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Purchase Card

Bottom N Analysis

on February 21, 2014

More transaction volume doesn’t always mean more important or more interesting from an audit perspective. A different type of value and perspective can also be derived from studying the areas where the least spend is occurring. The bottom N represent the highest risk areas from a statistical perspective.

Typically this type of analysis is done through some type of static report. However, in Oversight Insights On Demand™, this analysis is automatically provided in both the interactive dashboards and the analysis workbench.

Some examples of bottom N analysis are:

  • Bottom 5 Merchants by spend amount
  • Bottom 10 Merchant Categories by spend amount
  • Bottom 10 Merchant Categories by transaction count

Merchant categories where you have the lowest number of transactions could indicate various things:

  • Redirect spend to a different payment type:
    It could highlight spend that should have been on a different purchasing method. For example, the least used merchant category for a travel card might be a merchant category for office supplies. If so, you may want to redirect  the employee to use a purchase card instead which might could rebates back to the company.
  • Out of Policy Charges:
    Areas where very few employees are spending could indicate instances where the employee is spending outside of the guidelines of your company policy. This could point out areas where your policies need attention:
    • Areas where employees need more training
    • Areas where policies need to be clarified or strengthened

A good example of the type of out of policy charges that could be detected by bottom 10 analysis can be found in the recent blog article regarding “pet resort” out of policy charges.

  • Fraudulent Charges are often in merchant categories where the transactional count for your organization is low.

When selecting a tool to analyze your transactions, is makes sense to choose a tool like Insights On Demand that includes interactive analysis of the least used categories and merchants.

Julia Versaci

Julia Versaci is Director of Solutions Development at Oversight Systems.