AP Audits

Your accounts payable is very important in growing and maintaining your business. The concept is simple, but it can often become very confusing and complex. If your bottom line income seems a little off, there may be errors that are affecting your monetary flow. Investing in an AP audit can help you understand exactly where your money is going and how you can keep it from deviating from your business. With a little Accounting 101, you can understand how your accounts payable can go from your worst enemy to your greatest tool.

Simply put, your accounts payable is the record of the amount of money you owe to your suppliers. If you are running a carwash, you would probably purchase soap in large quantities. The soap supplier would come with an invoice, and you would apply that invoice to your accounts payable, and the supplier would receive his money at a later date. The money that you owe to this supplier constitutes your AP. Paying off your accounts payable effectively and in a timely manner keeps your business growing. Oftentimes, this process can experience mistakes, an a recovery audit can help recover money from this mistakes.

There are a variety of ways that your AP can experience error. Duplicate charges and unapplied discounts are very common ones, and even if they don't occur very often, they can put a dent in your company's profit. This system also can allow opportunities for fraud, in which a fictitious supplier is added to your accounts payable. So, instead of that money going towards your business, it is going into someone else's pocket. With the increasing complication in a growing business, an owner often installs an automated charging system, making charging the business more convenient and prompt. However, both a manual as well as an automated system are prone to errors, making keeping track of your money tricky. A accounts payable audit diagnoses these problems and discovers the root cause.

Often times, these errors can end up making you short on money and not able to make the payments to your suppliers. This in itself holds many potential problems. Paying on time is a vital component to your business' success. Late or sporadic payments can put stress on the relationship you have with your suppliers, and it also effects your business' credit score. Keeping a good reputation with suppliers can only benefit you, and an accounts payable audit can help you stay on top of your payments. An accounts payable audit looks through everything concerning your money, from invoices to contracts to bank statements and determines where you might be experiencing problems. They then propose a solution and how you can make your company more fiscally efficient.