The Strange Case of Vanishing Invoices

Written By: David Hewitt

The Problem

Are you missing some of your vendors’ invoices?  Is your RNI balance growing month after month?

If you’re like most AP departments, you’re probably missing some percentage of your vendor invoices and this slow leak is creating enough Dark Data to lead to millions of dollars in unseen risk and liability that must be resolved.

Most of these items will make their way into your monthly RNI report, but not all of them. An RNI report represents all known transactions that are received by the facility but have no complementary supplier invoice to offset the receipt in your accounting system. Additional to these items, there will also be instances of unseen and unpaid invoices in your supplier’s records. They hold as much risk, and they are equally important to resolve.

Unseen and unpaid indicate risk, liability, and imperfect processes. There are multiple reasons for the occurrence of these balances beyond simply unmatched invoices, purchase orders, and receiving information.

Without corrective action, the problem steadily gets worse due to the ever-growing levels of complexity in your financial suite; your prioritized attention to other compliance matters; and a constant procession of changes facing your AP department.

The Cost of the Problem

The inability to address unpaid vendor invoices whether it is due to a lack of time, access, or visibility can cost you in many ways.

Non-payment of invoices can put you at odds with your suppliers.  This creates unnecessary supplier abrasion, which is both uncomfortable and will at some point, in some way, require your staff’s time and attention to address and resolve. It’s best to get ahead of the issue.

Unpaid suppliers make unproductive partners, and they may also choose to put you on credit hold and potentially shut down a critical supply line.  Just consider the impact of neglecting to pay your staffing provider and coming to work to find one of your facilities experiencing a shortage of qualified nurses, for example.

There is also a major bottom-line implication to this matter.  Failure to see all your invoices means you aren’t paying all your transaction on time.  As a result, you could be missing critical discounts, rebates, volume price breaks, and more.

Finally, without proper visibility into all missing invoices, your RNI report may not be completely accurate and could impact, and call into question, the accuracy of your monthly accruals.

Exploring the Different Ways to Address the Problem

You can dedicate resources to review problem vendors to get to the root cause.  You can also investigate why PO’s are not automatically matching to invoices and receipts, and you can correct those issues in an attempt to avoid them from happening in the future.

You can also perform a manual evaluation of your largest open purchase orders against unmatched receipts.  Assuming you find any connected items, you can associate them together and pay the invoice.

Unfortunately, these types of reviews are quite manual and time-consuming and you may find it is hard to draw associations between the mismatched line items with your internal resources because… remember it was your internal process that missed the match in the first place.

You may choose to go in another direction altogether and write off the RNI items which could provide a temporary solution, but the overall balance will continue to grow, and you won’t gain any root cause insights.  Add to that, your report balance will be inaccurate.

You could choose to bring in an accounting firm but given the typical rates, you will likely see the costs of the project scaling out of control because you are asking these groups to pour over large volumes of data across many different systems.

In our experience, we find that the best solution is to hire a Recovery Audit firm to review the RNI report.  Recovery Audit firms have experience, tools, and aptitude for reviewing enormous sets of data and they have comfort and familiarity with your vendors.  If you do choose to allow a Recovery Audit firm to review your RNI, insist that they are delivering deep root cause analysis as well and best practice suggestions for reducing the problem on an ongoing basis.

Happy AP Appreciation Week to AP Professionals Across the World!

Written By: Tom Flynn, VP of Marketing

We wanted to take this opportunity to acknowledge the Accounts Payable Association, their leader Jamie Radford and his superb team to thank them for hosting and promoting this year’s Accounts Payable Appreciation Week!

It’s important for us to take time to acknowledge the contributions of AP professionals across the globe.  From our vantage at SpendMend, AP is positioned as a critical hub within any organization.  They are situated between many essential groups and are asked to partner with each of these groups on important tasks and workstreams.

