Need more CASH?

Do you have vendors who owe you refunds?

There are AP audit firms that will do detailed reviews of a company’s vendor payments searching for duplicate payments.  These firms will also review payments to contracts to ensure vendors are billing according to the contract terms.

But short of bringing an AP audit firm in to review your payments, there are simple steps that every company can do.

A review of your unpaid invoices may reveal that you have unused credits from suppliers.  These can result from over payments and returns.  I recommend that you review these items with the purchasing and payables team in the same manner that you review your customer aging.  At least monthly, have the AP aging run and review it for balances due you.  Make sure the credits are taken with your next payment to that supplier.  If you don’t have current buying needs with the supplier, contact them and request a refund.

The AP audit firms often start by requesting statements from your vendors.  I strongly encourage you to have every vendor send a statement to the AP person every month.  Your AP person should review the statement, searching for invoices that have been missed and credits that appear on the vendor’s statement that you are not aware of.   It will improve your vendor relations if you can catch missed invoices in a timely manner.  If there are credits you have not accounted for, that is found money.  Vendor statements will also allow you to make sure invoices are recorded or accrued into the correct accounting period, improving the accuracy of your results.

Always watch vendors that bill on a rolling statement.  Utilities are a classic example.  If a payment crosses in the mail, it is very easy to make a duplicate payment by paying the balance due instead of current charges.  This can happen with legal bills, fuel, and other recurring payments.

One final step is to discuss the outstanding checks from the bank reconciliation with AP every month.  If a check has not cleared the bank within a month, there may be a problem.   Research the check and ensure that it was not a duplicate payment.  Was the check mailed to the proper address?  Contact the supplier and make sure they have the check.  Even if you owe the money and have to replace the payment, it will build a stronger relationship with the supplier if you clear up the problem early.

B2B CFO® has over 200 experienced chief financial officers who stand ready to help businesses improve their cash management processes.

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