We let AI loose on millions of invoices and contracts, and here’s what we found (part 2)

by Rachael McCown August 22, 2019

Welcome back to our second blog in this three-part series on nine AP “gotchas,” where we look at some of the more egregious errors, waste, and fraud our AI flagged when auditing millions of our customers’ invoices and contracts . Our AI has found many instances of duplicate transactions, inflated invoices, and outright fraud, but we’ve highlighted and anonymized nine of the biggest “gotchas” in our recent State of AI in Business Spend report. In our first part of the series, we covered expired contracts and inflated invoices. Here’s the story behind the next three AP “gotchas” regarding duplicate spend and regulatory violations. 

Invoice Audit: $45,000 hotel invoice that was already reimbursed via T&E

One of the cool things about AI is that it can look across multiple systems to find “crossover” spend, or duplicate spend across two different systems. Most people think of duplicates as being within the same invoice automation system, or perhaps in two AP systems, but few realize that duplicates can be across invoice automation and expense management systems, nor do they have the capability to find it. 

Though uncommon, we’ve found several examples of this. One recent example is a $45,000 hotel invoice where the company held a large event. It turns out that an employee had already been reimbursed for the same amount after submitting an expense report. If AI hadn’t given the company visibility by flagging the duplicate spend across their expense management and invoice automation systems, they’d have double-paid that $45,000 – once to the employee, and once to the hotel.

Invoice Audit: A year’s worth of invoices – with none of the negotiated discounts

One of the more frequent spend errors our AI finds is invoices that don’t adhere to the terms of the contract, including incorrect pricing, premium services or add-on fees the customer didn’t purchase, missing volume discounts, and incorrect payment terms. One example we found was an entire year’s worth of invoices from a supplier that had none of the negotiated discounts…all year! They saved a bucket of money once they found it.

Invoice Audit: Invoice from a debarred supplier

Our AI flags regulatory violations in spend, including bribes to foreign officials per the US Foreign Corrupt Practices Act or the UK Anti-bribery Act, payments subject to healthcare spend transparency laws such as the US Sunshine Act or France’s Loi Bertrand. Of course, there are always payments to politically-exposed individuals, government entities, and sanctioned entities. One type of violation that people sometimes miss, however, is payments to debarred people or organizations. Violations usually don’t carry a penalty or criminal action, but they can affect reimbursement if you’re working on behalf of the government or entity that has debarred the supplier. Moreover, it can signal supplier risk, wrongdoing, or legal trouble that can hurt your business or reputation.

Check out our State of AI in Business Spend report, and keep an eye on our AppZen blog for the backstory on the rest of the AP “gotchas.”

Rachael McCown

Rachael is a Senior Business Operations Associate at AppZen. She loves the fact that her work changes daily and she is kept on her toes. Rachael is currently in her 2nd year of Masters of Data Science program through the University of Missouri and expects to graduate next May.