Welcome back to the third and final blog in our three-part series of (anonymized) backstories on the nine AP “gotchas” our AI flagged when reviewing millions of enterprise invoices and contracts. We always find fraud, padded charges, and plenty of errors, but highlighted nine of the wackiest in our State of AI in Business Spend report. Here’s our third and final post on the final three AP “gotchas”. Catch up on the first two posts on expired contracts and inflated invoices and duplicate invoices and regulatory violations.
Auto-renewing contract for a service you no longer use
One model in our AI platform looks for expiration dates – or lack thereof. We always flag auto-renewing contracts, contracts close to or beyond their expiration date, or contracts with expired terms, such as required insurance coverage. One auto-renewing contract, which happened to be in its second year, was for a service that the company was no longer using. Talk about waste! The company was able to discontinue the service immediately and seek reimbursement from the supplier. With AI, you can find this stuff before you pay, so you don’t have to claw it back later.
Construction project invoice for bunk materials
We’ve often heard from customers who undertake construction projects that supplier contracts are typically padded by at least 15-20 percent. Many consider it the cost of doing business, but it’s still annoying and unfair. Beyond getting gouged, the bigger issue for finance professionals is that they don’t have a good handle on the project for planning purposes, and they don’t always know whether the company will overspend (and by how much). Sometimes they’re overcharged for services, but in this case, there were charges for construction materials that the company never received. With AI, they can now keep their construction contractors on a much tighter leash.
Supplier invoice payable to an internal employee
When it comes to fraud involving an outside supplier, often there’s an inside person colluding to carry out the scheme. That person may approve bogus spend or alter system information to cover the fraudster’s tracks. In this particular case, the inside person was the outside supplier. AI found that the invoice’s “remit to” information was actually that of an internal employee who was receiving payments for fake “services.” The employee has been referred to law enforcement and no longer works at the company.
Check out all of the AP “gotchas” and more in our State of AI in Business Spend report.