If you’re a finance or divisional leader, chances are that you’re asking your people to look for cost savings.  Perhaps you’ve already issued or been issued with a mandate to find some aggressive cost savings.  Perhaps you’re at the point where the low hanging fruit is gone and you’re now considering the hard decisions including downsizing and deferring important expenditure. Perhaps the pressure on your CFO and by your CFO is increasing?

The good news is that if you’ve got a large ERP System (SAP, Oracle, Mincom, etc), there is a very good chance that you’re sitting on funds that you’re entitled to.

Find Money FAST is a product which trawls through your data to see if there is money going out the door that shouldn’t be.  Also known as revenue leakage or cost leakage, Find Money FAST can be set up to trawl your systems on a one off or ongoing basis to claw back these funds, finding things like:

• Duplicate payments
• Entitled discounts for paying on time
• Discounts given away which shouldn’t be
• Fraudulent payments

These manifest themselves in different ways.  Often there are a high volume of small transactions which add up to a significant amount.  Sometimes the individual transactions are significant in themselves.

You may think that you have these covered through internal controls, but as the Find Money FAST team always says “controls are good, but the truth is in the transaction.”  Unless you are trawling 100% of your data, you never know if you’ve leaving money on the table.

Some Facts and Figures

• Most companies report a relatively low duplicates payment frequency: between 0.1 and 0.5% of total payments made. [IOMA 2007] But even at this low frequency, duplicate transactions can add up to a loss of $100,000 to $500,000 for every $100 million in payments made.
• Nearly 40% of companies report T&E error rates in excess of 5% of T&E expenditures. [IOMA 2007]
• Just 44% of companies with over 1,000 employees pay most of their invoices within specified discount terms. More than half of companies with over 1000 employees are not taking full advantage of available vendor discount terms. [IOMA 2007].
  Missing a 1% discount on a quarter of your payments can add up to $250,000 cash lost, for every $100 million in payments. On the other hand, paying invoices too quickly places needless pressure on cash resources, and adds to the cost of financing working capital.
• 4.6% of invoices contain errors and 44% of companies pay without original invoices [IOMA 2007]
• The median loss to companies from an employee-vendor conflict of interest scheme is $75,000. [The Association for Certified Fraud Examiners]
• 44% of companies that use purchasing cards report that purchase volume is at least 5% of corporate spend. [IOMA 2007].” 35% of purchasing card fraud is detected through internal and external auditing. You need to audit on an ongoing basis to detect fraud and misuse and nip it in the bud.” [IOMA 2007]
• The average auto write-off tolerance (the difference between payment amount and invoice amount that is accepted without further review) for large companies is $92 per invoice. [IOMA 2008]

Why Find Money FAST?

The Find Money FAST team has over 500 analytics which can be set up quickly to cover all different possibilities. While a lot of these are not new ideas, the Find Money FAST team:

• Knows where to look
• Has nearly 500 different transaction tests and hypotheses ready to go
• Has negligible start-up time
• Has a track record of results
• Can trawl 100% of your data without causing business disruption

In short, if there’s money to be found in your AP, AR, GL, HR/Payroll, GST, IT & Telecommunications, AML or Inventory, they’ll help you find it fast, now, and also on an ongoing basis.

For further information, or an obligation-free consultation, please don’t hesitate to contact Todd Davies on 0422 000 913 or info@todddavies.com.au.

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Due to popular demand TDA is now offering advice in this area.

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We’d like to wish all of our clients, alliance partners, suppliers and friends all the best for the festive season. Thank you for your support and friendship, have a safe and happy festive season and we look forward to catching up with you in the new year.

Feel free to download the TDA 2008 calendar using this link: Todd Davies & Associates – 2008 calendar. 

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Photo credit: Jordan Yerman, New York City 2005.

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I’m working with a client on getting seed funding to start what I believe to be a very exciting new business, so much so that I’m taking an active involvement in it on an at-risk basis.

This company aims to generate superior capital returns for it’s clients through rehabilitating landscapes and making properties more productive on a sustainable basis.  It embodies a lot of the things I am passionate about – conservation, sustainable development, property investment, a good risk/return ratio and helping people to improve their businesses (in this case, agricultural potential and drought resilience).

This is a small scale offering, so it can only be offered to sophisticated investors and people I know (for more on this, see section s708 of the Corporations Act). If you fit either of these criteria, would like to get in on the ground floor and have some extra risk capital burning a hole in your pocket, please give me a call. We’re hoping to close stage one very quickly.

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