What a recovery audit can and cannot find
A recovery audit looks backward. It examines payments you have already made and asks whether any should not have been. That focus gives it clear strengths and clear limits. Knowing both helps you decide what to ask a partner firm and what to do yourself.
What the term means
In plain words, a recovery audit is a review of past payments, usually by an outside specialist, to find money owed back to you. The glossary entry on recovery audit gives the short definition. In practice the work draws on your payment records, vendor contracts and invoices, and sometimes on statements requested from vendors.
Fairview does not run recovery audits. A partner firm does, and the scope is agreed between you and the firm.
What it can find
Published descriptions of this kind of work name a consistent set of problems:
- Duplicate payments. The same invoice paid twice, sometimes because a vendor was entered under two records. See duplicate payment.
- Unapplied credits. Credits owed for returns or shortages that were never issued or never used.
- Unclaimed rebates and allowances. Negotiated amounts nobody tracked.
- Unapplied prepayments. Advance payments larger than the final invoice, with no credit applied.
- Pricing differences. Invoice prices that do not match contract prices.
- Excess charges. Freight or service charges beyond what an agreement allows.
Most of these are found by matching records against each other: payments against invoices, invoices against contracts. The accounts payable audit page describes what that review looks at.
What it cannot find, or cannot fix
Be realistic about these limits:
- Errors with no record. If a payment is missing from your files, it is hard to test.
- Overpayments the vendor disputes. A finding is only a claim until the vendor agrees. Recovery depends on the vendor responding and repaying.
- Old items you can no longer pursue. Contract terms or law may limit how far back you can claim. [VERIFY: time limits that apply to your contracts and jurisdiction]
- Poor value for the effort. A vendor with very few invoices may not be worth reviewing.
- Causes, not only symptoms. A review may find duplicates without fixing the vendor setup that created them. That is your process to repair.
- Ethical or legal conclusions. Whether a charge breaches a contract clause can be a legal question for your counsel.
Note: A recovery audit does not guarantee a refund. Any statement about typical results has to come from the firm and be approved by it. [CONFIRM: a partner firm supplies and approves this statement]
Credits versus cash
A recovery often arrives as a vendor credit and not as a payment. A credit reduces what you owe on later invoices. A refund returns cash. Which one you get depends on the vendor and on whether you still buy from them. Read reading a vendor credit or refund so you can tell what you received.
Questions that set expectations
Before you agree to anything, ask the firm:
- Which of the error types above will you test for in my records?
- How will you confirm a finding with the vendor?
- What happens if the vendor disagrees?
- How are credits treated for fee purposes?
- Which payment years are in scope?
Fee models for this work vary, and some are based on a share of what is recovered. Compare options in contingency fee versus flat fee.
What you can do yourself
You do not need to wait for a review to catch some of this. Run a report of open vendor credits by vendor and age. Look for the same invoice number paid twice. Check whether vendors with similar names exist in your system. These steps are cheap and often reveal where a review should look first.
How to proceed
If you want help, pick a path on the request a professional page. A partner firm will contact you, and the first call is the place to agree on what will and will not be tested.
Tell us what you need reviewed. We match you by hand with an independent partner firm. You keep your existing vendors.Find out what you are overpaying.