Bedrock Acquires Procoto to Revolutionize Procurement Processes and Enhance Enterprise Supplier Management Capabilities.
Businesses face a range of threats, from supplier data errors to overlooked AP discrepancies. If left unmitigated, these risks can lead to significant revenue losses. In fact, the Institute of Finance & Management found that businesses with poor data management practices lose up to 3% of their annual revenue due to errors in their accounts payable processes.
We believe that the best way to mitigate these risks is for organizations to focus on building a culture of risk awareness- particularly within their finance teams. This means ensuring the accuracy of supplier data and regularly conducting AP recovery audits to prevent lost revenue. In this post, we’ll explore why a risk mitigation strategy focused on supplier data integrity and AP audits is crucial for financial success.
One of the most significant risks facing finance teams is inaccurate supplier data. Errors in supplier data can lead to overpayments, duplicate payments, and missed discounts, all of which directly impact a company’s cash flow. According to Paystream Advisors, up to 12% of all invoices processed by organizations contain errors, many of which are related to incorrect supplier data.
When left unaddressed, these errors can snowball into significant financial losses. For example, overpaying suppliers or failing to capture available discounts can result in businesses losing hundreds of thousands of dollars every year. In addition, poor supplier data can lead to compliance issues, including tax discrepancies and legal challenges, further increasing financial risk.
Damaged supplier relationships due to invoicing errors or delays erode trust and may result in less favorable terms or even loss of critical suppliers. The reputational damage can be just as costly as the direct financial impact.
AP recovery audits are one of the most powerful tools in mitigating financial risks and recovering lost revenue. AP recovery audits involve identifying overpayments, duplicate payments, and other discrepancies in a company’s payment history. A well-executed AP audit can uncover funds that were erroneously paid out, potentially recovering millions of dollars.*
*For a more detailed breakdown of AP recovery audits, see our blog post titled ‘The Essential Guide to Recovery Audit Success’
A KPMG report revealed that businesses conducting regular AP audits recover, on average, 0.5% to 2% of their total annual spend, depending on the size and complexity of the business.
Without regular AP audits, businesses risk leaving significant amounts of money on the table. In fact, APQC research has shown that the average company could recover as much as $1 million in overpaid invoices simply by conducting thorough AP audits.
Bedrock has seen firsthand how neglecting AP audits results in missed recovery opportunities, increased financial exposure, and a potential increase in vendor disputes, which can harm both the bottom line and the company’s reputation.
To effectively mitigate risks related to supplier data and AP recovery, we believe it is paramount to foster a culture of risk awareness within your finance teams. Here are the key steps to achieve this:
Building a culture of risk mitigation starts with commitment from leadership. Senior executives must prioritize data accuracy and AP audit processes as core elements of the company’s risk management strategy. Leaders should model best practices and ensure these values are communicated across all levels of the organization.
Education is critical to cultivating risk awareness. Finance teams should be trained not only in the technical aspects of supplier data management but also in identifying potential risks. Regular workshops and training sessions can help finance professionals understand how small errors can snowball into larger financial and compliance issues.
Regular AP recovery audits should be a cornerstone of any risk mitigation strategy. Implementing automated systems that track and flag discrepancies in real-time can significantly reduce the workload on finance teams while increasing accuracy. By automating invoice reconciliation and supplier data maintenance, businesses can prevent issues before they escalate.
Encouraging transparency and open communication is essential for identifying and addressing risks. Finance teams should be empowered to report discrepancies and take corrective actions promptly. A culture of proactive problem-solving will help ensure that risks are addressed quickly and efficiently.
Once you’ve implemented the previous steps, it’s important to measure the effectiveness of risk mitigation strategies. Here are some key metrics to ensure you’re tracking:
Implementing regular feedback mechanisms will allow teams to continuously improve their processes. By tracking these metrics, businesses can assess the effectiveness of their risk mitigation strategies and make adjustments as needed.
While the benefits of risk mitigation are clear, there are challenges to overcome. Resistance to change is one of the most common obstacles, especially when it comes to shifting from a reactive to a proactive approach. Overcoming this resistance requires buy-in from leadership, clear communication about the benefits, and providing finance teams with the tools and support they need.
Balancing risk mitigation efforts with the day-to-day demands of finance operations can also be challenging. However, using automated tools and outsourcing certain tasks, such as AP audits, can help streamline processes and reduce the burden on finance teams.
A culture of risk mitigation is crucial for protecting your organization from financial and compliance risks. By focusing on maintaining accurate supplier data and conducting regular AP recovery audits, businesses can identify and prevent revenue leakage before it becomes a major issue. A proactive approach to risk management not only helps recover lost revenue but also improves cash flow, strengthens supplier relationships, and ensures long-term financial stability.
Take the first step toward building a culture of risk awareness today. Start by reviewing your current AP audit and supplier data management practices—and consider leveraging Bedrock’s solutions to enhance your risk mitigation strategy.