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.

1. Recovery Audit Services
Post-payment audit to recover excess payment from suppliers – through spend
analytics and a continuous process improvement to eliminate sources of leakage
Gianni Giacomelli
Senior Vice President, Genpact
Subhashis Nath
Vice President, Genpact

2. A Global Business Process Services Leader: Process
Transformation and Outsourcing, Analytics, Technology
What
we do
How
we do it
We help leaders of some
of the largest enterprises
transform and run
their processes and
operations, including
the very complex and
industry-specific
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
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
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3. THE CHALLENGE
PROCESS • ANALYTICS • TECHNOLOGY
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4. Companies face multiple challenges related to supplier
contracts, making a compelling case for recovery audit
Challenges related to contracts
•
Excess charges levied by vendors
due to undue unit rates
•
Rate/contract amendments not
considered
•
Duplicate charges across
consecutive/future invoices
•
Billing of services not used/delivery
mismatches
•
•
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
Inadequate volume discount
•
For every $100 million, a 0.1% error
margin translates into $100,000 in
recovery opportunity
Billing for services not contracted
•
•
Duplicate payments due to multiple
invoices
•
Compelling case for recovery audit
Overcharging of VAT
PROCESS • ANALYTICS • TECHNOLOGY
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5. Undue payments to suppliers is a significant issue – up to
0.1% of revenue could be recovered
Lack of quality
data
Inconsistent and incomplete data for a large supplier
base and huge transaction volumes makes audit exercise
lengthy and difficult
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
Inability to identify
root causes
Companies are unable to address the root causes leading
to repeated undue payments to their suppliers
Limited incentive
to improve
processes
Traditional external vendors have limited incentive to
help improve processes and prevent future errors
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
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6. Challenges contributing to recovery vary by industry
EXAMPLE
Retail
• Managing a portfolio of 30,000-60,000 SKUs creates a
high volume of purchase-to-pay transactions
• Complex pricing arrangements
Manufacturing
and CPG
• Purchases at different frequencies and volumes
• Frequent M&A
• As a result vendor master data and contracts tend to
have overlapping entity relationships
PROCESS • ANALYTICS • TECHNOLOGY
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7. Up to 12-17% of supplier payment value is ‘leaked’ in an
average manufacturing company, of which ~80% is recoverable
Top leakage
points
Data errors and
omission
5-7%
Unauthorized
payments
80-85%
4-5%
~80%
1.5-2%
Overpayment
1-2%
Duplicate
Payment
Unusual
purchasing
behavior
0.5-1%
12-17%
PROCESS • ANALYTICS • TECHNOLOGY
% „recoverable‟
leakage
% value
„leaked‟
~70%
~90%
TYPICAL
Business impact
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%
~80%
Source: Genpact experience
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8. THE SOLUTIONS
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9. A step by step recovery audit approach
A
Process
diagnostics
B
Audit
Identify cash
leakage points
through:
Audit methodology
comprises:
• Quantitative
diagnostics
• Audit analytics
• Qualitative
diagnostics
• Data collection
• Substantive
testing
• Report and
recommend
C
Recovery
• Recover
outstanding
claims
• Reports and
dashboards
D
Process
transformation
Process
transformation
achieved through
application of Lean
and Six Sigma, and
a scientific process
management
framework
Comprehensive area in scope
Accounts payable, procurement and supply chain invoices, contract services, indirect spend
and freight, trade promotion funds and pricing, taxes, utilities and telecom
PROCESS • ANALYTICS • TECHNOLOGY
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10. A
Process diagnostics
ILLUSTRATIVE
What can be achieved
• Road map for improved processes (e.g. electronic
invoicing) and compliance (e.g. contract amendments for
consistency)
Key findings
• 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
Sample deliverables
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
Business impact
• Understand dependencies between various functions,
businesses and regions
• Lean six sigma based solution development to generate
actionable recommendations
PROCESS • ANALYTICS • TECHNOLOGY
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11. B
Audit
ILLUSTRATIVE
What can be achieved
• 100% audit of in-scope areas
• 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
Sample deliverables
Days to payment trend analysis
• Reduced recovery year-on-year by up to 15-20% through
improved processes
• Collaborative approach with client and their suppliers
facilitating claim recovery
• Provide formal reporting to client and feed root causes
into continuous process improvement
PROCESS • ANALYTICS • TECHNOLOGY
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12. C
Recovery
ILLUSTRATIVE
What can be achieved
• An efficient and effective recovery process leading to 8090% 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
PROCESS • ANALYTICS • TECHNOLOGY
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13. D
Process transformation
What can be achieved
ILLUSTRATIVE
• 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 1520%
• Optimized supplier network integration throughout the S2P
lifecycle
Key performance measures
47.2%
Effectiveness
of IA recovery
Delivery approach
• Onshore activities
−
Due diligence on client requirements, existing processes
and transformational to-be state
−
Implement technology customized to client requirements
−
86%
1.2MM 4.2MM
Efficiency
Claim
denials
2%
12%
Execute process improvements
• Globally delivered activities
−
Develop comprehensive blueprints for process and
transactional excellence
−
Median
Six sigma/ process experts working on identifying
bottlenecks
−
Genpact Best In Class
Continuous process monitoring for adherence to accepted
operational metrics
PROCESS • ANALYTICS • TECHNOLOGY
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14. CONTACT GENPACT TO EXPLORE THE
“ART OF THE POSSIBLE”
PROCESS • ANALYTICS • TECHNOLOGY
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15. 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.
PROCESS • ANALYTICS • TECHNOLOGY
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16. Thank You
Gianni.giacomelli[at]genpact.com
Subhashis.nath[at]axisindia.co.in
www.genpact.com/home/solutions/finance-accounting/recovery-audit-services