Volca Newsletter
vendor overpayments
3 questions that audit your shop's AP process
Three questions worth asking about your shop today
Does your team know what a vendor is supposed to charge before the invoice arrives, or do they figure it out after?
When a vendor overcharges you, who catches it, and what happens if that person is out?
How long after a job closes do you have accurate material costs assigned to it?
These questions stem from a conversation with a $45 million dollar home service company we work with that caught a six figure overpayment to one of their major vendors.
Not because their process was broken but because their process was manual, and manual processes at that volume eventually miss something.
Here is what AP looked like at that company before they changed anything.
Every day, invoices came in from four or five vendors. Someone pulled each one, matched it to the purchase order in ServiceTitan, checked the price against what purchasing thought the vendor was supposed to charge, flagged discrepancies, and manually entered everything into their accounting software.
When a ServiceTitan update rolled through, it reset all the vendor pricing they had entered into the price book. They corrected it. It happened again.
Vendors billed in different units than POs were written in. Manual math, every time.
Credit memos came in before original invoices. Warranty returns hit before POs were received. Surcharges arrived split across multiple invoices in amounts nobody could predict.
At the end of every month: a pile of packing slips that had not been matched to anything, and an AP team working backward to close the books before checks could go out.
Their job costing was as accurate as the last thing their AP clerk caught before moving on to the next stack.
How they turned their process into a system:
They started forwarding vendor invoices to an automated inbox. The system matched each invoice to the open PO in ServiceTitan, flagged discrepancies before they became payments, and built out price book items from actual invoice data instead of manual entry.
Surcharges that had to be created by hand on every order: automated. Pricebook items that required someone to sit down and build from scratch: created from the invoice itself with the right cost attached.
A few months in, their AP clerk said pricing errors had become non-existent. Job costing started reflecting actual material costs in real time instead of two weeks after close.
If you want to see what this looks like for your operation, book some time below
- Don Rabovsky