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The Hidden Cost of Invoice Errors: How To Zap the Problem in SAP

October 11, 2023

by

Paul Dixon

#

SAPCompliance

Companies worldwide throw millions of dollars down the drain yearly due to damaging invoicing and billing blunders.

A high-profile case involving Australia's telecommunications giant, Telstra, is a recent example and one we'll examine. And if your company is a SAP user - you're in luck. This article also reveals how your company can manage and mitigate the threat in your SAP ERP or S/4HANA environment.

But before that, let's dive into an overview of invoice errors and their threat to your company.

Invoice and Billing Errors Explained

Most of you reading will already be familiar with the following. However, to set the context and zone in on the most critical areas (of a wide-ranging subject), let's refresh ourselves on the bread-and-butter aspects of invoice and billing errors.

Invoice and billing errors refer to mistakes or inaccuracies while creating, sending, receiving, and processing invoices in your business operations. These errors take various forms, occur at any stage of the invoicing and billing cycle, and often happen when employees use SAP.

Here are some tangible and common examples:

  • Data entry errors
  • Paying duplicate invoices
  • Incorrect tax and duties charges
  • Failure to apply price increases

In addition, costly invoice problems can also strike your business as a fraud or a scam, with nefarious internal and external actors targeting your organization. If you want to learn more about it, the following VOQUZ Labs article will get you up to speed: The Growing Threat of Invoice Fraud - Here's How To Prevent It Within SAP.

But now let's return to invoicing issues caused by errors. To further illustrate the threat, we'll look at how billing errors cost Telstra more than $1.4 million.

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remQ is a continuous monitoring software for SAP ERP and S/4HANA, with a large library of built-in controls that help check master data and business processes to avoid financial losses through errors and fraud. remQ can be set up in less than a day, works regardless of organization size and industry, requires no consulting project, and reduces the cost of compliance through automation.

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How Telstra Paid a High Cost for Its Invoicing and Billing Blunders

In 2022, telecommunications behemoth Telstra got into a legal, financial, and reputational quagmire after an Australian Communications and Media Authority (ACMA) investigation.

Ultimately, the Melbourne-headquartered business had to repay over $1 million to affected customers and was served a $325,000 infringement notice (effectively a financial penalty).

So where did it all go wrong?

In a nutshell, this: Telstra overcharged more than 10,000 customers over 12 years. And although this is a case of overcharging (rather than missing out on lost revenue because of undercharging), it still demonstrates that overbilling also causes companies tremendous damage.

But what is more revealing for this article are the reasons Telstra provided for committing the error - primarily because of problems with their internal systems.

They said problems in the following areas were to blame:

  • A data transfer problem between its CRM system and its billing system
  • Manual processing errors
  • Out-of-date employee instructions

The above are all familiar reasons for invoice errors. After all, employees are humans and will eventually make mistakes when manually entering data (especially if they aren't trained correctly).

Also, we now live in a world where different platforms, from CRMs such as Salesforce to marketing automation software like HubSpot, connect to SAP through APIs. And guess what? Things do go wrong on integrations and data transfers.

But enough of the doom and gloom. The following section will reveal how your organization can significantly reduce invoice errors.

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Reducing the Risk of Costly Invoice Errors in SAP

So far, we have learned that the following characteristics within internal systems exacerbate the risk of invoice errors:

  • Manual processing errors
  • Employees making invoicing mistakes
  • Incorrect data transfers and integrations

And what's one of the most effective ways to reduce the risk of financial, legal, and reputational damage to your business caused by invoice and billing errors?

Utilize automated internal control systems, such as remQ by VOQUZ Labs (a SAP add-on), in your SAP ERP or S/4HANA environments.

Let's delve into how this works. Invoice data in SAP can be categorized as both master data and business process data, depending on how it is used and managed within the SAP system.

Tax code errors is one example fitting in the master data category. And mistakes with the creation and approval of invoices is one such business process data scenario.

Where remQ applies its magic is the real-time auditing and monitoring of master and business process data within SAP. You can learn more about this system in our guide. But to cut to the chase, it means errors are spotted in almost real-time with alerts and notifications sent to your internal controls teams instantly.

Given that it can take more than 18 months to uncover invoice errors (after the damage has already snowballed), it's clear as night and day why SAP users worldwide are turning to remQ.

Final Thoughts and Next Steps

Invoice and billing errors pose a real and increasing threat to businesses - the Telstra CEO will know all too well about that. Returning to the Australian telecommunications firm, we don't know if they use SAP, or antiquated manual internal controls systems, so the following is speculation.

But you can bet the last dollar in your pocket that automated internal controls systems, like remQ, would have helped spot the invoicing and billing errors far sooner, saving the company a tremendous amount of money and legal problems.

If your business uses SAP ERP or S/4HANA, you have an opportunity to manage and mitigate the risk of invoice and billing errors. VOQUZ Labs remQ Business Inspector software operates as a SAP add-on with a library of 100+ pre-built shipped controls ready to run. We would be delighted to answer any questions you have - contact us.

Recommended reading: Enjoyed this article? Now read: Battling Business Email Compromise (BEC) Scams: How To Prevent Them Within SAP

ABOUT THE AUTHOR

Paul Dixon

Paul is a RegTech content writer & strategist with extensive experience in digital marketing and journalism. His work has appeared in the Guardian newspaper. He also holds a degree in International Relations, where he studied global sanctions compliance and cross-border finance.

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