All Eyes on Finance - Could a Recovery Audit Help to Relieve the Pressure?

In a heartbeat, Q2 of 2024 is upon us. For senior finance professionals, it's a point in the year to take stock, consider if business objectives are being delivered and whether the finance function is doing all it can to support company success.

The top issues on CFO priority lists at the start of year, were reported to include transformation leadership and finance function improvement¹, greater transparency in the face of cyber security and geopolitical risks², cost reduction and increased cash flow.³

These were all informed by a continued need to support company resilience as economic headwinds remain challenging.

Failure to deliver on today's finance function demands is not an option. But, with a potential economic recovery on the way (albeit a slow one), it is also imperative to put measures in place now that will help to propel profit and growth as external pressures ease.

All eyes are on finance. Being able to address priorities, shore up risk and position the business for future success is key. One, often overlooked, solution that can really prove its worth here is recovery auditing. This expert discipline not only frees up significant amounts of cash but creates transparency, drives improvement and identifies cost reduction opportunities. Here's a snapshot of its key benefits.

Cash Boosting
However perfect your employees and systems, you will have leakage. Recovery auditing scrutinises financial transactions, related data, and operations to identify and recover what's been lost. This can result in a substantial cash injection into the bottom line. The money is there for the taking, as long as you have the resource to go after it.

Over time, recovery audits can stimulate a dramatic boost to cash flow and profits, not only by identifying and recovering revenue leakage but also by correcting financial discrepancies.

They are designed to prevent organisations from losing large amounts due to financial errors such as unpaid invoices, duplicate payments, pricing and billing errors, missed discounts, allowances, and overpayments. Every organisation on the planet will be subject to these and the purpose of a recovery audit isn't to witch-hunt and apportion blame, but to prevent situations from snowballing and limit future error. Facing these issues head-on produces peace of mind in the long run.

Transparency
As already highlighted, recovery audits shine a light on discrepancies, helping to ensure they can be addressed and don't become an amorphous source of anxiety for finance professionals. Visibility is crucial for CFOs, who are expected to keep boards, investors and staff fully in the picture, when it comes to financial performance.

Elucidating errors may seem scary but ignoring them doesn't make them go away. Addressing them via a recovery audit helps to identify them and nip them in the bud.

This is a really effective form of risk mitigation, which galvanises the finance function and reduces the risk of financial fraud – all of which will be welcomed by stakeholders.

The process also encourages more open and transparent interactions with suppliers too. Acting as a check on accuracy, recovery audits enable companies to address issues with suppliers, ensuring contract compliance and maintaining strong working relationships.

Finance Function Improvement
Unsurprisingly, the analysis undertaken with a recovery audit can swiftly identify areas for operational improvement. Far more than a means of flagging error and recovering funds, audits pinpoint opportunities for enhancing internal processes and boosting operational efficacy and efficiency. They contribute to improvements in sourcing, procurement, ops and supplier relationship management.

Consisting of four phases; scoping, data gathering, delivery and reporting, audits can help with benchmark setting, to measure improvement against, all backed by clear, shareable data.

Outsourceable
With finance teams and CFOs having a wider remit than ever to satisfy, resource is tight. It can prove impossible to ringfence people internally to conduct a recovery audit, no matter how much you might want to deliver the exercise.

By working with an outsourced recovery audit partner who is solely focussed on the job of recovering your money, with the technology and processes in place to do so quickly, you can avoid risk of stretching your in-house team too thin.

Experienced audit specialists will be well versed in helping to gain buy-in for the process from the C-Suite and will support finance teams in a collegiate manner that should limit any sense of interfering or scapegoating.

From a practical point of view, auditors typically charge on a contingency basis, with fees based on a percentage of recovered money, so it's in their interest, as well as yours, to be a rigorous as possible.

For CFOs seeking to support the financial resilience and future growth of their companies, recovery audits are an essential strategic tool. They provide valuable insights, identify operational gaps, and protect the bottom line. Placed in the hands of experts, they are also straightforward and quick to deliver.

We can help
Barcanet can equip you with the time, technology and expertise to recover and retain cash, and drive efficiencies. Contact us via telephone on 020 8720 6756 or email at hello@barcanet.com.