An excerpt from “The Autobiographical Account of the World’s Most Controversial Employee”
I have to confess: I’m not the only one living big. Indeed, there are thousands of us riding the lack of institutional control over fraud, misuse and waste to great advantage at my company, and indeed throughout the endless landscape of the 21st-century industry.
Cash leakage? Why that’s a happenstance as common as apple pie. Want to know who really gets the front row seat for the pie-eating contest? Accounts Payable. Here are just a few of the stories I’ve heard from the fine souls in AP over the years:
The Gigantic Duplicate
Imagine yourself, the head of AP at a $5B company. You reach the end of your fiscal year, and like every year, you hire a recovery audit firm to tie up a few loose ends on duplicates. Or at least that was the plan until they sent you their findings: a stunning twenty million dollars out the door in duplicates last year alone. And the cost to recover it? A simple ten percent.
The Box/Car Debacle
And who could forget the embarrassing tale of the procurement employee who tried ordering 30 boxes of paper and received boxcars worth instead? Though their intentions were pure, only the details matter to the supplier, who promptly (and accurately) shipped the 30 boxcars of paper as ordered. When the actual, literal trainload of paper arrived, the only thing outweighing the card stock was the confusion.
In Search of a Trustworthy Nicaraguan Collections Agency
A big challenge for companies working internationally comes when the financial rubber hits the international road. When one AP team accidentally sent a $1 million payment that should’ve been a $10,000 payment to a South American vendor, they knew then: collecting the money back would be all but impossible. And, even if the vendor sent it back, the two organizations would face tax implications for transferring money across borders.
Outliers? Out, liars!
Ever received an invoice for $95 Billion? I know someone who has. A friend in AP was surprised to see that one on his desk. What happened? Someone entered the eleven-digit invoice number as the total due on a lazy Friday afternoon. A regular payment from this vendor might range between $5 and $1000. Imagine our surprise.
Duplicates Duplicates Duplicates
The funny thing about duplicate detection is that AP teams tend to think they have it under control until the very moment when they flip the switch on a spend risk platform and suddenly detect all the errors they’ve been missing. I know an AP team that once issued a single duplicate for $10.5M and a half million dollars.
I’ve Seen a Ghost (Vendors)
Imagine a rogue member of the accounts payable team. With access to the vendor master list, they can add a new vendor, in the case of the ghost vendor, a company that doesn’t truly exist. The rogue can add banking information and an address for paper checks, and begin to invoice the company for non-existent charges, personally approving every expense, and pocketing every dime along the way. And who would be the wiser?
The Christmas Spirit of Procurement
Another common trick: sell the stuff procurement purchases for you! I know of a man who, in an era long gone, submitted an order to procurement for 200 brand new palm pilots, purportedly to spread around the team members under his command as thanks for the hard work. When this enterprising chap was ultimately fired, imagine the surprised look when 85 palm pilots remained on his desk.
Another enterprising procurement hustler I’ve encountered ordered so many youth bibles, nail guns, ladders, generators and building materials on the company dime (and purportedly for company reasons) that by the time auditors dove into his activities, we were all left wondering whether he was leading a youth group or building the whole church!
The Geyser of Cash Leakage, Sprung Forth From the Vendor Master
Imagine the confusion when the vendor master list gets a little gum in the old gears. And by gum, of course, I mean duplicate listings for suppliers or an unmanageably long list that includes thousands of approved suppliers, including every potential vendor the organization has used in the last twenty years. I’ve seen AP process the same million-dollar invoice through each of the two duplicate listings for a vendor. And confusion abounds when an account rep puts an overdue bill on a P-card while AP also pays the paper bill. Vendor master errors: the fastest way to lose a million bucks.
Vendor Self Service
Then there are the self-service portals. Imagine, some companies allow vendors to self-service! All it took to leak seven figures was for some enterprising schmo with a bit of insider knowledge to come along and set up a brand-new bank account for this trusted vendor in the self-service portal. He did so shortly before submitting a very convincing invoice for 1.6 million euros.
Lots of Phish in the Sea
Of course, all bets are off if your AP team finds itself on the wrong end of a phishing hook. Even worse when that hook looks awfully friendly with scammers finding ways to figure out just what an approved invoice really looks like.
In conclusion, my friends, it should be clear by now: the world of business is a wild and mysterious place. Out there, operating beneath the foggy cover of business as usual are the master expense report artists like myself, the accounts payables scammers, the corporate travel account raiders, even the international hackers. The night is dark and full of terrors, indeed.
But with the right tools, you can shut it all down in advance. Go forth to the Fortune 100, ask the 25% who already have a spend optimization tool in place what their duplicate rate is. I think you’ll find it near zero. And see how much ransom they’re paying! I think you’ll be disappointed.
The stories are fun to recollect. But now that we sit at the advent of the spend optimization revolution in business, I fear that my friends and I will go the way of the dodo, relics of a bygone era. Dinosaurs are staring at a comet called Oversight.
**Not a real book, but all of these stories are based on real things that employees have experienced.