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Benchmark Your Audit Recovery Team Performance

AuditView dashboard makes tracking key benchmarks easier

by Chris Siemasko, VP Product Development and Strategy, APEX Analytix

We've all heard the old saying "What gets measured gets done." That quote, often attributed to management gurus like Peter Drucker or Tom Peters, is actually a paraphrase of Lord Kelvin's famous "If you cannot measure it, you cannot improve it." Central to the continuous improvement concept is the idea of developing metrics and benchmarking historical and current performance against them.

Benchmarking performance in Accounts Payable (A/P) or Shared Services centers is becoming common in today's competitive business climate, for groups, departments and individual managers. From the top down, leaders are holding everyone accountable for results -- and for making decisions that improve those results.

A closely related trend is the idea of executive "dashboarding." That is, monitoring business intelligence or performance data in real time and reporting results on demand in easy-to-understand graphical charts. Dashboards give managers the ability to drill down to underlying detail and "slice and dice" supporting data in a variety of ways to improve visibility and transparency.

These two overarching trends come together in FirstStrike® AuditView™, which gives A/P management the opportunity to measure how well their team does when it comes to A/P audit recovery. You can, with a keystroke or two, see claims, track your "hit rate" and help ensure that your A/P recovery team is performing at a level to meet your objectives.

Customers use AuditView to stay up to date on the daily status of audit activity and to keep leadership abreast of bottom-line savings and process improvements. This hosted online dashboard shows you:

• Bottom-line savings, your "cash in bank."
• Summary and detail by reason codes to understand root causes and eliminate future leakage.
• Deduction aging queues to keep savings opportunities from evaporating.
• Overall claim pipeline to forecast resolution efforts.
• Data detail to trend claim types and problem suppliers.

Key to improvement: drilling down

One of the most important metrics is Total Delivered Value. In short, what's your cash in bank? The graphic view shows exactly what's going on: what your company has recovered so far, what commitments are on hand, the associated claim counts and dollar values. You will also see targeted claims -- that is, potential recoveries that are currently being working on. Trending the metric over time will help you measure how your team or other teams are performing throughout your audit cycles.

The drill-down capability in AuditView is an essential ingredient for remedial action and continuous improvement. You can look at claims by type to understand the root cause. Perhaps there are duplicates, or pricing-related claims, freight- or tax-related issues. In a retail setting, claims may involve incorrect allowances, rebates or billbacks. Say you look at claims in your cash-in-bank bucket and see that 50 percent are allowance-related errors, with the rest split 5 to 10 percent across other claim concepts. You can then take action to figure out what is causing that high percentage. Is it a system issue on your side? Or maybe half those allowance errors come from a specific vendor. Are they billing incorrectly? Is the deal not set up correctly? You have the detail you need to take remedial action quickly.

At the top level, AuditView helps you measure the productivity of your entire recovery team. Let's assume they recover quite a bit and find errors they would not have found before. That's great, but you don't want errors to persist for years. With AuditView, you can drill down to the claim level and find the root cause and address that. The root cause would be masked if you had access only to summary information. Relevant detail gives you the opportunity for continuous improvement.

Tracking auditor performance

In a retail environment, the audit recovery team may consist of many people, with both internal and external resources. Managers want to know how individuals perform -- how many exceptions they look at and how many claims they find.

For example, Joe may generate one claim a week for $50,000 on average, compared to Jane who generates 50 claims a week for $1.2 million. That's important for managers to know. Maybe Joe is reviewing a segment of error-free suppliers -- or maybe he doesn't understand what he needs to do, and needs training. If you have just summary data to look at and things look OK overall, that type of problem would never surface.

Digging deeper into deduction aging

Deduction aging is another critical metric -- looking at aging from a timing point of view. How long has a claim been sitting with Joe? The meter starts running once he says it's a claim, but how long does it sit there? What stage is it in? Maybe that claim has been with Joe for a month? Has he worked it? Or perhaps the claim has been in the supplier's hands for 30 days with no action. The A/P manager can track this with the dashboard and get on the phone or take a credit if the contract allows it.

Tracking aging is a measure of team productivity, but it also affects cash in the bank and where you stand compared to your recovery budget, which is important for retailers that budget for recovery and track it monthly. AuditView gives you visibility over your audit activities, as well as detail on which vendors are responding or not responding. You can also quickly see where you stand compared to your recovery budget. Are you at 50 percent or 40 percent? You can consider where you should be at that point and if you need to raise a red flag or tell your leadership team that you are on target.

Of course, it's no secret that the longer a claim ages, the harder it is to collect -- and that ties directly to another category in AuditView, called "Not a Recovery." It's available when you look at claim status. You'll see a pie chart for claims invoiced, claims billed or refunds issued, for example. One big slice may be "Not a Recovery." It will contain situations that look like errors but turn out not to be after all. However, in many cases that "not a recovery" bucket holds claims where the supplier went out of business or closed the books on the prior year and says, "There's no way we can send you a check for $1 million."  Perhaps the buyer says this is a valued vendor and we won't risk the relationship by forcing them to pay the $1 million and restate their financials. Sometimes it's not worth the risk in the context of a $100 million relationship.

However, with a dashboard like AuditView on hand, you can be more proactive and jump on those situations earlier in their "depreciable life," so to speak. A sizable portion of those "not a recovery" dollars could go in the bank. For example, if you raised the issue of the $1 milion claim with the vendor early on, you may have gotten that $1 million without risking the relationship to do so. Real-time visibility into what's "Not a Recovery" will help you take more to the bottom line, because you don't miss opportunities like that.

Delivering essential transparency

At APEX Analytix, we don't mind if you know the day-to-day progress of any auditing assignments we perform on your behalf. In fact, we think it's to your competitive advantage to know precisely where things stand. Because AuditView is the very same tool your APEX audit advisors use to conduct and manage your audit, you're always, quite literally, on the same page with us.

AuditView gives you transparency into your audit status, in real time, every hour of every day, via a simple web login. One look at the graphics will show you the value received to date, what monies have gone to the bank, how much you've recovered and how much you've recognized. You'll also know about all the potential opportunities still in your recovery pipeline.  We think that's just the ticket for A/P operations that believe, as we do, in benchmarking and continuous improvement.

Chris Siemasko, vice president of product development and strategy at APEX Analytix, is responsible for the strategy, sales, qualitative and quantitative research, planning, packaging, and communication of the FirstStrike Performance Platform, the leading procure-to-pay transaction compliance and fraud prevention platform sold to Fortune 500 companies. He has 20 years of product management, project management and software delivery leadership in the information services industry, including positions in enterprise consulting and e-commerce product solution firms.