Despite having vendor contracts in place, invoice errors happen. Human error is a part of the business we are in. However, many vendor invoice errors are overlooked during payment processing. This is due to the fact that many health systems do not have a procedure in place for documenting and tracking this error. The Audit Group works with healthcare clients nationwide to develop processes to avoid errors like these.

When a Breakdown Happens

Imagine a Healthcare system started an agreement with a vendor in November of last year. During the course of the vendor relationship, purchase orders were always issued with correct contract prices. The invoices, however, were not issued with the correct, agreed-upon prices. If the healthcare system failed to catch this mistake over the course of eight months, they will have overpaid by more than $275,500 in July. As a result, the healthcare system may try to resolve the issue by short-paying some invoices in the following year. However, this “solution” could cause more trouble, if the invoices are approved for payment as presented without resolving why they didn’t match purchasing orders.

TAG’s Tips for Avoiding Invoice Discrepancies

To avoid ending up in the same situation as the example above, TAG recommends taking steps to improve your invoice management:

Develop a Process

• Invoice errors are bound to happen. Your health system should have a process map in place to catch and correct these errors and other potential problems before they turn into financial loss.

Do Not Pay Invoices With Known Discrepancies

• Don’t pay invoices when terms differ from purchasing orders until the discrepancies are reviewed and resolved. Discrepancies could indicate pricing errors, which often show up as differences in terms between purchase orders and invoices.

Find the Source of the Problem

• Correct root causes of discrepancies so they don’t continue to cause financial loss to the organization. Whether it is a contract overcharge on the vendor’s behalf or an incorrect purchasing order payment on your health system’s behalf, thorough data analysis should take place to find out when the problem started.

At The Audit Group, our experts perform extensive research to produce an accurate evaluation of your current processes, then provide recommendations for streamlined efficiencies and strategies for effective implementation. If your system continues to struggle with invoice discrepancies, contact our healthcare auditors today.