Optimising Purchase To Pay (P2P): Top 10 Exceptions
| Context | Exception | Description |
| Purchase Orders | Sensitive Changes to Purchase Orders After Creation | Monitor changes such as price and payment terms. Changes to price or payment terms impacts cost forecasts and cash flow. Changes to the PO increases the cost of processing the PO and impacts subsequent matching of goods receipts and invoices A common practice to circumvent system controls is to create a PO with nominal value to “get the process going earlier” and start the approval process … and subsequently update the price. Changes to the PO are a leading indicator of the process not being executed as designed and ultimately may impact Key Performance Indicators for the procurement process. |
| Purchase Orders | Duplicate Purchase Orders | Identify Purchase Orders where selected fields have same content indicating potential duplicates. For example: same vendor, material, amount, quantity, period. Duplicate purchase orders may lead to over delivery and over payment for goods or services resulting in higher than expected cash outflow and potential financial losses. Can also result in excess inventory storage and handling costs. |
| Purchase Orders | POs created and approved by the same person | Purchase orders created and approved by same person may result in the processing of unauthorised or fraudulent expenditure. |
| Purchase Orders | Non standard payment terms | Identify Purchase Orders where the payment terms are different to standard terms agreed with the vendor or are particularly sensitive (e.g., immediate payment). Purchase orders issued that do not follow the agreed or preferred payment methods can have an adverse effect on cash outflow and working capital. It may also lead to problems with vendor relationships and corporate image and reputation. |
| Payments | Manual Payments | Standard payments are largely automated. There is an increased risk and potential for inappropriate activity in the processing of manual payments. This can lead to unauthorised or fraudulent expenditure |
| Invoices | Invoices with no goods receipt | Risk of being invoiced and making payments for goods not received. Potentially leading to unauthorised or fraudulent expenditure. |
| Invoices | Duplicate invoices | Duplicate invoices may result in excess payments to vendor. Such invoices may lead to financial losses and affect cash outflow and working capital. |
| Invoices | Invoices created by the same person who created the vendor | If the same person has access to create vendor master records and process invoices then there is a risk of potentially inappropriate or fraudulent activity. Monitoring for invoices created by the same person who created the associated vendor provides visibility of such cases and therefore mitigates the risk. |
| Vendors | Sensitive changes to vendors after creation | Monitor changes such as bank details, alternate payee, payment terms, payment method. Inappropriate or fraudulent changes to vendor master records may impact cash outflow and working capital. |
| Vendors | Duplicate Vendors | Duplicate Vendor Master Records for the same vendor may cause data integrity issues which can adversely affect orders and payments. The vendor relationship may be affected due to data integrity issues. The possibility of duplicate orders and invoices being entered increase chances of fraud. |
The use of automation to monitor risk and performance in key financial business processes is growing. The processes are executed in ERP systems such as SAP and Oracle and all the transactional data is stored within these systems, meaning it can be monitored using automated tools. But where do you start? As food for thought we have listed the top 10 P2P exceptions being monitored by our customers.