AP often reports up to financial leadership in some fashion and in that role, they are tasked with managing and maintaining critical finance goals and controls.  AP must also forge a relationship with sourcing and procurement so the P2P process is seamless.  AP also maintains a large population of employees and are tasked with getting payroll out on time as well as getting expenses paid.  Possibly the largest and most difficult task of an AP department is the onboarding and management of a huge population of suppliers.  In that role AP serves are the final gate keeper on all money before it leaves the organization.
Simply put, AP is asked to do many tasks while interacting with vast arrays of groups and in most of these cases there is zero room for error.  Whenever people refer to AP as the “back office” it is always important for them to understand that “back office” does not mean “background.” It is more accurate to think of the AP “back office” as the “back bone” of an organization because AP is a central pillar in any business.  The last twelve months have demonstrated this reality more than any other time in recent memory.

When global pandemic challenged commerce across the globe, AP departments everywhere rose to the challenge to provide leadership and grit on par with front line healthcare workers. You ensured that bills were paid, that supply chains remained open, and that organizations continued to function under these new adverse conditions.  These were circumstances that most people had never seen before, and for most people, they had never even dreamed of such circumstances.  AP departments everywhere came through in a big way all the while suffering large scale staff reductions and mobilizing their staffs to move out of the office and work from home.

If you are in Accounts Payable in some form or fashion, then please know that this message is absolutely for you.  Thank you for your contributions on a daily, weekly, monthly basis and keep doing the great work that you’re doing. 

Fiscal Heroes to the Rescue — YOU Can Make a Difference

By: Tim Berkey

We have all seen and heard countless examples of courage from front-line workers and other medical professionals during the Covid-19 pandemic.  As our nation has experienced an unprecedented (in our era) medical challenge, we have found new respect for those who sacrifice themselves so that others may live.  And even while these amazing stories of human compassion give us temporary reprieve during this difficult time, the resulting impact of Covid-19 has created a gaping financial hole that further threatens the fiscal solvency, and in some cases, the mere existence of certain healthcare organizations.

In predictable response to this challenge, healthcare leaders have spent tireless hours making difficult decisions about the best use of time and resources, as well as creating future plans for dramatic expense reduction and revenue enhancement. In rare cases, these plans and their proper execution will be enough to offset up to a 50-percent reduction inpatient revenue since the early stages of the pandemic.  However, in many cases, even the best plans and execution will still render the organization unable to recoup the entirety of previously lost revenue.  For all organizations, there has been much opportunity to lament these harsh fiscal realities, though there are still strategies to consider which may give financial relief during this challenging time.  And like the creativity and drive, we have seen from those “healthcare heroes”, these other fiscal strategies will likely require a fresh way of viewing traditional problems through a non-traditional lens.  They will require a new group of “fiscal heroes”.

If you are reading this and wonder how you can make a contribution, you can be assured that those opportunities are equally within your reach — even as they may require challenging traditional paradigms.  One such notable example includes the recovery of dollars that already belong to a healthcare organization (either in tangible or contractual form).  For example, the examination of AP transactions for “leakage” (aka, “recovery) is a strategy not foreign to most organizations. Though, it is my experience that some organizations may presume that the potential opportunity is either too difficult to uncover, too small to matter, or that, “we already do a good job finding recovery opportunities.”  It may surprise even the most seasoned financial executives to know that recoveries in excess of $500,000 – $1,000,000 are common and do not reflect “poor AP performance”.  What may need to change in this climate is the manner in which the pursuit of such opportunity is evaluated.  I would argue that the pursuit of this “last-mile” opportunity is an absolute requirement.  Related, how many instances typically avail themselves in which your organization can achieve a significant fiscal bump for something that is already contractually protected and for business already transacted?  The speed-to-value aspect of such a strategy is paramount in a post-pandemic period of cash-flow optimization.

If you are an AP Manager/Leader reading this and have not recently engaged a recovery partner (of your own accord or at the direction of your senior financial leaders), you have the opportunity to be a fiscal hero.  You can begin by engaging in a conversation about achieving last-mile recovery dollars through a vendor partner review of your AP transactions.  Perhaps even more importantly, if you are a financial executive reading this you can enhance your fiscal hero status by temporarily suspending the temptation to judge the potential of realizing a significant revenue increase, and instead, embracing any potential opportunity as a platform from which your future performance standards in this department will be based.  It is human nature to both enjoy a financial recovery and lament that a recovery was even available in the first place. A new paradigm might reflect a culture of “amnesty” for even the largest recovery opportunities so that there is literally no chance that staff are hesitant to engage in future, similar pursuits of financial improvement.  And, to be clear, my experience is that most fiscal leaders are already willing to consider that last-mile recovery dollars in an area like AP are commonly a function of the sheer volume of transactions that this important department must touch, as opposed to inferring that the identification of any material recovery dollars represents a failure of existing management or personnel.  Ninety-nine percent (or more) current transaction accuracy will still yield valuable last-mile dollars to the organization.  Are you ready to realize them?


