Profit Recovery: Vendor Relationship Management (#60)
/In this podcast episode, we discuss how an examination of the relations between a company and its vendors can uncover profit recovery opportunities. Key points made are:
Conflicts of interest between a company and its vendors can cause major expense increases.
Companies tend to look for fraud internally first, which means that vendor investigations are delayed or never happen at all.
A common profit recovery scenario is when a company makes duplicate payments to a vendor, which has not sent them back. This could be a vendor error, or it could be fraud.
It is difficult to spotlight cozy relations between company staff and vendors, but you can use the Internet to uncover some of these relationships.
Need strong procurement practices to examine vendor relationships on an ongoing basis.
A conflict of interest may be OK, as long as the company is getting a good deal; verify whether this is the case with benchmarking, or use a full audit to search for anomalies.