Originally published on LinkedIn – November 29, 2017 (Article Link)
Photo by Helloquence on Unsplash
As 2017 comes to a close, most savings projects are wrapping up for the year. If you still want to make an impact for this year, I would recommend doing an audit of your temporary labor invoices. Let me tell you why.
Most people think this large spend category is already audited because of the size of the spend and the fact that they utilize a Managed Service Provider (MSP) as an intermediary who consolidates all of their invoices for them. Unfortunately, they’re wrong. It has been our experience that even with an MSP managing the program, we still find 1% over-billings, sometimes even more. These can come from billing the wrong rates, wrong markups or even the wrong OT factor. We’ve even seen invoices where the actual math in the invoice was incorrect.
I understand why most companies don’t audit their invoices: It’s a lot of work. Depending on the size of your spend, a consolidated invoice for the past year could easily be 20,000 individual line items each of which need to be examined from a number of different perspectives. That amount of work makes it tempting to assume that the invoice amounts are “close enough”.
This is also true. While most of the invoices that we audit are pretty close to accurate, “close enough” can still cost you real money. We typically find the invoices are 98%-99% accurate, with the vast majority of mistakes coming from simple human error. But that 1%-2% can equal a significant amount of money.
Our average client has a $40M contingent labor program. For them, 1% mis-bills equates to $400,000. You can see how if you are still looking for savings this year, reviewing these invoices could be a way to make a significant impact.
Staffing companies typically close their books on December 31st of each year and if you are looking to get a refund for incorrect invoices, now is the time to ask. In addition, it can also help to make your company’s profits look better this year.