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Returned goods is one of the largest areas of claims identified and recovered during a healthcare audit. In our experience working with health systems across the country, we’ve learned that it’s sometimes as easy as following up with the vendor to receive credits.
When a health system has an informal returned goods policy, there is often a disconnect between returning products to the vendor and the follow-up communication. We often find that this communication is lacking when return notes are not entered into the ERP system as well, and Accounts Payable does not have the information needed to confirm credits were received.
If you have a loose returned goods policy, you might not know how to follow up with vendors to receive credits that are due.
Follow Up with Vendors for Confirmation
We recently worked with a large, complex healthcare system, that had a more informal returned goods policy. Their policy focused more on processing the credits that they received, rather than capturing credits that were owed to the system.
In this example, we discovered an issue with several items were returned to Alcon Laboratories. While the returns were documented in the ERP system, Accounts Payable did not follow up with the vendor to confirm that the credits were received. As a result, the system did not receive credits on returns totaling $12,716.
TAG Tips for Following Up with Vendors
In our work with the health system above, we were able to update their returned goods process, to ensure tracking of credits owed. If your health system runs into similar issues with returned goods, follow the tips below:
- Establish a consistent and effective returned goods policy that tracks returns to ensure credits are received and posted
- Management should emphasize the importance of communicating returns between Purchasing, Shipping & Receiving, and Accounts Payable
- Accounts Payable should periodically run an Open Returns report to identify returns with unreceived credits, and then contact vendors about missing credits
The Audit Group has worked with major health systems and hospitals nationwide to streamline processe and improve cash flow. Our Discovery Review can uncover process breakdowns while recovering lost funds. Contact us to learn how our team of experts can make sure you’re not leaving money on the table.