Selecting a Payment Recovery Service

Not all payment recovery (or post-payment audit) firms are created equal. Here are 10 questions that you should ask any firm you are considering for payment recovery services.

1. Ask if they have experience in your industry. A familiarity with industry practices and vendors is essential to catch all erroneous payments and to avoid falsely identifying legitimate payments as erroneous.

2. Ask if they obtain refunds from vendors or simply do charge backs, credits and reversals. Some firms collect their fee after notifying your vendor that you will be taking a credit for an erroneous payment. You should be able to decide if you want to accept a credit or insist on a refund and your payment recovery firm should not receive their fee until the refund arrives or the credit is used.

3. Ask what their lowest dollar recoveries are. Since most of your payments are less than $500, a large pool of potential erroneous payments exists here. However, because of the difficulty involved in sifting through such a massive volume of data, some firms are reluctant to search for these items, preferring instead to concentrate on the big dollar recoveries. A good payment recovery provider will go after the lower dollar items, too, thereby increasing the total amount you recover.

4. Ask how much of your staff’s time and how much space at your site will be required. Some companies require desk space and telephones at your site or frequent use of your staff and equipment. Make sure that the disruption to your operation will be minimal and that any use of your equipment is done during off-peak hours.

5. Ask if they will maintain your confidentiality. Many firms do not want outsiders to know that payment recovery is being outsourced. Be sure that your payment recovery firm is invisible to your vendors and that your company’s name will not be included on advertising or promotional materials without your permission.

6. Ask if they can accept your electronic data in the format most convenient to you. Your systems staff should not have to do any custom programming or conversion to provide files from your purchasing and accounts payable systems. Your payment recovery firm should be able to accept recent backups of your files on your preferred media.

7. Ask if they will be able to suggest enhancements to your process on an ongoing basis. You should not have to wait until the end of the assignment to receive an audit report. Within 60 days of providing your data for analysis, your payment recovery firm should give you procedures specific to your operation in order to eliminate many types of your erroneous payments.

8. Ask how their recovery process accounts for the sensitivity of your vendor relationships. Many of your vendors may also be your customers or potential customers. Vendors should always be provided with substantiating documentation and given adequate time to resolve erroneous payments in a friendly manner.

9. Ask if you will have control over correspondence with your vendors. You should approve each claim before the vendor is notified and be aware of any contact made with your vendors on your behalf.

10. Ask for at least three references. And CHECK them! The references provided should be companies in your industry and of your approximate size. Check with the references to see if they had problems in any of the nine areas mentioned above.