About the Author

Tim Berkey is an independent strategy and delivery healthcare consultant who resides with his wife and family in Charlotte, NC.  With nearly three decades of healthcare process improvement and large-scale expense reduction experience at Premier, Inc., he helps healthcare leaders navigate pressing problems in areas such as supply chain management, general process improvement, and large-scale margin improvement.

When not partnering with healthcare organizations, Tim enjoys family time, art, music, and travel.

When The Hospitals Started Asking Me For Help… We’re Stronger Together.

Written By: David Hewitt, RVP of Sales – East,

I’ve served healthcare networks and hospitals for nearly a decade and if you would have asked me in January… I would have told you that I had seen it all.

But I hadn’t…none of us had.

The last few months have been one new experience after another and I’ve observed firsthand, how strong we are, and more than that – how strong we are together.

I’m fortunate, I’ve worked with many of the top hospitals across the country, and from those engagements I was able to meet some of the most influential leaders at world-class facilities.

If I’m being honest, conversations with these individuals have sometimes been a little one-sided – in terms of deference.  It’s true, my clients appreciate what I do, but I know I’m viewed as a supplier only, and by definition that makes me an outsider.

But things were a little different last week.  I was meeting with the CFO of a top U.S. hospital who I have met on a couple other occasions and he is always professional and cordial, but it’s always clear that I’m a contractor.  Although my work is openly and highly appreciated – the boundaries are still there.

During the conversation last week, my client took on a different demeanor – he was more candid and more vulnerable.  Clearly, the past few months have had a major impact on him.  His first words were, “David, I need you guys right now.  I need you to watch our back.”

You see, a couple months ago his whole healthcare network (like every other network in the country) shut down their elective procedures.  As a result, they bled cash.  And now, his group is planning to turn procedures back on to drive cash flow back to his bottom line.

The hospital is down in terms of staff, supplies and morale (if we’re being honest) and they are now expected to ramp up to pre-pandemic levels of output and efficiency.  Come on, man…

“We haven’t been focusing on our top or bottom line in the last few months and we know we’ve been taken advantage of by a few of our suppliers, and we know we’ve lost millions,” he admitted starkly. “You have to look into this for us.”

He asked me to double down on our audit scope and to investigate his AP transactions and his vendor relationships in detail.  He said he knew they had been moving too fast and too clumsily for the last several months in their attempts to keep up with the surge of COVID-19 patients.

As a result of his focus being pulled away from day-to-day operations, he was certain they had not been able to maintain compliance with their internal controls across their Procure-to-Pay cycle and he was grim about the losses he was suffering as a result.  He suspected they had been making purchases off-contract; onboarding duplicate and fraudulent suppliers; falling prey to price gouging; missing discounts and rebates; issuing duplicate and over-payments; and much more.  He actually said “… and that’s probably just the tip of the iceberg.”

Clearly the topic was very raw for him.  Hospitals like his have been reporting losses in the hundreds of millions of dollars due to COVID-19.

I felt bad for him.  I did.  But I felt excited too, because I realized how much we could help.  And he knew it too.  He said, “David, of all my partners you guys are the only one that can make this kind of impact this quickly.  I need you to backfill.”  I don’t know if I am doing the story justice, but in that moment everything changed.  He was pulling me in as part of his team.  I was more than a supplier.

I want to be clear about something, I know this is a self-serving story, but it’s a true story.

I’m not sharing this to advertise my company or to exploit the hardships of the market.  Quite the contrary.  I’m writing this because my firm wants to help.  We consider ourselves part of the healthcare industry.  The core of our mission statement is “to help hospitals better fund patient care.”  We take this very seriously.

