Invoice audits are a critical part of supply chain auditing. When you audit fulfillment SLAs, it’s known as fulfillment invoice auditing.
Like all audits, it’s a service provided by analysts who present objective findings that can not only help a business identify where it’s leaking revenue, but it can also reveal possible improvements beyond the audited service.
Since these analysts bring in market insights and contemporary supply chain expertise, they can also suggest ways to optimize your delivery system as well.
On average, businesses lose almost $300,000 per year due to invoicing errors. Studies also reveal that not all these errors are made in bad faith and that avoiding such scenarios isn’t difficult to begin with.
Which is why it’s essential to understand topics such as identifying potential issues, dealing with discrepancies, and steps to take when it’s time to conduct an invoice audit.
What Do Fulfillment Invoice Auditors Look for?
There are several items of interest for an invoice auditor.
It’s easier to divide all these items in categories of inbound ASNs (Advanced Shipment Notices), inbound returns, customers, work orders, storage, shipping, packaging, and miscellaneous costs.
After carefully understanding the SLA between the parties, auditors get to work on identifying the costs spent by a business on total orders, extra SKUs, case and label fees, cancellation charges, international order surcharges, taxes, storage, pallets, shipping carriers, and more.
Essentially, an auditor is following the money and while doing that, they can look at any piece of information that can help them identify where money was needlessly spent. Whether it involves checking customer data or interviewing sales officers and database managers, etc.
Take a look at the common types of invoicing errors that you need to identify.
Things To Ensure Before Getting Invoice Audits
Before getting your invoices audited, there are a few things you should ensure.
Start by checking all of your invoices and ensuring they’re up to date and accurate. This includes making sure that all charges are correct and that there are no discrepancies.
This also means getting your financial records in order and having all documentation ready and organized for the audit.
Finally, be prepared to answer any questions the auditor may have about your invoices or financial records. As investigators, they’re bound to follow the money and question everyone directly or indirectly involved with the process.
Fulfillment Invoice Audit Process Explained
The invoice audit process is relatively simple. Once you’ve identified potential errors on an invoice, you’ll need to gather documentation to support your claim.
This can include things like purchase orders, receipts, and correspondence with the vendor. Once you have this documentation, you can hire analysts for a fulfillment invoice audit.
The auditors will then review the documentation, conduct an investigation and make a determination as to whether or not the errors were made in good faith.
If they determine that the errors were made by mistake, they will work with the vendor to correct them. If they determine that the errors were made intentionally, they will present their findings and recommend taking appropriate disciplinary action against the responsible party.
Need Help?
Although it’d be wrong to say business owners aren’t careful, it’s also true that they can’t be too careful. Sooner or later, you’ll feel the need for an invoice audit and when you do, call us!
As supply chain consultants, we can ensure that your cost expenditures are optimized whether it’s by negotiating with your fulfillment partners or by helping you find one.
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