ANALYTICS • TECHNOLOGY 3© 2014 Copyright Genpact. All Rights Reserved.
THE CHALLENGE
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Companies face multiple challenges related to supplier contracts, making a compelling case for recovery audit
Challenges related to contracts Compelling case for recovery audit
• For every $100 million, a 0.1% error margin translates into $100,000 in recovery opportunity
• Recovered overpayments are literally found money and add directly to a company’s bottom line
• Delay accentuates the problem– The longer the wait, the more difficult it is to identify, validate, and retrieve them
• Excess charges levied by vendors due to undue unit rates
• Rate/contract amendments not considered
• Duplicate payments due to multiple invoices
• Duplicate charges across consecutive/future invoices
• Billing of services not used/delivery mismatches
• Billing for services not contracted
• Inadequate volume discount
• Overcharging of VAT
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Undue payments to suppliers is a significant issue – up to 0.1% of revenue could be recovered
Companies are unable to address the root causes leading to repeated undue payments to their suppliers
Inability to identify root causes
Lack of quality data
Inconsistent and incomplete data for a large supplier base and huge transaction volumes makes audit exercise lengthy and difficult
Limited incentive to improve processes
Traditional external vendors have limited incentive to help improve processes and prevent future errors
Capacity constraints
Internal and local teams are often unable to invest enough time to solve systemic process issues leading to repeated errors in payments, year-on-year
Late recovery is suboptimal
Traditional audits may not be completed until 18 to 24 months post transaction leading to lost documentation and delayed cash flow
PROCESS • ANALYTICS • TECHNOLOGY 6© 2014 Copyright Genpact. All Rights Reserved.
Challenges contributing to recovery vary by industry
• Purchases at different frequencies and volumes
• Frequent M&A
• As a result vendor master data and contracts tend to have overlapping entity relationships
Manufacturing and CPG
• Managing a portfolio of 30,000-60,000 SKUs creates a high volume of purchase-to-pay transactions
• Complex pricing arrangements
RetailEXAMPLE
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Up to 12-17% of supplier payment value is ‘leaked’ in an average manufacturing company, of which ~80% is recoverable
% ‘recoverable’leakage Business impact
80-85% Operating metrics• Decrease in working
capital by up to 3-5%• Increase in cash flow
by 2-3%• Bottom line
improvement by up to 0.1-0.2% of revenues
Process level metrics• 10-15% improvement
in payment process integrity
• 60-70% transaction level compliance assured
• 15-20% increase in best price efficiency
~80%
~70%
~90%
~80%
5-7%
4-5%
1.5-2%
1-2%
0.5-1%
Top leakage points
Data errors and omission
Unauthorized payments
Overpayment
Duplicate Payment
Unusual purchasing behavior
1 2 -1 7 %
12-17%~ 8 0 %
~80%
% value ‘leaked’
TYPICAL
Source: Genpact experience
PROCESS • ANALYTICS • TECHNOLOGY 8© 2014 Copyright Genpact. All Rights Reserved.
THE SOLUTIONS
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A step by step recovery audit approach
A B C D
Process diagnostics
Process transformation achieved through application of Lean and Six Sigma, and a scientific process management framework
Audit methodology comprises:
• Data collection
• Audit analytics
• Substantive testing
• Report and recommend
Identify cash leakage points through:
• Quantitative diagnostics
• Qualitative diagnostics
• Recover outstanding claims
• Reports and dashboards
Audit RecoveryProcess
transformation
Comprehensive area in scopeAccounts payable, procurement and supply chain invoices, contract services, indirect spend
and freight, trade promotion funds and pricing, taxes, utilities and telecom
PROCESS • ANALYTICS • TECHNOLOGY 10© 2014 Copyright Genpact. All Rights Reserved.
Process diagnostics
A
What can be achieved
• Identify key levers for improvement (incorrect invoice handling, payment terms not compliant with contract, sub optimal freight routing, missed promotional pricing, etc.) contributing to a high cash leakage by process
• Road map for improved processes (e.g. electronic invoicing) and compliance (e.g. contract amendments for consistency)
• Understand dependencies between various functions, businesses and regions
Delivery approach
• Experienced, trained resources deputed on-site for understanding processes and existing gaps
• Specialist offshore resources to analyze the past audit results/process data and to assess opportunity size
• Lean six sigma based solution development to generate actionable recommendations
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Sample deliverables
ILLUSTRATIVE
PROCESS • ANALYTICS • TECHNOLOGY 11© 2014 Copyright Genpact. All Rights Reserved.
Audit
B
What can be achieved
• 100% audit of in-scope areas
• Reduced recovery year-on-year by up to 15-20% through improved processes
• Feedback loop into continuous process transformation
• Improving internal control systems
Delivery approach
• Dedicated supplier recovery audit practice available for global deployment
• Audit payments on a historical or real-time basis to recover incorrect payments using industry standard tools e.g. Oversight
• Collaborative approach with client and their suppliers facilitating claim recovery
• Provide formal reporting to client and feed root causes into continuous process improvement
Sample deliverables
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ILLUSTRATIVE
PROCESS • ANALYTICS • TECHNOLOGY 12© 2014 Copyright Genpact. All Rights Reserved.
Recovery
C
What can be achieved
• An efficient and effective recovery process leading to 80- 90% recovery/adjustments within a period of 3 months
• Identification of non-compliant suppliers to inform supplier scorecards
• Satisfied supplier network through effective complaint management
Delivery approach
• Dedicated calling team with multilingual capabilities, right staffing at the right window in a near shore/offshore model based on client requirements
• Secure access to information about outstanding claims by supplier
• Accurately connect with identified contact at best time/method of approach in agreement with the client and its suppliers
ILLUSTRATIVE
PROCESS • ANALYTICS • TECHNOLOGY 13© 2014 Copyright Genpact. All Rights Reserved.
Process transformation
D
What can be achieved
• Eliminate root cause of cash leakage resulting in efficient and effective supplier payment and related upstream processes
• Reduction in year-on-year post audit recovery by up to 15-20%
• Optimized supplier network integration throughout the S2P lifecycle
Delivery approach
• Onshore activities− Due diligence on client requirements, existing processes
and transformational to-be state− Implement technology customized to client requirements− Execute process improvements
• Globally delivered activities− Six sigma/ process experts working on identifying
bottlenecks− Develop comprehensive blueprints for process and
transactional excellence− Continuous process monitoring for adherence to accepted
operational metrics
Key performance measures
Effectiveness of IA recovery
86%47.2%
Genpact Best In Class Median
4.2MM1.2MM
2% 12%
Efficiency
Claim
denials
ILLUSTRATIVE
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CONTACT GENPACT TO EXPLORE THE “ART OF THE POSSIBLE”
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About Genpact
Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations, including those that are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through becoming more adaptive, innovative, globally effective and connected to their own clients.
Genpact stands for Generating Impact – visible in tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances future adaptability.
We have global critical mass – 62,000+ employees in 24 countries with key management and corporate offices in New York City – while remaining flexible and collaborative, and a management team that drives client partnerships personally.
Our history is unique – behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 15 years.
For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.
Gianni.giacomelli[at]genpact.com
Subhashis.nath[at]axisindia.co.in
www.genpact.com/home/solutions/finance-accounting/recovery-audit-services
Thank You