We have an ideal solution to help hospitals restore cash flow right now – in a time when they really need it – and we want to use our solution to help recover funds and drive dollars back to hospitals.  Period.

If you work in finance at a hospital and you have any questions about what tools or strategies you should be using to drive hard dollars back to your bottom line, please reach out.  As I mentioned in the intro, I have been in this industry for nearly 20 years and if SpendMend is not a fit for you then I am sure I can connect you with another provider or consultant that can help you.

Please don’t hesitate to be vulnerable and reach out.  We truly are stronger together.

The More Things Change, The More Things Stay The Same

Written By: Nicole Thompson, Director of Business Development,

When I started in the recovery audit industry as an intern at an industry leader, I was shuttling disks and drives to the data processor’s office and picking up bankers boxes of printed client reports. Pulling invoices meant rolled up sleeves and long lists of invoices, a few days at Iron Mountain and hours on end at the copy machine. As I began calling vendors to follow up on questions about statements, I had to look up contact information on a CD-Rom or call 411. Duplicates were the result of faxed invoices, returns, etc.  After interning I was hired on as an Account Executive. My next role challenged me to build a business development team. From there, I built yet another team and led the implementation of not one, but two CRMs. Now, I’m privileged to be working with simply the best team in the Healthcare Recovery Audit Industry.


Companies were changing. They were moving from legacy homegrown systems and paper invoices to first generation ERP systems like JDEdwards and imaging systems that promised freedom from file cabinets.

Organizations with people entering invoices at locations across the nation and around the world created regional or global AP shared service centers, gravitating toward the goals of cost savings, best practices and oversight.

There goes the recovery audit industry. Not so fast.

Inaccurate information on any of the many touch points of the procure-to-pay cycle, typos, returns, credits not forwarded to AP, new staff training and turnover were just some of the causes of overpayments found by post-payment auditors.


As organizations became more complex, so did ERP systems and their resulting implementations. A once simple 6 month implementation was now a 5-year global rollout with all other projects on hold. With all hands on deck, day-to-day tasks like researching invoices that didn’t match the PO often didn’t get staffs’ full time and attention. Returns? Fugaddaboudit.

Offshoring and outsourcing were the buzzwords of the time, again, keeping everyone busy with change management, training, and conversion. These shared services centers promised to audit their own work.

What could possibly go wrong?

These system changes meant invoices paid in multiple systems, new and inexperienced staff, inadequate training and controls meant the promise of 100% accuracy went out the window.


SOX, data privacy and an ever-growing list of government regulations meant even more issues managing and complying with multiple reporting and governance requirements, all while maintaining or even reducing headcount.

Digital information coming into and leaving organizations reduced paper and manual processes, but “information at your fingertips” was falling far short of the promises made when data in distinct systems had no way of talking to each other. Creating order out of chaos became a pipe dream.

20+ years later, a few (ahem) gray hairs, teams built and countless clients later (no correlation), procure-to-pay, supply chain, sourcing – we all look very different on the outside – but on the inside, change, complexity and compliance are the only constants. Supply chain, purchasing and accounts payable professionals manage all of this with ease. It’s their normal.

As Mary Poppins said so well, more than 99% of what they do is “practically perfect in every way.” But when you’re dealing with millions and billions in spend, that small percentage of errors can really add up. For public companies, those dollars can go back to the bottom line. For privately held organizations, you can reinvest into growth. For healthcare organizations, that means funding even better patient care.

Am I glad the days of pulling invoices at Iron Mountain are over? YES!

But the days of helping companies recover overpayments continue. As long as change, complexity and compliance are part of business, recovery auditing will be as well.


So where do I see recovery auditing progressing?  The devil is in the details, and you have to dig into the details to find the real root cause of every single overpayment.

What happened? Why? How do you fix it?

Only by shining a light on your dark data can you achieve true visibility and uncover the answers to these questions.  And only by implementing the recommendations offered by the experts performing your audit, can you optimize your processes, controls and ultimately your department. You’ll be able to actually prevent those errors from happening in the future.

Change, complexity and compliance ensure that this illumination loop is infinite. We’ll be learning and growing and improving together for years to come.